Unformatted text preview: rate at maturity. Thus balloon payment home loans are frequently seller carryback loans used during tight or high–interest, mortgage markets. A balloon loan provides the “balance” is all due and payable at a specified time.
Figure 8-1 Comparison of Trust Deed and Mortgage Trust Deed Three Parties Trustor: The borrower who signs the note and trust deed and conveys title to Mortgage Two Parties Mortgagor: The borrower who signs the note and retains the
8-35 Parties Dynasty School (www.dynastySchool.com) REAL ESTATE FINANCE
trustee. Remains equitable owner. Beneficiary The lender who holds note and trust deed. Trustee: (neutral third party) The receiver of “naked legal title” from trustor (authorization to sell in the event of default). He will reconvey title when the debt is paid, or sell through a trustee’s sale. Payment in Full Note and trust deed is sent to a trustee by beneficiary, who signs a “Request for Full Reconveyance.” A trustee signs and issues a reconveyance deed, which is recorded to clear the lien from the public records. A reconveyance deed does not convey title to a new buyer. Conveyed to trustee with trustor retaining possession of the property. Beneficiary can choose either a trustee’s sale (most expedient–requires about four months) or a foreclosure through the courts. If foreclosed through the courts, the court foreclosure rules apply. There is no time limit since trustee has title and power of sale. legal title. Has possession and use. Mortgagee: The lender who holds the note and mortgage contract. When loan is paid, mortgagee issues a “Certificate of Discharge,” which is recorded to clear the lien from the public records. Title Default Breach Retained by mortgagor together with possession. Can usually be foreclosed only through the judicial court foreclosure, unless the mortgage contains a power of sale clause. Foreclosure is barred if no action is taken within four years of delinquency. Mortgage is said to have “outlawed.” Sta...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10