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Unformatted text preview: fferent prepayment penalty limitations on owner–occupied single–family dwellings, and may extend through 7 years. • • Up to 20% of the unpaid balance may be prepaid in any 12–month period. For amounts paid over this the borrower may be charged no more than six months' interest penalty. OR MORE CLAUSE
An or more clause specifies that the borrower may pay more than the required periodic payment specified in the note, including the right to pay off the entire balance at any time. A note containing an “or more” clause may or may not have a prepayment penalty. Benefits the borrower. 8-34 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 8: FINANCING INSTRUMENTS
PARTIAL RELEASE CLAUSE
A partial release clause provides for reconveyance of each lot by the beneficiary as each lot is sold, when the encumbrance covers two or more parcels. SUBORDINATION CLAUSE
A subordination clause is an agreement that the lender will relinquish priority to a subsequent lien. The clause is generally used to subordinate the loan to a construction loan to be obtained later. Benefits the borrower. POWER OF SALE CLAUSE
A power of sale clause enables nonjudicial sale of property possible in the event of default by the borrower. Properly written trust deeds always contain a power of sale. Mortgages generally must be foreclosed judicially, unless a power of sale clause has been specially incorporated. Benefits the lender. BALLOON PAYMENT CLAUSE
A balloon payment, by Civil Code definition is that more than double the amount of a regular installment is,. In a balloon mortgage say, if the amortization period is 15 years, but the entire unpaid balance is due at the end of say 5 or 7 years. The balloon payment mortgage, although used in financing commercial properties, has not met with huge success in financing homes because of the balloon feature. Unless the note calls for a rollover, there is no assurance that the loan will be rewritten with a new...
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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