Mortgages & Notes
This document is the borrower’s promise to repay the loan.
What is a promissory note?
The borrower in a deed of trust is called this.
Who is the trustor?
A fully amortized loan payment includes these two parts.
What are principal and interest?
The federal law requiring disclosure of loan terms to consumers.
What is the Truth-in-Lending Act (TIL Act)?
This clause ensures that money from eminent domain is applied to reduce the mortgage principal.
What is the condemnation clause?
The clause that allows the lender to demand the full loan balance immediately.
What is the acceleration clause?
This neutral third party holds “naked title” until the loan is paid.
Who is the trustee?
A loan that requires interest-only payments until the balance is due.
What is a term loan (straight loan)?
Regulation Z requires lenders to disclose this annual borrowing cost measure.
What is the Annual Percentage Rate (APR)?
A balloon loan has this type of payment at maturity.
What is a large final payment?
The clause that gives the lender the right to call the loan due if the borrower sells the property.
What is the alienation (due-on-sale) clause?
A deed of trust is preferred over a mortgage because foreclosure under this provision is faster and cheaper.
What is the power of sale provision?
The ratio of loan amount to property value.
What is the loan-to-value ratio (LTV)?
This right allows borrowers 3 business days to cancel certain credit transactions.
What is the right to rescission?
FHA loans require this upfront fee to insure the loan.
What is UFMIP (Upfront Mortgage Insurance Premium)?
When foreclosure sale proceeds exceed the debt owed, this legal action determines what happens to the extra money.
What is a surplus money action?
Once a deed of trust loan is paid off, this document reconveys title back to the borrower.
What is a reconveyance (release) deed?
This federal agency guarantees loans for eligible veterans with no down payment required.
What is the Department of Veterans Affairs (VA)?
Intentionally refusing to lend in certain neighborhoods is called this.
What is redlining?
The name of a band that Professor Miller is in.
What is Nothin' Fancy?
A three-party arrangement of borrower, lender, and trustee is called this.
What is a deed of trust?
Name two states that customarily use deeds of trust instead of mortgages.
What are California and Texas? (others acceptable: Colorado, Virginia, Washington, etc.)
This type of insurance protects lenders against borrower default in conventional loans.
What is Private Mortgage Insurance (PMI)?
Unscrupulous lending practices that exploit uninformed consumers are called this.
What is predatory lending?
Substitution of a new contract or party for an old one in a mortgage agreement is called this.
What is novation?