CHAPTER NINE - d Interest Rate Usury and ARM(adjusted rate...

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Real Estate Chapter 9 CHAPTER NINE FINANCING THE REAL ESTATE I. Introduction A. Three types of security arrangements: 1. Secured Transaction (personal property) 2. Suretyship (Third party) 3. Mortgage (Real Property) B. This chapter focuses on mortgages: terms, the transaction, etc. II. Definitions A. Promissory Note - a promise, in writing, to pay a specified sum at a specified time. Identify debtor (borrow) and payee (bank) 1. Recourse Note - Borrower personally liable, banks likes this (Commercial property ONLY) 2. Nonrecourse Note - Provides no personal liability to borrower, borrower likes this (Commercial property ONLY) 3. Clauses that could be in the Promissory Note a. Acceleration Clause - In an event of default, entire amount is due b. Due on Sale Clause - Entire amount of mortgage due on transfer c. Prepayment Penalty - Penalty for bank’s lost of future interest given to borrower’s paying early (largely commercial)
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Unformatted text preview: d. Interest Rate- Usury and ARM (adjusted rate mortgage) B. Deed of Trust- an instrument serving the same function as a mortgage, where borrower places title to property in trust to secure repayment of a loan owed to the beneficiary of the trust. Mortgagor (borrower) and mortgagee (bank/lender) 1. Included in Deed of Trust a. Description of Collateral b. Require Borrower to maintain insurance c. Assignment of Rents (additional collateral), for commercial 2. Page 294 J. Duong 1 Real Estate Chapter 9 C. Loan Agreement 1. Only applies if it is a Commercial loan 2. Includes: a. Loan amount b. Purpose c. Security interest 3. Warranties 4. If you default, bank puts in “receiver” to deal with normal operations and run the commercial property, the owner loose rights to property even without foreclosure J. Duong 2...
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CHAPTER NINE - d Interest Rate Usury and ARM(adjusted rate...

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