Term
| What two documents does a typcial mortgage center around? |
|
Definition
| Promissory note that creates the liability of the borrower and a mortgage that secures the note |
|
|
Term
| What are the assumption/novation agreements? |
|
Definition
| When a mortgage is assumend, it is the three party agreement between the seller, buyer, and lender on the terms of the new mortgage |
|
|
Term
| Steps a buyer should take when entering into a "Sale-subject to" transaction. |
|
Definition
- Read carefully
- Estoppel certificate...states the principal and interest, balance due, whether the loan is in default, penalties, and tax and insurance escrow
- Title insurance
- If payments include tax and insurance
|
|
|
Term
| What is the only money involved in a purchase money mortgage. x |
|
Definition
| The "downpayment" called the purchase money/take-back |
|
|
Term
| Prior in time is prior in right |
|
Definition
| mortgages will be ranked according to time |
|
|
Term
Secondary mortgages have a shorter maturity than first mortgages gerneally.
T/F |
|
Definition
|
|
Term
| Typical clauses for a secondary mortgage. x |
|
Definition
- If the first mortgage is in default, the second mortgagee can make the payments, add the sum to the second debt, accelerate and foreclose.
- Buy the first at a discount
|
|
|
Term
| What are the two adverse consequences to the first mortgage? |
|
Definition
- it places an undeue financial burden on the borrower
- the second mortgage may take action, such as foreclosing, that will destroy leases that could be valuable to the first mortgage.
|
|
|
Term
|
Definition
| the lender excusing the seller of liability when a mortgage is assumed |
|
|
Term
| Example of a purchase money mortgage |
|
Definition
| Seller conveys property to Buyer for 100,000, Buyer paying 20,000 cash, and giving Seller a mortgage for the balance of 80,000. No outside lender...Seller holds the mortgage and collects payments. The only cash involved is the 20,000 down payment. This is also called a "purchase money" or "take-back" mortgage. |
|
|
Term
| If two leins attach at the same time, one being a regular mortgage and the other a purchase money mortgage. Which one has seniority? |
|
Definition
|
|
Term
| What is the difference between a junior and a wrap around? x |
|
Definition
| The junior typically is secured by land that is already subject to senior encumbrances......The face amount of the wraparound represents the total of the amounts then due on the senior mortgage and the new money advanced under the wraparound. |
|
|
Term
| What is the theory of subrogation? x |
|
Definition
| The legal doctrine under which one who pays money on a senior lien is under certain circumstances entitled to claim the benefit of the priority enjoyed by the senior lien. |
|
|
