Chapter 4 of 1510% of exam
Financing
Most buyers finance purchases with mortgage loans, so licensees must understand loan instruments and lending laws. Financing terms affect affordability and the flow of a transaction.
Loan Instruments and Clauses
A mortgage or deed of trust secures a promissory note against the property. Common clauses include acceleration (full balance due on default), alienation or due-on-sale (balance due on transfer), and defeasance (releasing the lien once paid). Foreclosure allows the lender to force a sale after default.
Federal Lending Laws
The Truth in Lending Act (Regulation Z) requires disclosure of the APR and finance charges. RESPA governs settlement-cost disclosures and prohibits kickbacks. The Equal Credit Opportunity Act prohibits discrimination in lending based on protected characteristics.