real estate finance - full book (500 pgs)

Up to 20 of the unpaid balance may be prepaid in any

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Unformatted text preview: l Estate, Notary, Nurse, Food Handlers, Tax and Securities 8: FINANCING INSTRUMENTS Dynasty School (www.dynastySchool.com) 8-31 REAL ESTATE FINANCE LOAN CLAUSES AND TERMS A number of special provisions may be included in trust deeds, mortgages, and promissory notes. Most are designed to protect the lender or the borrower, in various situations. PURCHASE MONEY This term refers to actual money or credit used to acquire the property made as security for the loan. Seller Financing – Any secured credit extended by a seller is “purchase money.” Refinancing – Refinancing of any kind is not “purchase money.” Transferability – Once a loan is “purchase money,” the sale of the note or assumption of the debt does not change its status. Limitations – No deficiency judgment on purchase money is allowed if the lien was created by: • • Credit extended by the seller. Financing used to purchase an owner–occupied dwelling of 4 units or less. Effect – The effect of these statutory limitations is to give limited liability to the home buyer. Thus, there is less risk to borrowing money for purchase of a home than for any other purpose. ACCELERATION CLAUSE An acceleration clause gives the lender the right to “call” all sums owed to the lender, immediately due and payable upon the happening of certain specified events. 8-32 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 8: FINANCING INSTRUMENTS DUE–ON–SALE CLAUSE An alienation clause (also known as due–on–sale clause) is a special kind of acceleration clause permitting the lender to call the loan if the borrower alienates (conveys or transfers) title. The clause must be stated specifically in the note as well as the trust deed to be enforceable. Benefits the lender. Federal Statute – The Garn–St. Germain Depository Institutions Act of 1982 preempted state prohibitions on the exercise of due–on–sale clauses by all lenders. Due–On–Sale Now Enforceable – On Oct...
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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.

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