You can expect to see ten questions on the end-of-course exam and ten questions on the state exam from this unit. This unit is heavily weighted on the state exam.

Learning Objectives

After successfully completing this unit, you will be able to
• distinguish between title theory and lien theory,
• describe the essential elements of the mortgage instrument and the note,
• describe the various features of a mortgage including down payment, loan-to-value ratio, equity, interest, loan servicing, escrow account, PITI, discount points, and loan origination fee,
• explain the use of discount points and calculate approximate yield on a loan,
• explain assignment of a mortgage and the purpose of an estoppel certificate,
• explain the foreclosure process and distinguish between judicial and nonjudicial foreclosure,
• describe the mortgagor’s and mortgagee’s rights in a foreclosure, and
• calculate loan-to-value ratio

Key Terms

acceleration clause	loan servicing
assumption	loan-to-value ratio
blanket mortgage	mortgage
buydown	morgagee
contract for deed (land contract)	mortgagor
defeasance clause	note
deed in lieu of foreclosure	novation agreement
discount points	partial release clause
due on sale clause	PITI
equity	prepayment clause
equity of redemption	prepayment penalty
escrow	receivership clause
estoppel certificate	right to reinstate
hypothecation	satisfaction of mortgage
interest	short sales
lien theory	subject to
lis pendens	subordination agreement
land development loans	take-out commitment
loan origination fee	title theory

Overview

In this unit, you’ll learn how Florida’s lien theory differs from title theory, which has a significant effect on the ownership of mortgaged property. The unit also covers discount points and shows how points affect the lenders’ yield on a loan. You’ll also learn how to calculate down payments and the loan-to-value ratio for a mortgage loan.