CLI REAL ESTATE PART B EXAM Flashcards

CLI REAL ESTATE PART B EXAM Flashcards when a home loan is originated, this is charged by most lenders to cover the expenses involved in generating the loan a loan origination fee or transfer fee (which is typically 1% of the loan amount) Lenders look at these two thingsdebt-to-income and loan-to-value ratio allowing defaulted borrowers a period in which to redeem their real estate after the sale, during this period the borrower has statutory right of redemption (may be as long as a year) Requires lenders must disclose all closing costs up front and if there are pre-payment penalties Truth in Lending Act A mortgage is a two-party instrument.Borrower = MortgagorLender = Mortgagee buys from a lender block or pool of mortgages that may then be used as collateral for mortgage backed securities, buys mortgages on secondary market Fannie Mae seperate self from property/getting rid of it, must pay off loan when you sell property due on sale clause or alienation clause a clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan defeasance clause It's role is to maintain sound credit conditions, help counteract inflationary and deflationary trends, controls interest rates depending on economy Federal Reserve System Sell land because need cash flow and lease and lease for long time Sale and leaseback Specific credit terms, such as down payment, monthly payment, and amount of finance charge or term of loan are called Triggering terms In tennessee, a mortgage is calleddeed of trust Federal Home Loan Mortgage Corporation, continues to provide a secondary market for mortgage loans, primarily conventional loans Freddie Mac Provision that permits borrower to obtain release any one lot or parcel from the blanket lien by repaying a certain amount of the loan Partial release clause Source of funds that takes advantage of the equity built up in a home Home equity loan most mortgage payments are paidin arrears (payments made at the end of the period) unscrupulous lenders charging interest in excess of the maximum rate allowed by law is called usury Federal National Mortgage Association was created as a government agency in 1938 Fannie Mae

a lien on the real property of a debtormortgage the sales price is less than the remaining indebtedness, lender may permit short sale Includes real property plus personal property, for real

estate and personal property wrapped up in oneExample:

include furniture, microwave, fridge Package loan Not loans, used to finance large commercial or industrial properties Sale and leaseback Covers more than one parcel or lot. It is usually used by a developer to finance a subdivision Blanket loan Lender commits to large sum for construction in increments, generally short-term or interim financing Construction loans the minimum level of funds that an institution must maintainreserve requirements The Fed's reserve requirements place funds out of circulation, when reserve requirements are increased, lender solvency is improved but funding is harder to obtain final payment that is at least twice the amount of any other payment balloon payment The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) regulate mortgage loan originators the borrower, receives a loan and in return gives a promissory note and mortgage to the lender mortgagor the lenderMortgagee A deed of trust is a three-party instrument whose parties

include:

trustor = homeowner/borrowerbeneficiary = lender, bank, holder of promissory notetrustee = third party, holds legal title on behalf of te lender don't have possession, HAS

POWER OF SALE

by the provisions of the defeasance clause, the lender is required to execute a satisfaction of mortgage (aka a release or discharge) For individuals with full eligibility, no down payment is required for a loan up to the maximum guarantee limit VA guaranteed loans used to increase the lender's yield (rate of return) on its investment discount points foreclosure sale may not produce enough cash to pay the loan balance in full after deducting expenses and accrued unpaid interest. in this case, the mortgagee may be entitled to a personal judgement against the borrower for the unpaid balance Requires that credit institutions inform borrowers of the true cost of obtaining credit Regulation Z, which was enacted to enforce the Truth in Lending Act Has agreement that you can borrow more in future and provides a security interest when a note is executed by the borrower to the lender Open-end loan provides that when a property is sold, the lender may either declare the entire debt due immediately or permit the buyer to assume the loan at an interest rate acceptable to the lender alienation clause

Finance charge disclosure under TILA must include Loan fees, finder's fees, service charges, points and interest Progress payments that lenders need to pay people such as framers and roofers (disbursed funds on payments) Draws Most states give defaulting borrowers a chance to redeem their property through the equitable right of redemption Paying interest in advance, a way to temporarily lower the interest rate on a mortgage or deed of trust loan Buydown the usual loan that homeowners get and it pays interest as well as a portion of the principal owed amortized loan The Fed regulates the flow of money and interest rates in the marketplace through its member banks by controlling the rate charged for loans it makes to them, called the discount rate helps people who do not have enough down payment and can not charge pre payment penalties FHA insured loans The lender may want to prevent a future purchaser of the property from being able to assume the loan, particularly if the original interest rate is low. For this reason, most lenders include a(n)?alienation clause (aka resale clause, due-on-sale clause, or call clause) a personal judgement levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full deficiency judgment one discount point equals1% of the loan amount (NOT PURCHASE PRICE)