real estate finance - full book (500 pgs)

To the borrowers these funds are like their own bank

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Unformatted text preview: For income property, a statement of all rental payments, tenant deposits, etc., and proration of rents. Structural pest control report and certificate of completion, if appropriate. Escrow assembles all the necessary documents, properly executed and notarized. Frequently, escrow officer prepares these documents as needed. Escrow also checks to see that all signers of the documents have capacity to sign. DOCUMENTS PREPARED BY LENDER After the loan is conditionally approved by the underwriter the following documents are prepared and require the borrower's signature: Original note and deed of trust Loan escrow instructions Any amendments to loan escrow instructions Dynasty School (www.dynastySchool.com) 14-29 REAL ESTATE FINANCE Certification amendment to loan escrow instructions Truth in lending disclosure form Insurance authorization and requirement chart Loan application for final signature The promissory note outlines the financial terms of the loan: amount of loan, interest rate, monthly payments, date of first payment, and so on. The promissory note also lists other conditions such as late charges, prepayment privileges and penalties, and acceleration clauses. A deed of trust is used to secure the repayment of the loan by creating a lien against the property. As explained in an earlier chapter, deeds of trust are used in California instead of mortgages, because of the ease with which a lender can foreclose in case of a borrower's default. A deed of trust shows only the loan amount, not the interest rate, monthly payments, and so on. The deed of trust recites that, if the debt it secures is not paid, the property may be sold to satisfy the debt. The deed of trust is recorded, while the promissory note is not. Thus, to maintain confidentiality between the lender and borrower, the deed of trust shows only the amount of the loan, not the repayment terms. In addition, the deed of trust contains many other detailed agreements between the borrower and lender. HUD EDUCATION MATERIALS HUD publishes a Hom...
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