PENNSYLVANIA REAL ESTATE CORE REVIEWS
ANSWERS AND QUESTIONS SET A+
✔✔broker - ✔✔One who buys and sells for another for a commission. In real estate, a
broker must be properly licensed to perform certain activities specified in the real estate
license laws and collect compensation.
✔✔rules and regulations - ✔✔Real estate licensing authority orders that govern
licensees' activities; they usually have the same force and effect as statutory law.
✔✔State Real Estate Commission - ✔✔The agency established by the Pennsylvania
Real Estate Licensing and Registration Act to administer this law and supervise the
activities of licensees.
✔✔Real Estate Licensing and Registration Act - ✔✔The Pennsylvania law that protects
the public interest by governing real estate practices and the activities of licensees.
✔✔deficiency judgement - ✔✔A personal judgment levied against the borrower when a
foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.
✔✔equitable right of redemption - ✔✔The right of a defaulted property owner to recover
the property prior to its sale by paying the appropriate fees and charges.
✔✔deed in lieu of foreclosure - ✔✔A deed given by the mortgagor to the mortgagee
when the mortgagor is in default under the terms of the mortgage. This is a way for the
mortgagor to avoid foreclosure.
✔✔foreclosure - ✔✔A legal procedure whereby property used as security for a debt is
sold to satisfy the debt in the event of default in payment of the mortgage note or default
of other terms in the mortgage document. The foreclosure procedure brings the rights of
all parties to a conclusion and passes the title in the mortgaged property to either the
holder of the mortgage or a third party who may purchase the realty at the foreclosure
sale, free of all encumbrances affecting the property subsequent to the mortgage.
,✔✔alienation clause - ✔✔The clause in a mortgage that states that the balance of the
secured debt becomes immediately due and payable at the mortgagee's option if the
mortgagor sells the property. In effect, this clause prevents the mortgagor from
assigning the debt without the mortgagee's approval.
✔✔satisfaction of mortgage - ✔✔A document acknowledging the payment of a
mortgage debt
✔✔defeasance 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.
✔✔acceleration clause - ✔✔The clause in a mortgage or trust deed that can be
enforced to make the entire debt due immediately if the mortgagor defaults on an
installment payment or other covenant.
✔✔amortized loan - ✔✔A loan in which the principal as well as the interest is payable in
monthly or other periodic installments over the term of the loan.
✔✔straight loan (or term loan) - ✔✔A loan in which only interest is paid during the term
of the loan, with the entire principal amount due with the final interest payment.
✔✔prepayment penalty - ✔✔A charge imposed on a borrower who pays off the loan
principal early. This penalty compensates the lender for interest and other charges that
would otherwise be lost.
✔✔loan origination fee (or loan fee) - ✔✔A fee charged to the borrower by the lender for
making a mortgage loan. The fee is usually computed as a percentage of the loan
amount
✔✔usury - ✔✔Charging interest at a higher rate than the maximum rate established by
state law.
✔✔interest - ✔✔A charge made by a lender for the use of money.
✔✔trust deed (or deed of trust) - ✔✔An instrument used to create a mortgage lien by
which the borrower conveys title to a trustee, who holds it as security for the benefit of
the note holder (the lender); also called a deed of trust.
✔✔hypothecation - ✔✔The pledge of property as security for a loan.
✔✔mortgage - ✔✔A conditional transfer or pledge of real estate as security for the
payment of a debt. Also, the document creating a mortgage lien.
, ✔✔promissory note - ✔✔A financing instrument that states the terms of the underlying
obligation, is signed by its maker, and is negotiable (transferable to a third party).
✔✔lien theory - ✔✔Some states interpret a mortgage as being purely a lien on real
property. The mortgagee thus has no right of possession but must foreclose the lien and
sell the property if the mortgagor defaults.
✔✔title theory - ✔✔Some states interpret a mortgage to mean that the lender is the
owner of mortgaged land. Upon full payment of the mortgage debt the borrower
becomes the landowner.
✔✔mortgagee - ✔✔A lender in a mortgage loan transaction
✔✔mortgagor - ✔✔A borrower in a mortgage loan transaction
✔✔Freddie Mac - ✔✔A corporation established to purchase primarily conventional
mortgage loans in the secondary mortgage market.
✔✔Ginnie Mae - ✔✔A government agency that plays an important role in the secondary
mortgage market. It sells mortgage-backed securities that are backed by pools of FHA
and VA loans. Formerly known as the Government National Mortgage Association
(GNMA).
✔✔Fannie Mae - ✔✔A quasi-government agency established to purchase any kind of
mortgage loans in the secondary mortgage market from the primary lenders. Formerly
known as the Federal National Mortgage Association (FNMA).
✔✔secondary mortgage market - ✔✔A market for the purchase and sale of existing
mortgages, designed to provide greater liquidity for mortgages; also called the
secondary money market. Mortgages are first originated in the primary mortgage
market.
✔✔Federal Reserve System (the Fed) - ✔✔The country's central banking system,
which is responsible for the nation's monetary policy by regulating the supply of money
and interest rates.
✔✔primary mortgage market - ✔✔The mortgage market in which loans are originated
and consisting of lenders such as commercial banks, savings and loan associations,
and mutual savings banks.
✔✔specific performance - ✔✔A legal action to compel a party to carry out the terms of a
contract.
ANSWERS AND QUESTIONS SET A+
✔✔broker - ✔✔One who buys and sells for another for a commission. In real estate, a
broker must be properly licensed to perform certain activities specified in the real estate
license laws and collect compensation.
✔✔rules and regulations - ✔✔Real estate licensing authority orders that govern
licensees' activities; they usually have the same force and effect as statutory law.
✔✔State Real Estate Commission - ✔✔The agency established by the Pennsylvania
Real Estate Licensing and Registration Act to administer this law and supervise the
activities of licensees.
✔✔Real Estate Licensing and Registration Act - ✔✔The Pennsylvania law that protects
the public interest by governing real estate practices and the activities of licensees.
✔✔deficiency judgement - ✔✔A personal judgment levied against the borrower when a
foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.
✔✔equitable right of redemption - ✔✔The right of a defaulted property owner to recover
the property prior to its sale by paying the appropriate fees and charges.
✔✔deed in lieu of foreclosure - ✔✔A deed given by the mortgagor to the mortgagee
when the mortgagor is in default under the terms of the mortgage. This is a way for the
mortgagor to avoid foreclosure.
✔✔foreclosure - ✔✔A legal procedure whereby property used as security for a debt is
sold to satisfy the debt in the event of default in payment of the mortgage note or default
of other terms in the mortgage document. The foreclosure procedure brings the rights of
all parties to a conclusion and passes the title in the mortgaged property to either the
holder of the mortgage or a third party who may purchase the realty at the foreclosure
sale, free of all encumbrances affecting the property subsequent to the mortgage.
,✔✔alienation clause - ✔✔The clause in a mortgage that states that the balance of the
secured debt becomes immediately due and payable at the mortgagee's option if the
mortgagor sells the property. In effect, this clause prevents the mortgagor from
assigning the debt without the mortgagee's approval.
✔✔satisfaction of mortgage - ✔✔A document acknowledging the payment of a
mortgage debt
✔✔defeasance 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.
✔✔acceleration clause - ✔✔The clause in a mortgage or trust deed that can be
enforced to make the entire debt due immediately if the mortgagor defaults on an
installment payment or other covenant.
✔✔amortized loan - ✔✔A loan in which the principal as well as the interest is payable in
monthly or other periodic installments over the term of the loan.
✔✔straight loan (or term loan) - ✔✔A loan in which only interest is paid during the term
of the loan, with the entire principal amount due with the final interest payment.
✔✔prepayment penalty - ✔✔A charge imposed on a borrower who pays off the loan
principal early. This penalty compensates the lender for interest and other charges that
would otherwise be lost.
✔✔loan origination fee (or loan fee) - ✔✔A fee charged to the borrower by the lender for
making a mortgage loan. The fee is usually computed as a percentage of the loan
amount
✔✔usury - ✔✔Charging interest at a higher rate than the maximum rate established by
state law.
✔✔interest - ✔✔A charge made by a lender for the use of money.
✔✔trust deed (or deed of trust) - ✔✔An instrument used to create a mortgage lien by
which the borrower conveys title to a trustee, who holds it as security for the benefit of
the note holder (the lender); also called a deed of trust.
✔✔hypothecation - ✔✔The pledge of property as security for a loan.
✔✔mortgage - ✔✔A conditional transfer or pledge of real estate as security for the
payment of a debt. Also, the document creating a mortgage lien.
, ✔✔promissory note - ✔✔A financing instrument that states the terms of the underlying
obligation, is signed by its maker, and is negotiable (transferable to a third party).
✔✔lien theory - ✔✔Some states interpret a mortgage as being purely a lien on real
property. The mortgagee thus has no right of possession but must foreclose the lien and
sell the property if the mortgagor defaults.
✔✔title theory - ✔✔Some states interpret a mortgage to mean that the lender is the
owner of mortgaged land. Upon full payment of the mortgage debt the borrower
becomes the landowner.
✔✔mortgagee - ✔✔A lender in a mortgage loan transaction
✔✔mortgagor - ✔✔A borrower in a mortgage loan transaction
✔✔Freddie Mac - ✔✔A corporation established to purchase primarily conventional
mortgage loans in the secondary mortgage market.
✔✔Ginnie Mae - ✔✔A government agency that plays an important role in the secondary
mortgage market. It sells mortgage-backed securities that are backed by pools of FHA
and VA loans. Formerly known as the Government National Mortgage Association
(GNMA).
✔✔Fannie Mae - ✔✔A quasi-government agency established to purchase any kind of
mortgage loans in the secondary mortgage market from the primary lenders. Formerly
known as the Federal National Mortgage Association (FNMA).
✔✔secondary mortgage market - ✔✔A market for the purchase and sale of existing
mortgages, designed to provide greater liquidity for mortgages; also called the
secondary money market. Mortgages are first originated in the primary mortgage
market.
✔✔Federal Reserve System (the Fed) - ✔✔The country's central banking system,
which is responsible for the nation's monetary policy by regulating the supply of money
and interest rates.
✔✔primary mortgage market - ✔✔The mortgage market in which loans are originated
and consisting of lenders such as commercial banks, savings and loan associations,
and mutual savings banks.
✔✔specific performance - ✔✔A legal action to compel a party to carry out the terms of a
contract.
