Real Estate 306 Exam 2 Questions and
Answers
The action of taking possession of a mortgaged property when the mortgagor fails to
keep up their payments
✓ ~~~ Foreclosure
A claim or legal right against assets that are typically used as collateral to satisfy a
debt
✓ ~~~ Lien
a non-binding financing commitment
✓ ~~~ Term Sheet
A loan committee that consists of upper management of a lending institution with the
authority to approve loans that the initial loan officer does not have the authority to
approve
✓ ~~~ Credit Committee
An entity created for a specific purpose such as a LLC or LP
✓ ~~~ Special Purpose Entity (SPE)
Part of the organizational documents that identifies the relationship between
investors/owners/developer is a deal and spells out their percentage ownership
interests and any rights responsibilities and profit splits
, ✓ ~~~ Operating Agreement
A type of loan used to purchase real estate, where the borrower agrees to pay the
lender over time, typically in a series of regular payments that are divided into
principal and interest. The property serves as collateral
✓ ~~~ Mortgage
Also known as a mortage _____, or promissory ______, is a legal document that
binds the borrower to repay the mortgage within an agreed period and outlines the
terms of the loan
✓ ~~~ Note
Promise by a third-party entity, or individual, to pay or perform the obligations of the
borrower
✓ ~~~ Guaranty
The process of reducing or paying off the principal of the loan, typically in regular
installments
✓ ~~~ Amortization
The amount of time during which a borrower repays a loan if fully amortizing, or until
the outstanding loan balance, or balloon payment, is due if non-amortizing (i.e.
interest only) or partially amortizing
✓ ~~~ Term
The amount of capital borrowed (the return OF capital for the bank)
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