5.2 Loan Types + Clauses

A property with an existing loan is sold, the buyer takes ownership, but the lender's permission was not obtained. The lender:

• has no recourse against the seller or buyer

• can increase the interest rate

• may call the loan due on sale

• may exercise the defeasance clause.

A release clause is normally found in a(an):

• installment loan

• blanket loan

• budget loan

• participation loan

A seller who wants to help a buyer who has insufficient down payment might suggest a(an):

• budget mortgage

• open-end mortgage

• package mortgage

• purchase money mortgage

The provision in a mortgage in which the lender agrees not to evict a tenant if a property is acquired through a foreclosure is a:

• a non-disturbance clause

• personal guarantee clause

• subordination clause

• defeasance clause

If a real estate company wants to borrow money but does not want the company or the broker to be liable in the event of default, they should execute a(an):

• personal note

• recourse note

• nonrecourse note

• unsecure note

A loan that includes both real and personal property as collateral is a:

• package loan

• purchase money loan

• blanket loan

• budget loan

The clause in a first mortgage that permits a second mortgage to take priority is called a:

• subordination clause

• subrogation clause

• substitution clause

• release clause

A clause that permits the lender to call the entire loan balance due and payable under certain conditions like default is:

• acceleration

• acquisition

• alienation

• defeasance

A married couple has $80,000 in equity and a $24,000 mortgage on a home they are trying to sell. In order to buy a new home, the buyers need to obtain financing on the existing home to have funds for the down payment of the new home. The type of loan they would get on the existing home is a:

• blanket loan

• package loan

• purchase money loan

• bridge loan

The interest rate and monthly payment are subject to periodic changes in a(an):

• adjustable rate mortgage

• construction loan

• package mortgage

• wraparound mortgage