Real Estate Finance and Mortgages
Instruments and parties
Every loan has two documents: the promissory note (the promise to pay) and a security instrument. Utah lenders almost always use a deed of trust, with three parties: trustor (borrower), trustee (holds title for the beneficiary and conducts the sale), and beneficiary (lender). The borrower keeps possession but pledges title, which is hypothecation.
Key numbers and terms
Loan-to-value equals loan divided by value; equity is value minus debt. PITI is principal, interest, taxes, and insurance; escrow (impound) accounts collect taxes and insurance. Points are prepaid interest: one point is 1% of the loan amount, and discount points buy down the rate. The origination fee pays the lender for making the loan. The APR reflects the cost of credit including fees. Under TILA/RESPA/TRID, the borrower receives the Loan Estimate within three business days of application and the Closing Disclosure at least three business days before consummation. Private mortgage insurance is generally required above 80% LTV on conventional loans.
Loan types: conventional (conforming to Fannie/Freddie limits), FHA, VA, USDA; fixed-rate versus adjustable (initial rate, adjustment caps, index and margin); amortized, interest-only, balloon, negative amortization. A due-on-sale (alienation) clause blocks assumption without lender consent.
Default and foreclosure
Utah uses nonjudicial foreclosure under a deed of trust: a notice of default is recorded, a statutory waiting period must run, notice is published, and the trustee sells at public auction to the highest bidder. Alternatives include forbearance, modification, short sale, and deed in lieu. A deficiency judgment may follow a judicial foreclosure.
Worked example: a $400,000 price with 90% LTV means a $360,000 loan and a $40,000 down payment.