Chapter2Financing：notesandmortgages.ppt

Chapter 2  Financing: Notes and Mortgages  Contents Notes－Major Provisions The mortgage instrument Assumption of Mortgage Other financing sources Default Alternative to foreclosure: Workouts Foreclosure Bankruptcy I. Notes 借据/期票（相当于“抵押贷款合同”） Serves as an evidence of debt Major Provisions (I): Amount borrowed Interest rate Payment amount, number of payments Maturity date Application of payments: Default conditions and penalties Major Provisions (II) Early payments or Prepayment of outstanding balances 提前还款 A privilege not a right Generally for residential mortgage loans, highly restricted for income-producing properties Default and Acceleration Clause 加速还款条款 Lender may accelerate on the note by demanding outstanding balances be paid immediately in case of default Nonrecourse Clause 无追索权条款 Lender will not hold the borrower personally liable in case of default Major Provisions (III) Loan Assumability 贷款续供 Loan assumed by the new buyer to retain favorable financing terms previously negotiated “Due on sale” clause 转售即还条款 Assignment clause 抵押贷款转让条款 Lender can sell the note to another party without approval of the borrower Future Advances 追加贷款 For additional funds Release or extinguishment of lien by lender 解除或灭失抵押权 when the loan is fully repaid II. Mortgage Instrument Utilization of mortgage financing has been the most common method of financing the purchase of real estate, esp. residential properties. Real estate is generally regarded as excellent security for a loan, since the lender acquires a secured interest in the real estate with a mortgage. Two sources for the loan be repaid: The borrower’s repayment The property serves as a security Definition of a mortgage A mortgage is created in a transaction whereby one party pledges real property to another party as security for an obligation owed to that party. A promissory note 应付票据/借款合同 Mortgage is evidenced by a separated promissory note. A written promise to pay or repay a specified sum of mo