REAL ESTATE FINANCE - CHAMPIONS UPDATED
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. Mortgage
Answer:
A pledge of real property as security for a debt.
Question:
2. Deed of Trust
Answer:
A three party loan instrument - borrower, lender and trustee.
Question:
3. Note, Promissory Note
Answer:
A personal promise to repay a debt.
Question:
4. Mortgagor
Answer:
Borrower under a mortgage
Question:
5. Mortgagee
Answer:
Lender under a mortgage
Question:
6. Beneficiary
Answer:
Lender under a deed of trust
Question:
7. Trustor
Answer:
Borrower under a deed of trust
Question:
8. Trustee
Answer:
A third party under a deed of trust who acts as an agent for the lender
Question:
9. Power of Sale
, Answer:
A clause in a deed of trust allowing non-judicial foreclosure
Question:
10. Non-judicial foreclosure
Answer:
Foreclosure that does not require court proceedings or a judgment of foreclosure
- the result of power of sale clause in a deed of trust
Question:
11. Hypothecation
Answer:
The action of pledging real property as security for a debt
Question:
12. Acceleration Clause
Answer:
A clause in a mortgage allowing the lender to declare the whole amount of the principal due and payable in
the event of default by the borrower.
Question:
13. Alienation Clause
Answer:
"Due on Sale" clause stating that the balance of the debt becomes due if the property is sold by the
mortgagor
Question:
14. Defeasance Clause
Answer:
A clause stating that the lien on the property is defeated when the debt is repaid
Question:
15. Escalation Clause
Answer:
A clause allowing the lender to raise the existing interest rate - although most often associated with an
Adjustable Rate Mortgage, it can be used to overcome an alienation clause
Question:
16. Prepayment Clause
Answer:
A clause stating that the borrower can pay the entire amount or the stated amount prior to the due date in
the note and whether there will be a penalty associated with that prepayment.
Question:
17. Subordination Clause
Answer:
A clause allowing a lender to move to or take a lower lien position
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. Mortgage
Answer:
A pledge of real property as security for a debt.
Question:
2. Deed of Trust
Answer:
A three party loan instrument - borrower, lender and trustee.
Question:
3. Note, Promissory Note
Answer:
A personal promise to repay a debt.
Question:
4. Mortgagor
Answer:
Borrower under a mortgage
Question:
5. Mortgagee
Answer:
Lender under a mortgage
Question:
6. Beneficiary
Answer:
Lender under a deed of trust
Question:
7. Trustor
Answer:
Borrower under a deed of trust
Question:
8. Trustee
Answer:
A third party under a deed of trust who acts as an agent for the lender
Question:
9. Power of Sale
, Answer:
A clause in a deed of trust allowing non-judicial foreclosure
Question:
10. Non-judicial foreclosure
Answer:
Foreclosure that does not require court proceedings or a judgment of foreclosure
- the result of power of sale clause in a deed of trust
Question:
11. Hypothecation
Answer:
The action of pledging real property as security for a debt
Question:
12. Acceleration Clause
Answer:
A clause in a mortgage allowing the lender to declare the whole amount of the principal due and payable in
the event of default by the borrower.
Question:
13. Alienation Clause
Answer:
"Due on Sale" clause stating that the balance of the debt becomes due if the property is sold by the
mortgagor
Question:
14. Defeasance Clause
Answer:
A clause stating that the lien on the property is defeated when the debt is repaid
Question:
15. Escalation Clause
Answer:
A clause allowing the lender to raise the existing interest rate - although most often associated with an
Adjustable Rate Mortgage, it can be used to overcome an alienation clause
Question:
16. Prepayment Clause
Answer:
A clause stating that the borrower can pay the entire amount or the stated amount prior to the due date in
the note and whether there will be a penalty associated with that prepayment.
Question:
17. Subordination Clause
Answer:
A clause allowing a lender to move to or take a lower lien position
