New York · Chapter 10 of 26

Real Estate Finance

Mortgages and notes, borrower duties, foreclosure in New York, sales subject to or assuming a mortgage, loan types, FHA/VA/SONYMA, the secondary market, Truth in Lending, PMI, underwriting and predatory lending.

45-minute read · Built for the Salesperson Exam

note/bond and mortgagelien theoryjudicial foreclosuredeficiency judgmentacceleration and due-on-sale clausessubject to vs. assumptionfixed and adjustable ratesballoon, blanket, wraparound, bridge, reverse mortgagesFHA, VA, RHS, SONYMAFannie Mae, Freddie Mac, Ginnie MaeRegulation Zright of rescissionPMILTV and qualifying ratiosdiscount pointspredatory lendingusury

The Note and the Mortgage

A mortgage loan uses two documents. The note (called a bond in older New York practice) is the borrower's personal promise to repay; the mortgage pledges the real property as security for the note and creates a lien. The borrower is the mortgagor and the lender is the mortgagee. New York is a lien theory state: the borrower keeps title and all the usual rights of ownership, and the lender has a lien it can enforce only through foreclosure. Monthly payments often cover principal, interest, taxes and insurance (PITI), with taxes and insurance held by the lender in an escrow account. The mortgage is recorded to protect the lender's priority, and when the loan is paid off the lender must deliver a satisfaction of mortgage for recording.

N.Y. Real Prop. Law §275

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