Real Estate Course Level 14 Flashcards

Real Estate Course Level 14 Flashcards Security Instrument Comparison ChartHere's a snappy little chart that you can refer back to for a quick comparison of the primary security instruments used in property loan agreements, including the one unique to Georgia!Facts of a featherb) acceleration clause. makes entire loan due immediately.a) subordination clause.b) acceleration clause.c) defeasance/satisfaction of mortgage clause.d) due on sale/alienation clause.The TakeawayBecause it can be a costly and complicated process, a good foundational understanding of foreclosure is critical for anyone making a career of real estate.In Chapter 5, you

learned: The lender's perspective on foreclosure. The

causes of default and the impact of foreclosure. The statutory influence on foreclosure. The terminology of foreclosure. How debt priority is createdNow that you have a solid, foundational understanding of foreclosure, in the next chapter, you'll be taking a walk down the different paths of foreclosure that exist. But don't worry, you won't get lost... not with me as your guide!Quiz Level 14c) entry and possession.Foreclosure by entry and possession is a nonjudicial form of foreclosure that depends on the borrower's willingness to grant the lender access and occupancy of the property subject to foreclosure.Which nonjudicial form of foreclosure depends on the borrower's willingness to grant the lender access and occupancy of the property subject to foreclosure?a) strict foreclosure.b) possession and lis pendens.c) entry and possession.d) entry and foreclosure.Quiz Level 14b) The proceeds from the sale must exceed theoutstanding debt.A couple things have to be in place for a lender to be able to pursue a deficiency judgment against

the borrower: State law has to allow for its use; the

mortgage agreement cannot contain an exculpatory clause that forbids it; and a judge has to review, approve, and award it. There would be no need for a deficiency judgment if the proceeds from the sale exceed the outstanding debt.Which of the following does NOT have to be in place in order to pursue a deficiency judgment?a) State law has to allow for its use.b) The proceeds from the sale must exceed theoutstanding debt.c) The mortgage agreement cannot contain anexculpatory clause.d) A judge has to review, approve, and award it.Facts of a featherc) defeasance/satisfaction of mortgage clause.yes . is not triggered until full repayment of loan is made bythe borrower. acknowledges full ownership rights of borrower havebeen achieved. results in the removal of the lender's lien or theconveyance of the title to the borrower. official lender declaration that the terms of the loanagreement have been meta) subordination clause.b) acceleration clause.c) defeasance/satisfaction of mortgage clause.d) due on sale/alienation clause.Quiz Level 14d) A trustee executes a deed of reconveyance or deedof release, which is recorded.When a

deed of trust is used and the note is paid in full, the lender authorizes the trustee to execute what is known as a deed of reconveyance or deed of release. As with a mortgage satisfaction, this also needs to be recorded to clear the title.What happens with a deed of trust when the borrower pays the note in full?a) A mortgage satisfaction is issued and

recorded.b) A mortgage satisfaction is issued but NOT recorded.c) A trustee executes a deed of reconveyance or deedof release, which is NOT recorded.d) A trustee executes a deed of reconveyance or deedof release, which is recorded.The TakeawayAs important as it is to understand the documents that make up a mortgage loan, it's just as critical to understand the need to get those documents promptly recorded. It helps lenders establish debt priority, and it helps sellers and buyers know whether or not a property is encumbered with any outstanding liens as they look to buy and sell.In

Chapter 1, you learned: How the use of property as

security in real estatefinancing is handled and what benefits it provides. What documents make up a mortgage loan. The process and importance of recording amortgage.In Chapter 2, we'll be discussing one of the two primary documents that make up a mortgage agreement. I can't say more about it now, but I "promissory" that it will be well worth your while!Facts of a featherc) defeasance/satisfaction of mortgage clause.has an affect on debt priority.a) subordination clause.b) acceleration clause.c) defeasance/satisfaction of mortgage clause.d) due on sale/alienation clause.Facts of a feathera) Judicial foreclosure.yes involves both a lawsuit and a sale.a) Judicial foreclosure.b) Power of sale.c) Entry and possession.d) Strict foreclosure.Quiz Level 14a) right to reinstate clause.As kind of a response to or defense against the lender-friendly acceleration clause, the right to reinstate clause provides the borrower a way to get back on track by bringing current any delinquent payments so that they can proceed forward in a pre-acceleration environment, making regular monthly payments under the original terms of the contract.While an acceleration clause demands immediate payment in full of a loan due to payment default, another clause provides the borrower with a way of addressing those consequences and returning to a pre-acceleration environment. What clause is that?a) right to reinstate clause.b) alienation clause.c) prepayment clause.d) subordination clause.Facts of a featherb) acceleration clause. is not triggered until full repayment of loan is made by the borrower.a) subordination clause.b) acceleration clause.c) defeasance/satisfaction of mortgage clause.d) due on sale/alienation clause.Quiz Level 14c) judicial and nonjudicial.The two primary categories of foreclosure are judicial and nonjudicial.What are the two primary categories of foreclosure?a) foreclosure and aftclosure.b) nonjudicial and legal.c) judicial and nonjudicial.d) judicial and administrative.

Case Study: Frank's FalloutPart 1Frank bought a ranch from Herman without the

benefit of representation by a real estate professional or legal guidance. He had known Herman since they were in high school back in the day, so Frank trusted that the two of them could make this happen without all that "unnecessary expense."A few weeks later, when Frank finally got around to recording his purchase of the ranch

with the county clerk, he became aware of a pre-existing mechanic's lien on the property. It seems that the contractor that built the air-conditioned chicken coop out by the barn never got paid the full amount she said she was owed.When confronted about it, Herman said he told the contractor she wouldn't see a dime over what he had paid her already. As far as he was concerned, it wasn't his fault she went over budget."Besides," Herman insisted. "I didn't even know she placed a lien on the property, so I sold the ranch in good faith."Frank was miffed and said a few choice words to Herman before wheeling around on his

heels and heading to the courthouse.Question: It would

appear that Frank made a few bad choices when he entered into an agreement to buy Herman's ranch. What are some concerns you see with Frank's

decisions?Answer: The decision to enter into a sales

contract without the assistance of licensed professionals or legal representation is a risky one, unless the parties involved are very experienced and knowledgeable about such matters. Additionally, you can assume from the story that Frank didn't have a title search done before he bought the ranch. Otherwise, he would have known about the mechanic's lien prior to purchase. Finally, although it might not have caused any additional problems in this story, Frank took too much time getting his purchase of the property recorded. This happens sometimes when properties are bought and sold in very informal fashion, and

it can cause real headaches.Part 2:No longer concerned

about maintaining a friendship, Frank went to court to try to force Herman to assume liability for the mechanic's lien.Much to his dismay, however, when Frank complained to the judge that he knew nothing about the lien when he bought the property from Herman, the judge was less than

sympathetic in his response.Question: Why do you think

the judge was less than sympathetic? Do you think Frank had legal grounds to force Herman to assume liability for

clearing the mechanic's lien?Answer: The court's stance on

this case was, since the mechanic's lien had been recorded prior to the sale, Frank had constructive notice. If he didn't know about the lien, it was his own fault. That response may not be sympathetic, but it is legally sound.Constructive notice, in this instance, barred Frank from claiming any relief from Herman with respect to the mechanic's lien.