Some junior loans include a lifting clause that allows a borrower to replace a senior loan without disturbing the status of the junior loan, but the amount of the new senior loan can't exceed the specific amount of the original senior loan outstanding at the time the second loan was established.

Furthermore, what is a lifting clause?

A provision in a second,third,or other junior mortgage that allows the liens ahead of it to be paid off and refinanced for the same or a lesser amount,without sacrificing their priority in lien positions.

Additionally, what is a wraparound clause? A wraparound mortgage is a type of junior loan which wraps or includes, the current note due on the property. The wraparound loan will consist of the balance of the original loan plus an amount to cover the new purchase price for the property. These mortgages are a form of secondary financing.

Secondly, what is an acceleration clause in a loan?

An accelerated clause is a term in a loan agreement that requires the borrower to pay off the loan immediately under certain conditions.

Which of the following clauses in a mortgage allows the lender to demand loan repayment if a borrower sells the property?

due-on-sale clause

Related Question Answers

What does a Habendum clause do?

Habendum Clauses in Real Estate

Usually, the habendum clause states the property is transferred without restrictions. This means the new owner has absolute ownership of the property upon satisfying their conditions (usually payment in full) and has the right to sell or bequeath the property to an heir and so on.

What is a testimonium clause?

Legal Definition of testimonium clause

: the authenticating clause of an instrument (as a deed) that typically begins “In witness whereof” and furnishes such information as when it was signed and before what witnesses.

What is the OR MORE clause in a loan?

An “or more” clause is a clause in a promissory note that grants the borrower the right to make additional payments or pay off the loan in its entirety at any time and without penalty.

What are the mortgage clauses?

What is a Mortgage Clause? A mortgagee clause is a property insurance provision granting special protection for a mortgagee (e.g., financial institution that has an interest in the property) named in the policy that, in effect, sets up a separate contract between the insurer and the mortgagee.

What is the difference between acceleration clause and alienation clause?

While an alienation clause is activated when you sell your home, an acceleration clause becomes effective when you fail to meet a requirement of your loan terms. The most common reason is a missed mortgage payment. Both clauses require you to pay back the full balance owed on your loan with accrued interest at once.

What is the difference between an acceleration clause and a due on sale clause?

The simplest demand feature is the acceleration clause. This clause stipulates that in the event you violate a contractual obligation, the lender has the right to “call” the loan – demand its payment in full immediately. The next type of “demand feature” is the due on sale clause.

Can a bank call your loan?

The bank can “call” the loan and demand full payment of the remainder of the loan immediately. While this practice is legal if disclosed in the terms of the loan, a bank likely will never call the loan unless you fail to meet the loan's terms. For example, one or more late payments might trigger a call on the loan.

When can a lender call a loan?

As mentioned above, a lender can theoretically call your loan due for just one missed payment, depending on the terms of your mortgage agreement. However, commonly, you have to miss two or three mortgage payments before a lender decides to take this step.

What type of loan allows the interest rate to fluctuate depending on money market conditions?

Variable rate loans are loans that have an interest rate that will fluctuate over time in line with prevailing interest rates. They generally have lower starting interest rates than fixed rate loans, but the interest rate and payment amounts can change over time. Sometimes they are also known as floating rate loans.

Can a mortgage company call your loan?

Yes, under specific circumstances a lender can demand repayment even if your loan service is current. On term and intermediate loans, as well as mortgages, there is usually language in the note that allows a lender to call the note if the lender deems himself insecure.

Who is most benefited by an acceleration clause in a mortgage?

lender

What is an insecurity clause?

An "insecurity clause" is a provision in a loan agreement or promissory note that allows a lender to accelerate payment of a debt, demand additional collateral, or halt future advances if the lender has good reason to believe that the debt cannot be paid in accordance with the terms of the agreement.

What is a prepayment penalty clause?

A prepayment penalty clause states that a penalty will be assessed if the borrower significantly pays down or pays off the mortgage, usually within the first five years of the loan.

What is an assumption clause?

An assumption clause is a provision in a mortgage contract that allows the seller of a home to pass responsibility for the existing mortgage to the buyer of the property. In other words, the new homeowner assumes the existing mortgage.

What is cross acceleration?

Cross Acceleration means any Debt of the Company or any of its Subsidiaries is cancelled, or declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).

Who is responsible for a wraparound loan?

Under a wrap, a seller accepts a secured promissory note from the buyer for the amount due on the underlying mortgage plus an amount up to the remaining purchase money balance. The new purchaser makes monthly payments to the seller, who is then responsible for making the payments to the underlying mortgagee(s).

What is unique about a subject to purchase arrangement?

When you purchase a property subject to, you are essentially buying the home subject to the existing mortgage — that's really all there is to it. That means the seller maintains the responsibility of paying off the loan, but the buyer has agreed to make mortgage payments on behalf of the original seller.

What is a wrapped note?

A wraparound transaction is a form of creative seller financing that leaves the original loan and lien in place when a property is sold. The buyer makes monthly payments to the seller on the wrap note and the seller in turn makes payments to the first-lien lender.

What is piggyback loan?

A “piggyback” second mortgage is a home equity loan or home equity line of credit (HELOC) that is made at the same time as your main mortgage. Its purpose is to allow borrowers with low down payment savings to borrow additional money in order to qualify for a main mortgage without paying for private mortgage insurance.

What is an alienation clause in a loan?

An alienation clause, also known as a due-on-sale clause, is a real estate agreement that requires a borrower to pay the remainder of their mortgage loan off immediately during the sale or transfer of a property title and before a new buyer can take ownership.

When a wraparound mortgage is used the existing loan?

A wrap-around loan takes into account the remaining balance on the seller's existing mortgage at its contracted mortgage rate and adds an incremental balance to arrive at the total purchase price. In a wrap-around loan, the seller's base rate of interest is based on the terms of the existing mortgage loan.

What is a defeasance clause?

A defeasance clause is a term within a mortgage contract that states the property's title (a fancy word for “ownership”) will be transferred to the borrower (mortgagor) when they satisfy payment conditions from the lender (mortgagee).

Are conventional mortgage loans assumable?

Which Mortgages Are Assumable? For most FHA and VA loans, a seller must obtain lender approval for an assumable mortgage. In most cases, conventional mortgages are not assumable.

When the terms of the mortgage loan are satisfied the mortgage?

Key Takeaways. A satisfaction of mortgage is a signed document confirming that the borrower has paid off the mortgage in full and that the mortgage is no longer a lien on the property.

Is the process of combining one or more loans into a single new loan?

Consolidation: The process of combining one or more Federal student loans into a single new loan.

What type of mortgage loan covers more than one piece of property?

A blanket mortgage is a single mortgage that covers more than one property. This type of loan enables investors to purchase multiple investment properties without securing financing for each property separately.

Which type of mortgage loans do not have a due on sale clause?

There are some kinds of mortgages where the contract does not have a “due on sale” clause. Those include VA, USDA, and FHA loans. These types of mortgages lack such clauses because they actually can be transferred from one individual to another.

What is a loan called that contains a lot release clause?

If a mortgagor includes a mortgage release clause in their mortgage contract then the lender is released from a specified claim after a certain portion of the mortgage has been paid. Generally a release clause could release the lien and property title making the remainder of the loan unsecured.

What is the lien theory of mortgages?

What is Lien Theory? Definition: In lien theory states banks or mortgage lenders never retain title to the property. Instead, the mortgage lender holds a lien against the property. In these states, the deed stays with the borrower, and the lender places a lien on the property using a mortgage.