Term
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Definition
a legal instrument (required by a lender for a loan) in which the borrower promises to pay a debt over a specified period of time.
The promissory note is typically NOT recorded. |
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Term
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Definition
a legal instrument whereby the mortgagor (borrower) pledges her property to the mortgagee (the lender) as security for a loan (lien).
The lender will provide a loan only if the borrower gives the lender a mortgage.
It is crucial for a morngagee to recored its mortgage in order to protect its interest in the event of foreclosure. Although it does NOT have to be recorded to be enforceable. |
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Term
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Definition
To pledge property as security or collateral for a debt.
Generally, there is no physical transfer of the pledged property to the lender, nor is the lender given title to the property, though he or she has the right to sell the pledged property in the case of default.
http://legal-dictionary.thefreedictionary.com/hypothecating |
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Term
| Loan to Value Ratio (LTV) |
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Definition
the ratio (%) between the sum of money lent in a mortgage agreement and the lender's valuation of the property involved.
ex.) $500K value, LTV 80% = $400K loan
20% Down Payment = $100K |
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Term
| Private Mortgage Insurance (PMI) |
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Definition
insurance charged to a borrower when the mortgage loan-to-value ratio is above 80% of the property's appraised value at loan closing.
PMI is charged because these borrowers are higher risk. |
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Term
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Definition
this theory used for financing real property dictates:
the mortgagee (lender) holds only a secured interest.
the mortgagor (borrower) is the legal owner of the land.
The mortgagee may not take possession before foreclosure. |
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Term
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Definition
this theory used for financing real property dictates:
a trustee (a neutral 3rd party) holds legal title until the loan has been satisfied or foreclosed
This instrument is a deed of trust or trust deed |
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