UCLA ECON 103 - Chap002 (1) (4 pages)

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Chap002 (1)



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Chap002 (1)

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Pages:
4
School:
University of California, Los Angeles
Course:
Econ 103 - Introduction to Econometrics

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Chapter 02 Real Estate Financing Notes and Mortgages Solutions to Questions Chapter 2 Real Estate Financing Notes and Mortgages Question 2 1 Distinguish between a mortgage and a note A note admits the debt and generally makes the borrower personally liable for the obligation A mortgage is usually a separate document which pledges the designated property as security for the debt Question 2 2 What does it mean when a lender accelerates What is meant by forbearance The acceleration clause gives the lender the right or option to demand the loan balance owed if a default occurs Forbearance by the lender allows the borrower time to cure a deficiency without the lender giving up the right to foreclose at a future time Question 2 3 Can borrowers pay off part or all of loans anytime that they desire No In general prepayment is a privilege not a right In cases of residential consumer loans made by federally related lenders this option is usually provided to borrowers In commercial real estate loans it is not Question 2 4 What does non recourse financing mean The borrower is not personally liable on the note The lender may look only to the property security to satisfy the loan in the event of default Question 2 5 What does assignment mean and why would a lender want to assign a mortgage loan Assignment gives the lender the right to sell or exchange a mortgage loan to another party without the approval of the borrower Question 2 6 What is meant by a purchase money mortgage loan When could a loan not be a purchase money mortgage Purchase money means funds from the loan will be used to purchase a property It will not provide funds for other uses such as could be the case with a refinancing Question 2 7 What does default mean Does it occur only when borrowers fail to make scheduled loan payments Default means that the borrower has failed to 1 make scheduled loan payments or 2 violated on a provision in the note or mortgage Question 2 8 When might a borrower want to have another



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