real estate finance - full book (500 pgs)

It will also give them time to start default actions

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Unformatted text preview: the 10th of the month. The late charge is a flat $4. Conventional Loans – Late charges on conventional loans vary. The State of California has a civil code provision that limits late charges on single–family, owner–occupied dwellings to 6% of the principal and interest payment. The borrower must be given a minimum of 10 days to make payment. DEFAULTS It is generally accepted that most lenders do not want to own the real estate that is pledged as collateral for their loans. However, defaults do occur, even though most lenders will expend every effort to qualify their borrowers in order to ensure the success of their loans. Some lenders inevitable will encounter defaults on their loan portfolios. A default is breaching of a term of a loan agreement. When borrower defaults, the lender will exercises the acceleration clause contained in all loan documents which allows the lender to declare the full amount of the debt immediately due and payable. If the borrower cannot meet his/her payment scheduled, the lender is empowered to foreclose against the collateral to recover any loss. Although legally any default in a loan contract enables the lender to accelerate the debt, most lenders will seek to avoid foreclosure and arrange a plan with the borrower that will protect the interests of both parties and avoid costly foreclosure procedure. DEFAULT IN MORTGAGE PAYMENT The most common form of default occurs when the payment of mortgage is not made upon due. Almost all loan contracts stipulate that the regular payment is due “on or before” a specified date, but most lenders will give an additional period, called grace period, usually from ten to fifteen days, in which to receive the regular payment. 14-38 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 14: THE LOAN PROCESSING Many loan contracts include a late payment charge of some specific amount that is applied if the borrower exceeds the grace p...
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