Real Estate Financing and Lending
Instruments and Georgia practice
A loan has two documents: the promissory note (the promise to pay) and the security instrument. Georgia is a title-theory state and lenders use a deed to secure debt rather than a mortgage; title to the property passes to the lender until the debt is satisfied, and the borrower retains equitable title. Default is enforced by nonjudicial foreclosure under a power of sale: notice published in the county legal organ once weekly for four consecutive weeks, with the sale on the courthouse steps on the first Tuesday of the month. Georgia has no post-sale statutory right of redemption, though confirmation of the sale may be required when the lender seeks a deficiency.
Qualifying and loan types
Know LTV and CLTV, PITI, escrow or impound accounts, private mortgage insurance and its cancellation, and conventional versus FHA (MIP, lower down payment), VA (no monthly PMI but a funding fee, occupancy requirement), and USDA (rural, income limits). Understand fixed versus adjustable rate loans, rate caps, index and margin, buydowns, discount points versus origination fees, and the APR as the cost of credit expressed as a rate.
Federal law
The closing disclosure under TRID, RESPA Section 8 prohibitions on referral kickbacks and unearned fee splits, escrow account limitations, the right of a borrower to a copy of the appraisal, ECOA nondiscrimination, and HMDA data reporting are exam staples. In Georgia, mortgage brokers and lenders are licensed under the Georgia Residential Mortgage Act through the Department of Banking and Finance.
Traps and rule of thumb
RESPA does not ban all fees, only unearned ones and referral payments. Points paid to lower the rate are discount points; points paid for processing are origination fees. Example: a $250,000 purchase with 80% LTV gives a $200,000 loan and a $50,000 down payment; 2 discount points equal $4,000.