Foreclosure Advice -Foreclosure Glossary

Sacramento Short Sale Specialist Report:

Acces to the Web’s mst extinive Forecloure Glossary courtesy www.foreclosureradar.com
A —
Abstract of Title — A documented history of the title to a piece of real property, detailing the original grant and all subsequent conveyances, encumbrances and liens affecting the property, the results of which are reduced to a written summary and reviewed to prepare a title insurance commitment or binder subject to various conditions. An abstract of title can be a full abstract; an abstract of current owner; a date-down or bring-down, an update from a given date. The abstract will include a review of all documents associated with a real property.
Acceleration Clause — An advance of the due date on a debt established through a clause in a mortgage or deed of trust.
Actual Notice — A directly delivered notification to a party, serving as an indisputable notice, as opposed to a constructive notice.
Adjudicated Newspaper — Local print new resource, approved by the court, for the publication of legal notices.
Adjustable-Rate Mortgage (ARM) — A mortgage with an interest rate that is periodically adjusted based on a variety of indices.
Advance — Temporary compensation paid to a lean holder for a delinquency.
Affiant — A declarent, the person who swears to an affidavit.
Affidavit — a formal legal statement, signed by a declarent (affiant) and witnessed by a notary or authorized representative of the court.
Agreement of Sale — A written contract specifying the terms of a sale between buyer and seller.
Amortization — gradual repayment, decreasing or accounting for the principal and interest of a debt based on an established schedule.
Annual Percentage Rate (APR) — The described cost of a loan or other financing for a year.
Annuity — An annual, semi-annual, quarterly or other regular payment, often with a guaranteed minimum amount.
APN — See Assessor’s Parcel Number.
Appraisal — a professional evaluation process used to estimate the value of a property; appraisals typically include recent sales of comparable properties in an area. Valuation methods for appraisals include sales comparables, income and cost-basis analyses.
Appreciation — An increase in the value of real property or assets.
Arrears — A past due amount on a debt, which accrues from the date on the first missed payment.
Asbestos — A toxic substance once used to produce insulation, fireproofing and sound damping materials for buildings. Asbestos has been banned and is no longer used, due to its links to certain types of lung diseases, but many older homes may still contain asbestos.
Assessed Value — The monetary value placed on property, by the County Tax Assessor, for the purpose of taxation. Increases in assessed values may be limited by law.
Assessment Tax — Charges made against property to help pay for civic improvements and public services.
Assessor — A representative of the County who establishes the value of a property for purposes of taxation.
Assessor’s Parcel Number (APN) — A uniquely identifiable number assigned to each parcel of land by a County Tax assessor.
Asset — Tangible items of monetary value owned by a person or company including: real property, personal property, stocks, mutual funds, etc.
Assignee — In a transfer document, the party to whom the rights to a property, title or other interest are transferred.
Assignment — A document that effects the transfer of rights of a property, title or other interest from one party (assignor) to another (assignee).
Assignor — In a transfer document, the party from whom the rights to a property, title or other interests are transferred.
Assumable Mortgage — A mortgage loan that can be taken over by a buyer at the time of sale of the property. If the mortgage contains a due-on-sale clause, no assumption of the mortgage may occur without the lender?s consent, or the loan becomes due in full at the time of sale.
Assumption of Mortgage — The purchase of a mortgaged property where the buyer accepts (assumes) responsibility for the existing debt; lenders often charge an assumption fee for an assumption of mortgage.
Auction — A public proceeding in which properties that have been processed through Notice of Default and Notice of Trustee sale are made available for purchase by public bid.
Automated Underwriting — A streamlined, automated loan application underwriting process that provides lenders with recommendations for approval or manual underwriting.
Automatic Stay — A bankruptcy provision that halts any act, including foreclosure, which can be construed as an act against the interests or property of the debtor.
B —
Balance Sheet — A financial statement detailing the assets, liabilities, and net worth as of a specific date.
Balloon Mortgage — A mortgage which does not fully amortize over the term of the note and which becomes due at maturity. Often based on a 30-year amortization schedule, the unpaid balance becomes due in a lump sum payment at the end of a specific period (often 5 or 7 years).
Balloon Payment — The final, balance-due payment of a balloon mortgage, due a maturity of the loan.
Bank owned — Properties in which the highest bid at auction was the lender?s opening bid and which have now become property of the bank that placed the opening bid. Also known as REO, or Real Estate Owned.
Bankruptcy — A legal declaration of an individual or organization’s inability to pay their creditors. This legal declaration severely impacts a persons credit and their ability to borrow money. Protections, in the case of homeowner bankruptcy filings, place automatic stays on all debt collection actions, including foreclosure. Bankruptcy does not stop foreclosure, it does delay the sale of the property until the homeowner resolves the debt, or in most cases, the lender gets approval from the bankruptcy court to continue the sale (see Order Granting Motion for Relief From Stay). As a secured debt, the lender has the right to take the security (property) if the homeowner lacks the ability to pay the debt as agreed. Bankruptcy is only an effective tool against foreclosure if the homeowner will have sufficient income to pay their home loan and make up past due amounts once the bankruptcy plan is completed.
Before-tax Income — Income before taxes are deducted, also known as gross income.
Beneficiary (Bene) — The party benefiting from the provisions of a contract, the Lender.
Beneficiary Demand — specification of payment required by a beneficiary holding a deed of trust prior the authorization of a conveyance.
Beneficiary’s Request — a decision by a lender (beneficiary) to postpone the sale of a property, for any reason.
Beneficiary’s Statement — A statement of the remaining principal balance and other information about a loan.
Bid — An offer of payment for goods or services made in competition with other offers.
Binder Clause — A preliminary report issued by a title insurance company outlining the condition of title and the conditions under which a title insurance policy may be issued. Also called a preliminary certificate.
Bona fide — In good faith, true, actual, credentialed or without fraud.
Breach Letter — A notification letter detailing a breach of contract and the request for a remedy to the breach. See Notice of Intent.
Bridge Loan — A short-term loan, typically associated with properties for sale, secured using a borrower?s current property of which the proceeds can be applied to the building of or closing on a new property before the current property sale is complete.
Broker — A licensed party or firm acting as an agent between providers and users of products or services. See ?Mortgage Broker,? and ?Real Estate Broker.?
Building Code — Local regulations establishing minimum acceptable levels of safety, production standards and construction requirements for the construction and occupancy of buildings; designed to protect public health and general welfare as related to the construction and occupancy of structures.
Business Day — 9:00 a.m. to 5:00 pm, Monday through Friday, excluding various holidays. The business day is not an international standard.
Buy-Down — A lump-sum payment made to reduce the interest rate on a loan at the time the loan is made
Buyer’s Market — A market with more sellers than buyers.
C —
Cancelled — The status of an auction that has been called off through the reinstatement or payoff of the loan or the expiration of a postponement period.
Cap — The maximum amount the interest or mortgage payment of an adjustable- or variable-rate mortgage may increase. See also ?Interest Rate Cap.?
Capacity — The ability of a borrower to make mortgage payments. Capacity is determined by income, income stability (job history and security), assets, savings and the monthly income remaining after all debts and obligations are met.
Capitalization rate — ?Cap Rate.? Used to evaluate the income of a property, this is the measure of the ratio between net operating income (rent less repairs, utilities, vacancies and other operating expenses) divided by the original value of the property, typically expressed in a percentage.
Cash-out Refinance — Refinancing a mortgage beyond the amount required to repay an existing mortgage, subordinate liens and refinance costs and fees.
Cashier’s Check — Checks guaranteed by the bank which are usually treated as cash and cleared instantly, but are subject to conditions if lost, stolen or deemed otherwise fraudulent.
CC&Rs — Covenants, Conditions and Restrictions, the governing documents that define the operations and rights of a Homeowners Association.
Certificate of Deposit (CD) — A time-deposit by which an issuing bank promises to return the deposit plus accrued interest at a fixed interest rate after a specified time period.
Certificate of Eligibility — .S. Department of Veterans Affairs (VA) certificate confirming the eligibility of a veteran for a VA-guaranteed mortgage loan.
Chain of Title — Starting with the earliest existing and ending with the most recent, documents, the history of recorded documents transferring title to a real property as recorded in the county in which the property resides. Chain of title relies on record dates to determine chain order.
Chapter 11 — Business reorganization.
Chapter 12 — Farm reorganization.
Chapter 13 — Debt relief in which a debtor retains possession of his property while making payments to creditors under a court approved plan.
Chapter 7 — Liquidation, individual or business.
Clear Title — A title free of any liens, defects or encumbrances.
Closing — The completion of a loan transaction when mortgage documents are signed and recorded, funds disbursed, and property transferred. Also known as settlement or escrow.
Closing Agent — A person or entity responsible for the coordination of the various closing activities of a transaction including the preparation and recordation of documents and disbursement of funds. Title companies, escrow companies or attorneys typically conduct closing.
Closing Costs — Costs, excluding the price of the property, associated with the transfer of ownership in real estate transactions, including, but not limited to: loan origination fees, title examination and insurance, surveys, appraisals, attorney?s fees, and prepaid items, such as escrow deposits. Closing costs vary regionally and between lenders.
Closing Date — The date established to complete a loan transaction and finalize the sale of a property, coordinated between the buyer, seller, closing agent, and lender.
Closing Statement — A final, detailed accounting of the closing costs of a mortgage transaction including: sales price, down payment and total additional settlement costs required from the buyer and seller. Also known as HUD-1 Settlement Statement.
Clouded Title — Circumstances or conditions associated with a title that call into question the validity of property ownership, such as unreleased liens, release of interest documentation or absent satisfaction of mortgage documentation.
Co-borrower — Any additional borrower other than the first borrower whose name appears on the application and mortgage note and whose income and credit history are used in the qualification of the loan. All listed borrowers share jointly the obligation and liability for the note.
Code — a systematic collection of laws, rules or regulations that exhaustively comprises a complete system.
Collateral — In mortgage and deed of trust agreements, property pledged or provided as security for repayment of a loan. Real property security offers protection to a lender in the event of default, as a breach will constitute a forfeiture of the pledged security.
Collateral Estoppel — a common law doctrine which prevents a party involved in prior judgment from a lawsuit on a different cause of action from the re-litigation of those matters in a subsequent lawsuit.
Collection Service — An agency specializing in the pursuit and recovery of debts.
Commercial — Property whose primary use is in commercial activity (shops, offices, etc.) as opposed to industrial, residential or agricultural activities.
Commission — fee for or payments to a party for services rendered or products sold, often calculated as a percentage of the goods sold, such as the fee a real estate agent earns from the sale of a property.
Commitment Letter — A formal, binding offer from a lender explicitly detailing the terms of a mortgage agreement, including the amount of the mortgage, the interest rate, the repayment terms and time period for the loan.
Common Area — Amenities, portions of buildings or land owned and held in common by a planned unit development (PUD) or condominium project used, cared for and maintained, in common, by all unit owners. Common areas may include corridors, means of ingress and egress, recreational facilities and parking areas.
Common Law — Laws interpreted by the courts, which are based on historical precedents and customs; distinguished from statutory law (created through legislation).
Community Property — a property ownership regime, in common law jurisdictions, where property (excepting gifts and inheritances) acquired during a marriage is owned jointly by both spouses and is divided equally upon divorce, annulment or death.
Comparables (Comps) — An abbreviation for ?comparable properties?. A detailed comparison of similar properties used to determine the current value of a property being appraised.
Concession — An item or action given up or agreed to during the negotiation of a contract; carpet and paint allowances, home warranties or the coverage of closing costs are common concessions during the negotiation of the sale of a property.
Condemnation — See Eminent Domain
Condominium (Commercial/Residential) — Ownership in a commercial or residential property where individual units of a larger, multi-unit facility or complex are purchased rather than rented. Owners of condominium units own the units themselves and have the right, along with other owners, to utilize, as well as the obligation (through condominium association fees) to maintain, common areas but does not own common elements such as exterior walls, floors or ceilings nor structural systems beyond the unit itself.
Confirmation of Bankruptcy Plan — See Ratification of Bankruptcy Plan.
Conforming Loan — A loan that, through uniform mortgage documents and national standards, meets Government Sponsored Enterprise (GSE) guidelines.
Construction Loan — A loan for financing the cost of construction or improvements to a property, released to the builder at periodic phases of the construction project.
Constructive Notice — A legal presumption of notification to a party (and knowledge thereof) of an action without indisputable confirmation, as opposed to an actual notice
Contiguous — objects, such as parcels of land, which exist in continuous physical proximity or adjacency to one another.
Contingency — A clause or contractual condition that must be met before a contract becomes legally binding.
Contractor?s Lien — see Mechanic?s Lien.
Conventional Loan (Mortgage) — A conforming loan or a lender agreement not insured or guaranteed by the federal government or one of its agencies, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS).
Conversion Option — A provision of mortgages that permits a borrower to change from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice-versa at specified time after loan origination and/or after certain stipulations are met.
Convertible ARM — An adjustable-rate mortgage (ARM) that permits a borrower to change from an adjustable-rate-mortgage (ARM) to a fixed-rate mortgage at specified time after loan origination and/or after certain stipulations is met.
Convey — To transfer a title, mortgage, encumbrance or lien of a property from one party to another.
Conveyance — A document transferring a title, mortgage, encumbrance or lien of a property from one party to another.
Cooperative (Co-Op) Project — A residential or mixed-used development for which a corporation or trust holds title to the property, selling shares to buyers representative of the value of a single unit, who in turn receive a proprietary lease as evidence of their title.
Cost of Funds Index (COFI) — A regional average of interest expenses incurred by financial institutions used to determine interest rate changes on some variable- or adjustable-rate mortgages.
Counter-offer — In negotiations, an offer made in response to a previous offer, representing requested concessions or a differing price from the previous offer. Counterclaim ? In civil court proceedings, a claim presented by a defendant in a pending lawsuit against the plaintiff in opposition to the plaintiff’s claim, to reduce implications or amounts of said claim. Claims and counterclaims will be settled in a single suit, unless severed.
Covenants, Conditions, and Restrictions (CC&Rs) — The governing documents that define the operations and rights of a Homeowners? Association.
Cram down — A forced reduction in the amount of a secured claim, based on the value of the property at the time the bankruptcy plan is confirmed, which allows a debtor to avoid the unsecured portion of an under secured claim. Also known as Lien Stripping.
Credit — the granting of resources by one party to another without immediate payment, thereby creating debt or deferred payment.
Credit Bid — Used by a secured lender at auction to ensure that the collateral for sale is not sold for less than the face value of the debt it secures, even if the claim amount exceeds the amount of the value of the collateral.
Credit Bureau — A company that collects information from various sources and provides reports to institutions on individual consumers? borrowing and bill paying history.
Credit History — A record, maintained by a credit bureau, of an individual consumer or corporation?s debts and borrowing history used to determine credit worthiness.
Credit Line Mortgage — A mortgage or deed of trust that provides for additional future advances to a borrower.
Credit Report — Information provided by credit bureaus detailing the credit history of an individual consumer or corporation used to determine creditworthiness, typically requested by institutions considering an extension of credit to a consumer.
Credit Score — A numerical expression ranking a borrower?s credit worthiness at a given time. Based on a statistical analysis of a consumer?s credit files, lenders use credit scores to evaluate the potential risk of lending money and determine interest rates, and limits in relation to these scores.
Creditor — A party extending credit to another party, issuing a debt for which the second party is responsible.
Creditworthy — A borrower?s ability to qualify for lines of credit and repay debts.
Cross-claim — A claim, in a pending lawsuit, brought against a party on the same side of a suit; a claim by a plaintiff against a plaintiff or by a defendant against another defendant.
Cross-Collateral Loan — A loan in which a borrower secures a second loan using collateral from an existing loan.
Cure — the sufficient payment of existing default money to reinstate or pay off a loan currently in default.
D —
Date-Down — the execution date, as opposed to the recording date, of an official document.
Debt-to-Income Ratio (DIR) — Used by lenders to qualify a borrower?s loan, the percentage of gross monthly income allotted for monthly expenses (including housing, child support, etc.), installment debts, and payments on revolving debts, such as credit cards.
Declaration — See Affidavit.
Deed — A legal, recorded document or certificate that grants the right of ownership or title to real property.
Deed in Lieu (of Foreclosure) — The transfer of a property title from a property owner in default to the lender or beneficiary to satisfy the mortgage debt and avoid foreclosure. Commonly referred to as a voluntary conveyance.
Deed of Trust — A legal document, equivalent to a mortgage, used in some jurisdictions to transfer title of a property to a third party (trustee) to hold as security for the lender. The document establishes the trustee?s fiduciary responsibility to both the borrower (to hand over the deed if paid in full) and the lender (to foreclose in the event of default). Also known as Trustee?s Deed.
Default — Failure to fulfill an obligation or comply with conditions of an established contract, including missing expected payments. Defaults can be monetary or non-monetary.
Default Amount — the amount, as of default date, which a borrower is behind on their payment of a loan.
Default Judgment — A judgment rendered in favor of a plaintiff in a lawsuit, due to a defendant?s failure respond, enter a plea or otherwise provide a defense.
Defendant — a party being sued in court.
Deficiency Judgment — A judgment lien against a borrower allowing a lender to collect the balance of a debt when the sale of the property at foreclosure auction is insufficient to cover the mortgage. Judgments can only occur with recourse loans.
Delinquency — a condition of failure to meet a duty or obligation, as when a borrower fails to make scheduled payments on a loan.
Department of Housing & Urban Development (HUD) — A cabinet-level department of the U.S. Federal Government established in 1965 to create opportunities and execute policy associated with cities and affordable housing. Branches of HUD include the Federal Housing Administration (FHA), which insures loans to parties otherwise unable to qualify for mortgage financing.
Depreciation — A decrease in the value of real property or other assets due to changing market conditions or condition of the property.
Disclosure — the provision of all known documents and information concerning a property that might affect a property?s value or desirability.
Discount Point — A one-time fee paid by a borrower, usually at closing, to compensate the lender for the difference between the current market interest rate and the rate applied the borrower?s terms. A point is equal to one percent of the principal amount.
Dismissal with Prejudice — A judgment rendered in a case, based on its merits, barring the plaintiff from refilling another suit against the same defendant again. In a bankruptcy court, an order dismissing a bankruptcy case and prohibiting the debtor from filing another bankruptcy petition, without rescission or amendment, until after a specified time.
Docket — A given court’s calendar of cases and their current status.
Documentary Transfer Tax — A local tax imposed on the transfer of real property. Also known as Doc Stamps.
Down Payment — An initial, partial cash payment of the price of a property with the remaining balance covered by a loan.
Dragnet Clause — A mortgage loan provision in which multiple properties are pledged as collateral on a loan. A default on any of the pledged properties constitutes a default, and may trigger foreclosure, on all of the properties encompassed in the dragnet clause. Also known as a Spreader clause.
Due on Sale Clause — A provision in a mortgage or deed of trust that permits the lender to demand repayment, in full, of the remaining balance of a debt in the event the property securing said debt is sold.
E —
Earnest Money — In property negotiations, a deposit furnished by a buyer to demonstrate genuine intent in completing the purchase of a property. This deposit can, if the offer is accepted, be held by the seller?s representative and applied to the buyer?s portion of the remaining costs. Conversely, the earnest deposit will be returned to the buyer should the offer not be accepted or if certain agreed upon contingencies are not met. Deposit amounts can vary depending on regions and markets. Also called ?earnest payment? or ?good-faith deposit.?
Easement — The right establishing the use of, or access to, real property owned by another.
Eminent Domain — The inherent power of jurisdictions to seize private property without the owner?s consent, but with due monetary compensation, for public or civic use. Also called Condemnation.
Encroachment — An intrusion onto the property of another without right or permission.
Encumbrance — Any claim on any real property, such as a lien, mortgage, building code, easement, mechanic?s liens, etc. which limit the title of a property. Easements and zoning regulations are non-money encumbrances affecting the use of the land; liens, both voluntary and involuntary, are money encumbrances.
Endorsement — The guarantee of a loan in the event a borrower?s failure to pay.
Equitable Title — Title by which a beneficiary can benefit from real property, as opposed to legal title, which is held by the trustee and entails certain legal responsibility, to trustor.
Equity — The value of real property after all liens and liabilities have been accounted for.
Equity Line of Credit — A loan drawn against equity in any real property.
Escrow — The completion of a loan transaction when mortgage documents are signed and recorded, funds disbursed, and property transferred. Also known as settlement or closing.
Escrow Account — Assets or documents deposited in the care of a neutral third party to be delivered upon the fulfillment of certain conditions. Mortgage servicers establish escrow accounts on behalf of borrowers to pay taxes, insurance premiums, or other charges.
Escrow Analysis — An accounting of an escrow account by a mortgage servicer to determine a borrower?s monthly escrow payments, and determine whether surpluses or deficiencies exist.
Estate — An individual?s net worth established by the value of their total assets, including real property.
Estoppel — a legal consideration barring one individual from pursuing recourse of a second, if the recourse contradicts an established statement or action of the pursuing individual.
Eviction — A legal action and process to gain possession of real property, by the party entitled to possession of property, by the removal of another party from the property. Also known as Forcible Entry and Detainer (FED) or Unlawful Detainer.
Exception — items not covered by an insurance policy; an interest in a property that remains with the property after a transfer of title.
Exclusive Agency Listing — A listing agreement which allows an agent to list a property and guarantees a commission if the house sells through any real estate agent or company but also allows the owner to seek out their own buyers and not pay a commission. Typically includes a limited range of broker services to the owner.
Exclusive Right-to-Sell Listing — A listing agreement that gives the contracted broker the right to collect a commission if the property is sold by anyone, including the owner, during the term of the agreement. Typically includes the full range of real estate brokerage services.
Executor — A person named by the maker of a will to carry out the directions of the will including the distribution of property.
F —
Fair Credit Reporting Act (FCRA) — Federal laws which regulate the collection, dissemination and use of consumer credit information.
Fair Debt Collection Practices Act (FDCPA) — A federal statute of the Consumer Credit Protection Act which establishes guidelines under which debt collectors may conduct business; established to eliminate abusive practices in consumer debt collection, promote fair debt collection, define the rights of consumers involved with debt collection, and prescribe penalties and remedies for violations of the Act.
Fair Market Value (FMV) — the estimated value of a property based on what a willing buyer and willing seller would pay, based on all pertinent details and an assessment of the overall market conditions at the time of sale.
Fannie Mae — Federal National Mortgage Association.
Fannie Ma — eller/Servicer ? A lender Fannie Mae has approved for the origination and service of loans in adherence to Federal Housing Administration guidelines.
FED (Forcible Entry and Detainer) — See Eviction.
Federal Housing Administration (FHA) — A branch of the United States Office of Housing and Urban Development which provides mortgage insurance for single-family, multifamily, manufactured homes and hospital loans made by FHA-approved lenders. Established in 1934 to stabilize the housing market.
Federal National Mortgage Association (FNMA/Fannie Mae) — A government-sponsored enterprise (GSE), established in 1938 and chartered by Congress in 1968 to provide liquidity and stability to the U.S. housing and mortgage markets through investments in the secondary mortgage market. A private, chartered, shareholder company publicly traded on the New York Stock Exchange.
Fee Simple — The representation, under common law, of absolute ownership of real property within the limits of government powers of taxation, eminent domain, escheat, and police power.
FHA-Insured Loan — A loan insured by the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development (HUD) available in urban and rural areas for single family homes, for 2, 3, and 4-unit properties and condominiums. Down payment requirements are lower than for conventional loans, with interest rates generally at market rates. With FHA-insured mortgages, extra payments can be made toward the principal and the balance can be paid off at any time.
FHLMC (Federal Home Loan Mortgage Corp.) — A share?holder owned corporation, chartered by Congress in 1970, that supplies funds to mortgage lenders through the securitizing and investing in home mortgages. (Also called “Freddie Mac”)
Financial Institution — Intermediary agents of the capital and debt markets who provide financial services to clients and members. Banks, credit unions, asset management firms, stock brokers, etc.
Financing Statement — Document, standardized under the Uniform Commercial Code, filed with a lender that provides details of personal property taken as collateral to secure a loan. The document is filed with a designated public official with a time stamp, note of filing date and file number thus securing the lender’s claim to the assigned collateral.
First Mortgage — A legal document establishing the primacy of a lien against a property, and establishing the priority of the lien over all subsequent (junior) liens against the property except those imposed by law.
First Trust Deed Loan — Debt secured by real property which employs a deed of trust and grants the trustee the right to foreclosure on the property, on behalf of the lender, in the event of default.
First-Time Home Buyer — A party with no ownership interest in a principal residence during the three-year period ending on the date of purchase of a security property. Other qualifications for first-time home buyers include: single parents who have only owned a principal residence property with a former spouse while married; displaced homemakers who have only owned with a spouse; individuals only owning a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations; and individuals who have only owned a property found not in compliance with State, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.
Fixed-Period Adjustable-Rate Mortgage — Mortgages with an initial fixed-rate period, after which time the rate adjusts either upwards or downwards, based on the cap structure and the chosen index, annually or at a specified period for the remainder of the term. Also called a Hybrid Loan.
Fixe — ate Loan/Mortgage ? A mortgage loan with an interest rate that does not change during the term of the loan.
Flipping — the purchase of real property with the intent of reselling for profit in the shortest possible time.
Flood Certification Fee — An assessment fee charged by flood determination companies to identify properties located in designated flood zones, typically included in the closing costs on the sale of a property.
Flood Insurance — Insurance that compensates for physical property damage resulting from flooding, which is typically not covered under standard hazard insurance, and is required for properties situated in federally designated flood hazard zones.
FNMA (Federal National Mortgage Assn.) — A government-sponsored enterprise (GSE), established in 1938 and chartered by Congress in 1968 to provide liquidity and stability to the U.S. housing and mortgage markets through investments in the secondary mortgage market. A private, chartered, shareholder company publicly traded on the New York Stock Exchange.
Forbearance — An agreement (between a lender and borrower, in a foreclosure process) to refrain from or delay the enforcement of an action that is due. Also called a forbearance agreement.
Forced Sale — a civil action forcing a real property owner to sell a property in contention.
Forcible Entry and Detainer (FED) — See Eviction.
Foreclosure — A legal process through which a lender may sell a real property, pledged as security for a mortgage or deed of trust, at auction, to recover the value of the mortgage, when the borrower is found delinquent of mortgage payments or is otherwise in breach of an established loan contract.
Forfeiture — The loss of money, property, collateral, rights, etc., due to a breach of contract or non-compliance with a legal obligation.
Free and Clear — Ownership of real property free of any debt or obligation against it.
Friendly Foreclosure — Common term for Deed in Lieu of Foreclosure.
Front-end Ratio — See Housing Expense Ratio.
Fully Amortized Mortgage — A mortgage in which the monthly payments are scheduled to completely repay the obligation by the completion of the mortgage term.
Future Advances — The lending of additional funds on an already secured mortgage contract, without the execution of a new mortgage contract.
G —
General Contractor — The person hired to oversee a home improvement or construction project who handles all aspects of the project including scheduling workers, hiring specialized subcontractors (plumbers, electricians, carpenters, etc.) and ordering supplies.
General Lien — A lien affecting all real property of a borrower which serves as security for all debts to the lender.
Gift Letter — A letter included in a loan application verifying that a certain amount of money, typically for a down payment, was given as a gift to the homebuyer, without the requirement of repayment and that the donor is not involved with the sale of the property (i.e. seller, broker, real estate agent, loan officer, builder, etc.).
Good-Faith Estimate — A standard form provided by a mortgage lender or broker, as required by the Real Estate Settlement Procedures Act (RESPA), disclosing the estimated and itemized amount of fees and associated costs likely to be incurred in connection with a mortgage transaction including: closing costs, inspections, title insurance, taxes and other charges. Used to compare lender or broker quotes, this form must be provided within three business days of applying for a loan.
Government Mortgage — A mortgage loan insured by the Federal Housing Administration (FHA), or guaranteed by the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS), as opposed to a Conventional Mortgage.
Government National Mortgage Association (GNMA) — A government-owned corporation (popularly know as “Ginnie Mae”) within the Department of Housing and Urban Development (HUD) that provides guarantees of mortgage backed securities that are federally insured or guaranteed by other government agencies.
Grace Period — A loan or contract provision that allows a party to fulfill an obligation after a deadline has expired without incurring a penalty. During a grace period, no late fees are charged, and the late payment does not result in default or cancellation of the contract.
Graduated Payment Mortgage — A flexible-payment mortgage with negative amortization built into the structure, where payments level off after a specified period of increase.
Graduated Rate Loan — A loan in which the interest rate starts low and increases according to a predetermined schedule. Once payments have reached a specified level the rate becomes fixed for duration of the loan.
Grant Deed — A deed used in various states and jurisdictions to transfer the title of real property and establishing that the grantor has the right to convey said property and that the grantor of the deed has made full disclosure of all encumbrances on the property. If the grant deed is proven defective, the grantee may hold the grantor liable.
Grantee — The party in receipt of a grant.
Grantor — The party making a grant, often of the title to real property.
Gross Monthly Income — The total income earned each month before taxes and other deductions; may also include rental income, alimony, child support, public assistance payments, retirement benefits and self-employed income.
Gross Rent Multiplier — The ratio of total gross rent (before expenses such as property taxes, insurance, utilities, repairs or other expenses) to the purchase price of a property, or the number of years it would take for a property to pay for itself in gross rent. The lower ratio, the better the opportunity.
Ground Rent — Regular payments to the owner of a leasehold property for the use of the land; payments for a long-term lease on a piece of real property where the use may include the construction and habitation of a structure or agricultural production, etc.
Growin — quity Mortgage (GEM) ? A fixed rate mortgage in which the monthly payments increase over time, according to a set schedule, with the additional payments being applied to the principal on the loan, thus reducing the mortgage term.
H —
Hard-Money Loan — A typically short-term loan based on an exchange of cash rather than an extension of credit.
Hazard Insurance — Insurance coverage that compensates a policyholder for physical damages to property caused by fire or other natural disasters and occurrences.
Holder in Due Course — A party who purchases a negotiable instrument (a check, note, draft, etc.) for value in good faith, free of any claims to or any defense of a party to it, but is not the original payee or a beneficiary of the instrument.
Home Equity Conversion Mortgage (HECM) — loan option for current homeowners, 62 years of age or older, developed by the Federal Housing Administration (FHA) and designed to release equity in a property as one lump sum or a series of payments with the loan repayment obligation being deferred until the owner dies, the property is sold or the owner leaves. Also called a Reverse Mortgage.
Home Equity Line of Credit (HELOC) — A variable-rate loan secured through equity in a borrower?s property in which a lender agrees to lend a maximum percentage of the property equity for an agreed upon period to a borrower for use at the borrower?s discretion. Similar to a line of credit, the borrower is not granted a lump sum, but may borrow, during the established draw period, sums up to the total amount of the promised advance and is only required to repay the amount drawn plus interest on this amount.
Home Inspection — The inspection of a home, by a qualified professional, to evaluate systems and structures of the property to assess the overall condition and potential issues in need of repair.
Homeowner?s Insurance — A policy that protects a lender?s interests and compensates homeowners for damages sustained to a structure from fire, flood or other event; for liabilities from injuries to visitors and for damage or theft of personal property including appliances, furniture, clothing or equipment.
Homeowner?s Warranty (HOW) — Insurance offered by a seller to cover costs for certain home repairs, systems, fixtures or appliances for a specified period after the purchase of a home. Also a warranty offered by new home builders to original homeowners against major structural defects, with the builder being held financially responsible for repairs.
Homeowners? Association — A private organization comprised of homeowners residing within a particular area whose principal purpose is to enforce the Covenants, Conditions and Restrictions of residency in the area and to ensure the provision and maintenance of community amenities and services for the common benefit of the residents.
Homestead Exemption — Legislation established by state statute, designed to protect an individual?s principal dwelling from creditors, property tax actions and forced sale by the recorded declaration of homestead. Homestead exemptions are automatic in some states.
Housing Expense Ratio — Used by lenders to qualify prospective loan buyers, the percentage of gross monthly income allocated towards paying for actual or proposed household expenses including: principal, interest, taxes, insurance (PITI), and association dues. Often referred to as a Front-End Ratio ? typically 28 percent.
HUD — See Department of Housing & Urban Development.
HUD-1 Settlement Statement — See Closing Statement.
Hybrid Loan — See Fixed-period Adjustable-rate Mortgage.
I —
Improvements — Additions, changes or upgrades to real property, which increase the property?s value.
In Lieu of — Instead of; rather than. See Deed in Lieu of Foreclosure.
In personam — designates a legal proceeding against a specific party and enforceable wherever this specific person resides.
In rem — Designates a legal proceeding against a specific property; in rem actions for title determinations must be held in the county where the property is situated.
Income Property — Real property purchased, developed, owned or managed with the intention of producing income from rents.
Index — A number representative of a change in value, statistically rendered from an aggregate set of securities and used to compute interest rates for adjustable-rate mortgages. Commonly used indices include the Standard & Poor?s 500, the Down Jones Industrial Average and the Nasdaq Composite.
Inflation — An increase in the general level of prices for goods and services.
Initial Interest Rate — The introductory interest rate applied to an adjustable?rate mortgage (ARM), which is fixed for a period and then adjusts to reflect prevailing market rates. Known sometimes as the ?start rate? or ?teaser rate,? this rate can be below market rates.
Injunction — A writ, legal postponement or court order requiring a party to proceed, or restraining a party from, proceeding with a certain action. Bankruptcy filings trigger automatic injunctions (stays) from debt collection, prohibiting lenders from pursuing foreclosure, which is considered a collection action against the bankrupt borrower.
Inquiry — A request to a credit-reporting agency, by a lender or business, for a copy of an individual?s credit report typically made at a request for credit. Specific and/or numerous credit inquiries can harm an individual?s credit score.
Installment — A successive, fixed-schedule payment towards a debt.
Installment Debt — A loan issued with conditions of full repayment of interest and principal in accordance with a specified schedule of payments for a specified period of time.
Institutional Lenders — Intermediary agents of the capital and debt markets who provide financial services to clients and members. Commercial banks, credit unions, life insurance companies, etc., as opposed to private or individual lenders. Institutional lenders are highly regulated by federal and state agencies.
Instrument — A formal legal document.
Insurable Interest — Property, of which, when lost or damaged would cause a financial or other loss to a party in ownership.
Inter-Pleader — A legal action allowing a third party holding contested funds to transfer custody of disputed assets to the court to decide at the court?s discretion how the value of the assets are divided among disputing parties, thereby absolving the third party from any liability. Disputes over the division of a trustee’s sale overbid between junior lien-holders are often decided through a Bill of Inter-Pleader.
Inter-Pleader Action — Bill of Inter-pleader. See Inter-Pleader.
Interest — The fee paid for to borrow money.
Interest Accrual Rate — Usually expressed as an annual percentage, the percentage rate (fee for borrowing) at which the interest on a principal amount is added to a mortgage loan.
Interest Rate Cap — The maximum amount the interest or mortgage payment of an adjustable- (ARM) or variable-rate mortgage may increase, as specified in the mortgage note. Also known as Cap Rate or Interest Rate Ceiling.
Interest Rate Floor — The minimum interest rate for an adjustable- (ARM) or variable-rate mortgage, as specified in the mortgage note and despite market rate declines.
Investment Property — Property purchased with the intent to generate rental income, tax benefits, or profitable resale rather than as a primary residence.
Involuntary Lien — A lien attached to real property without the owner’s consent, such as special assessments, judgment liens or unpaid tax liens. In contrast to mortgage liens, which are voluntary.
J —
Joint Tenancy — Ownership of real property by more than one person at a given time.
Joint Venture — A cooperative entity comprised of two or more parties to undertake business activities together.
Journal Entry of Judgment — A final written record of the findings and decisions of a court proceeding.
Judgment Lien — an encumbrance on real property resulting from a court judgment.
Judicial Foreclosure — The sale of real property, which was held as security for a mortgage found in default, processed through formal court proceedings and resulting in the lender recovery of lost equity through the sale of the property at auction (referred to as a Sheriff?s Sale). As opposed to non-judicial foreclosure.
Jumbo Loan — A loan in excess of the industry-standard definition of a conforming loan. Jumbo loans are not eligible for purchase by FNMA or FHLMC.
Junior Bene Buyout — The discounted purchase of a junior beneficiary trust deed in light of an impending foreclosure on a senior trust deed.
Junior Lien — A voluntary or involuntary encumbrance recorded against real property that was recorded after, and is subordinate to, a primary encumbrance.
Junior Mortgage — A voluntary encumbrance recorded against real property that was recorded after, and is subordinate to a primary encumbrance; a second or third mortgage.
Jurisdiction — The authority granted to a legal body to address, pronounce and take action against a party within a defined area of responsibility.
L —
Laches — Invoked as a defense, asserting that an opposing party failed to act in a timely manner and as a result the opposing party has no entitlement to the original claim.
Land Contract — An agreement between the buyer and seller of real property in which the seller retains the property title and provides financing to purchase the property, while the buyer takes possession of the property and repays the loan under agreed upon terms.
Lease Option — Lease-Purchase Option. A contract arrangement in which a tenant in a property is granted the option to purchase a property from an owner at the end of a contractual period.
Legal Citation — Standard legal writing practice of crediting and referring to authoritative documents and sources.
Legal Description — A descriptive written delineation of real property identifying the individual lot, block, subdivision and reference to topographic map coordinates.
Lender — The name of the foreclosing lender that provided a loan.
Lenders Mortgage Insurance (LMI) — See Mortgage Insurance.
Liabilities — A party?s obligations or debts from previous or existing transactions.
Liability Insurance — Policy coverage that protects property owners against third-party claims of personal injury, property damage or negligence.
LIBOR-Index — London Interbank Office Rate reference rate, used to determine interest rate changes for adjustable- or variable-rate mortgages. Roughly equivalent to the U.S. Federal Funds rate and based on the interest rates banks borrow unsecured funds from the London Interbank Market.
Lien — A legal claim against real property to secure payment of a debt.
Lien Stripping — See Cram Down.
Lifetime Cap — A limit, for an adjustable?rate mortgage (ARM), on the amount that the interest rate can increase over the life of the mortgage.
Lifetime Payment Cap — A limit on the amount that payments can increase or decrease over the life of an adjustable-rate mortgage.
Liquid Asset — Any asset rapidly and readily able to be converted to cash with minimal loss in value.
Lis Pendens — Litigation (lawsuit) pending. A pending lawsuit placed on a court docket or the notice of pending litigation to secure a claim on real property through court action. Associated with the Judicial Foreclosure process.
Lis Pendens Notice — A publically recorded notice of a pending lawsuit involving real estate, advising concerned parties that the title to a real property is in question and potentially subject to judgment.
Listing Agreement — A contract between a seller and a listing real estate broker establishing conditions, commissions and exceptions and granting the broker the right to offer the property for sale under the established terms.
Loan Amount — The original amount of the loan in foreclosure.
Loan Origination — The loan process from the application phase to the disbursement of funds including application processing and underwriting and the closing of the loan. Loan servicing follows the disbursement of funds after origination.
Loan Origination Fees — See Origination Fees.
Loan-to-Value (LTV) — A numerical relationship between a loan amount and the appraised value of a real property expressed as a percentage.
Loan-To-Value (LTV) Ratio — A percentage, used in lender risk and loan assessment practices, which accounts for the relationship between a loan amount and the value of a property being offered as security for the loan (typically the lowest appraised or purchase price value). The higher the LTV ratio, the more risk the lender assumes and the more the borrower pays for the loan, if accepted; loans with higher LTV ratios may also require mortgage insurance.
Lock-In Rate — See Rate Lock.
Long Arm Statutes — State laws that grant courts jurisdiction over out-of-state residences by virtue of sufficient activity within the state.
Lot Book (Judgment Lien Report) — A record of liens and outstanding encumbrances against a real property; an Opinion of the Title regarding all outstanding and current loans.
Low-Down-Payment Feature — A mortgage feature, usually for fixed-rate mortgages, that enables buyers to purchase property with a low down payment, often as little as 3 percent.
M —
Margin — An amount, expressed as a percentage, added to the index of an adjustable-rate mortgage (ARM) to establish the interest after each adjustment; the purchase of securities utilizing other securities as collateral; a lender’s profit on a loan.
Market Value — See Fair Market Value (FMV).
Marketability — The status of a property title when considered for sale. Property titles free of defects, objectionable liens or encumbrances are considered marketable.
Maturity Date — The established date upon which the principal amount of a debt becomes due and payable or is scheduled to be paid in full.
Mechanic?s Lien — A claim against real property by a contractor or subcontractor for a property owner?s failure to make payment for improvement or repairs performed on a property. These liens can have priority over previously recorded liens, depending upon the date the work was started, the nature of the work performed and State law.
Memorandum of Agreement — A document, written between parties, clearly stating a cooperative objective to meet a common goal or work on an agreed upon project.
Merged Credit Report — A report on credit comprised of information from multiple credit bureaus.
Modification Agreement — A mutual agreement to change some aspect of a contract or mortgage loan including interest rates, loan terms or loan balance.
Mortgage — The transfer of an interest in real property in exchange for a debt. Also commonly referenced as the amount of money borrowed, with interest, to purchase real property.
Mortgage Broker — A licensed individual or firm that serves as an intermediary between borrowers and various lenders in the sale of mortgage loans. Mortgage brokers typically accept loan applications; provide state and local disclosures and process loan documents, which they submit to a lender. Mortgage brokers provide consumer assistance until the time a mortgage is obtained by the borrower.
Mortgage Insurance (MI) — Lenders Mortgage Insurance (LMI), Private Mortgage Insurance (PMI). Insurance policy payable to a lender as an offset to losses incurred through a mortgagor?s default on a loan and the inability to recover costs after proceeds from a foreclosure auction. Typically required on mortgages in which a down payment is less than 20 percent of the sale price or appraised value of real property.
Mortgage Insurance Premium (MIP) — A fee paid by a borrower, to an insuring agency such as the Federal Housing Administration (FHA) or a private mortgage insurance (PMI) company, for mortgage insurance. Premiums are paid once at closing and on a monthly basis until a threshold of approximately 80 percent loan-to-value is reached or for a set period.
Mortgage Lender — An institution or individual providing funds for a mortgage. Lenders review the credit and financial information of borrowers, appraise and evaluate the property offered as security for the loan and process the loan application through closing. Lenders may work with outside mortgage brokers in the early phases of loan origination.
Mortgage Life Insurance — Insurance policies established to pay off mortgage debts in the event of a borrower?s death while the loan is outstanding and the insurance is in force. Policies are designed to pay the outstanding debt and are structured to terminate upon final repayment of the mortgage.
Mortgage Rate — The interest rate (fee) charged or paid to borrow money for the purchase of real property.
Mortgagee — The institution or individual (typically a bank or financial institution) receiving a mortgage or accepting real property as security for a loan, a lender.
Mortgagor — The party granting a mortgage on real property or pledging real property as security for a debt, a borrower.
Motion Granting Relief from Stay — The pleading of a creditor involved in a bankruptcy case, requesting a court order that, when granted, will allow a lender to proceed with actions and pursue remedies to recover a debt.
Motion to Dismiss — A legal procedural device which requests that a decision be rendered by a judge on a case prior to the trial for which there may be no legal remedy.
Motion to Strike — A legal procedural device requesting that a presiding judge removes from an opposing party?s pleading any insufficient, redundant, immaterial, impertinent or scandalous matter or testimony.
Multifamily Mortgage — A mortgage loan for properties containing five or more dwellings.
Multifamily Properties — Properties supporting five or more dwellings.
Multiple Listing Service (MLS) — Private association database clearinghouses that permit real estate brokers and firms to exchange information about real estate properties and foster growth.
Mutual Agreement — the most common foreclosure postponement reason; it simply indicates that the homeowner and the lender have agreed to postpone the sale. This may be the result of a phone call where the homeowner has requested a little more time, or a more formal agreement like forbearance. Many homeowners do not realize when they enter a forbearance agreement that the foreclosure process continues and if they miss an agreed upon payment the property can be sold on the next scheduled sale date with no further notice.
Mutual Funds — A collective investment vehicle, managed by a professional investment firm that pools investor money to purchase an array of securities, allowing small investors access to a diversified portfolio.
N —
Negative Amortization — An increase in the balance of a loan due to the addition of unpaid interest to the loan balance because payments are less than the interest due.
Negotiable Instrument — An exchange document of unconditional transfer of money linked to possession of the document, payable on demand to bearer or order; promissory note or bill of exchange.
Net Monthly Income — Monthly income after the payment of taxes; the amount of ?take home? pay.
Net Worth — Total assets of a company or individual, including cash, minus total liabilities (debt), at a given point in time.
Neutral Market — A balanced real estate market with an equalized number of buyers and sellers and no negotiating advantage for either buyers or sellers.
Non-Judicial Foreclosure — The foreclosure of real property, processed without court supervision or action filing. As mandated by state legislation, the procedure involves notification to interested parties (by personal service and/or publications and postings) and the final sale of the property at auction. Unless petitioned by the mortgagor, the court provides no supervision of the process, however, non-judicial foreclosures can be accompanied by further civil actions (including deficiency proceedings) involving the court. Non-judicial foreclosures are supported by a Deed of Trust or a Power of Sale clause in mortgage contracts.
Non-Liquid Asset — Property or possessions which cannot easily be converted into cash. Examples include real estate, cars, boats or bonds.
Non-Recourse Loan — Loan agreements in which the lender has no legal right to collect the “deficiency” from the borrower following the sale of a property at auction. The lender can only use the proceeds from the sale of the collateral (property), which secured the loan in default, to satisfy the debt. Regardless of the difference between the debt owed and the money recovered from the sale, the borrower is not held liable.
Notary Public — A public officer licensed by the state and granted the power to serve the public in the administration of oaths and affirmations, the taking of affidavits and declarations, the witness and authentication of the execution of documents and the performance of other duties as defined by the jurisdiction in which they serve.
Note — The written, documented promise of a borrower to repay a specified sum under specified and agreed upon interest rates and conditions.
Note Rate — A percentage fee, specified on a promissory agreement, that a borrower agrees to pay for the use of money. See Annual Percentage Rate.
Notice of Default — Notification furnished to a borrower advising them that proper payments have not been made by a predetermined deadline on a loan secured against real property and that if the money owed, plus fees, is not paid in a given time, a foreclosure proceeding against the property will be initiated. This is the initial step in the foreclosure process.
Notice of Intent — A notification letter detailing a breach of contract and the request for a remedy to the breach. See Breach Letter.
Notice of Non-Responsibility — A recorded notice relieving an owner of real property of the obligation to pay for materials or improvements ordered by another party.
Notice of Publication — Publication in the newspaper of an official notification in order to process the serving of defendants who cannot be located. Notice of publication must follow specifically legislated guidelines as to format and process.
Notice of Trustee Sale — Legally required notification and description establishing the date of sale for a default property to be sold at auction. The officially recorded notice details the date, time, auction location and total debt due on the property for sale, establishing the final date of the foreclosure process. Also known as Notice of Sale.
Notice of Sale — See Notice of Trustee Sale.
Novation — An agreement between all parties to replace one obligation with another, or to substitutes one party to a contract with a new one, releasing the original party from the transferred contractual obligation.
O —
Off Calendar (Dropped) — the removal of an on-going foreclosure property from a trustee auction calendar.
Offer — A formal bid from a buyer to a seller for the purchase goods or services.
Official Record — Collection of all originally recorded legal documents (or official copies) filed in the county recorder’s office and establishing an enforceable fact.
Opening Bid — the amount at which bidding will start for the property. This amount may be discounted from the Sale Amount; typically it will be higher than the Sale Amount if the sale was postponed.
Operation of Law — fairly rare, but used when a court orders the postponement of the sale. The most likely reasons for a court to make such an order would be in cases where there is a plausible allegation of fraud against the lender, or there are questions of material fact around the right of the lender to foreclose.
Opinion of Title — See Lot Book and Abstract of Title.
Option — A contract written by a seller that conveys a right, but not the obligation, to buy a property at a later date.
Original Date — The original auction date for the Trustee Sale.
Original Principal Balance — he amount of money borrowed or the amount owed prior to any payments made, less interest and associated charges.
Origination Fee — Charges paid by a borrower to a lender or broker for the processing of a loan application, typically stated as points and equivalent to a percentage of the mortgage amount. One point equals approximately one percent of the mortgage amount. Also Loan Origination Fee.
Overbid — A bid that is higher than the minimum or starting bid.
Owner Carry Back — See Owner Financing.
Owner Financing — A transaction in which a property seller carries all or part of the financing of a buyer?s purchase of a property. Owner financing agreements must consider ?Due on Sale? clauses associated with outstanding loans on the property being sold. As monthly premiums for owner-financed mortgages are frequently interest-only, these arrangements often involve a balloon mortgage payment. Also known as Seller Take-Back or Owner Carry Back.
Owner-Occupied Property — Real property designated as a borrower?s primary residence.
P —
Paid off — Payment in full of all interest, principal and charges on a loan.
Parcel — An area of real or immovable property.
Partial Payment — A payment for less than the full amount expected by a creditor.
Partial Reconveyance — A mortgage or deed of trust provision specifying that a portion of a real property held as collateral is to be released from serving as collateral prior to the satisfaction of the mortgage obligation.
Payment Cap — Limits to the amount a monthly mortgage payment of an adjustable- or variable-rate mortgage may increase.
Payment Change Date — The date on which a new monthly payment amount takes effect on an adjustable-rate or graduated-payment mortgage, generally occurring in the month immediately following the adjustment date.
Perfected Title — Ownership of real property free of any debt or obligation against it. Also known as Free and Clear.
Personal Property — Any property that can be easily transported from one location to another, as distinguished from real property or buildings. Also called chattels or movables.
Petition — A formal, written request filed with a civil official or government body addressing some specific grievance and course of action.
PITI — See Principal, Interest, Taxes and Insurance.
PITI Reserves — A specific amount of cash that a borrower must have available, after making a down payment and paying all closing costs for the purchase of a home, equal to the amount a borrower would pay for principal, interest, taxes and insurance (PITI) for a predefined number of months.
Plaintiff — The party filing a lawsuit against another party.
Planned Unit Development (PUD) — A building development and regulatory process governing the design and grouping of varied and compatible land uses in a contained area or subdivision.
Plat (Plot or Survey) — A surveyor’s map, drawn to scale, showing the divisions of a piece of land, indicating property boundaries, easements and rights of way.
Pleadings — Formal written statements by the parties in a civil action, filed with the court, of their respective claims and defense; complaint and petition.
(PMI) Private Mortgage Insurance — See Mortgage Insurance.
Point — A percentage of the amount of a loan charged for the securing of the loan.
Portfolio Loan — A loan retained by a lender rather than being made available on the secondary mortgage market.
Posting — A procedural provision of notification by physically affixing a document (notice) on an official bulletin board or upon the property itself.
Postponement — The rescheduling of a sale of real property at auction; postponements can occur for a variety of reasons including: bankruptcy, mutual agreement, beneficiary request, trustee?s discretion or operation of law.
Power of Attorney — The legal, documented authorization of a person to act on another person?s behalf. Power of attorney can grant limited or complete authority and can be established for fixed periods of time.
Pre-Approval — A lender?s process for determining the potential credit-worthiness of a borrower and an indication to the borrower of the amount they may be eligible to borrow based on the borrower?s credit worthiness, income, assets and debts.
Pre-Approval Letter — A letter from a mortgage lender assuring that the income and credit of a party has been checked and that the party could qualify for a loan of a specified amount, establishing a buyer as viable and potentially able to finance the purchase of real property.
Pre-Qualification — An initial and cursory assessment by a lender to determine the loan amount a potential borrower may qualify to borrow, based on a debt to income ratio and not underwritten by the guidelines of the prequalifying institution.
Pre-Qualification Letter — Written documentation from a mortgage lender stating that an initial and cursory analysis of a borrower?s eligibility to borrow a specified amount has been conducted but not confirmed.
Predatory Lending — The practices, often deceptive, of lenders in which mortgage loans are made to individuals without the resources to repay, and loans which are structured to negate a borrower?s ability to seek recourse in the defense of repeated and systematic abuses.
Preemption — The right to purchase or take possession of something, particularly land or real property, before another party.
Preforeclosure — The period of time between a recorded Notice of Default and the sale of a property at auction.
Preliminary Certificate — See Binder Clause.
Preliminary Report (Prelim) — An initial report on real property containing information on documents recorded in association with the property that may impact title. Typically produced prior to the issuance of title insurance or the start of escrow, preliminary reports are essential for the buyer of a property but should not be considered and Abstract of Title, which details all recorded instruments associated with a real property and exceptions under which a title company will furnish title insurance.
Prepayment — Any amount applied to the principal balance of a loan prior to the scheduled due date.
Prepayment Penalty — A fee charged to borrowers for prepayment, or substantial payment to reduce the unpaid balance, of a loan prior to the scheduled due date.
Principal — An amount of money borrowed or still owed to a lender, not including the interest paid to borrow the money. The principal, unpaid or outstanding balance is the initial amount owed on a loan minus the amount already applied towards repayment of the initial balance.
Principal, Interest, Taxes and Insurance (PITI) — A borrower?s mortgage payment; the sum of monthly principal, interest, taxes and insurance.
Prior Sale Date — The previous date, if any, that a property was scheduled for sale at auction.
Priority Clause (Priority) — A clause specifying that one lien has prior claim over or is subject to claims of another lien.
Private Mortgage Insurance (PMI) — See Mortgage Insurance.
Private Offering — A sale of securities, in a corporation, not subject to the registration requirements of the Securities Act of 1933.
Probate — The process of legally establishing or certifying the validity of a will and by which a judicial authority can convert the title of a deceased person’s real property.
Promissory Note — A written contract detailing the specific terms by which a borrower agrees to repay a sum to a lender.
Proof of Claim — An signed legal document filed with in bankruptcy court by a creditor substantiating a claim owed the creditor as of the date of a debtor?s bankruptcy filing.
Property Appreciation — An increase in the value of real property or assets.
Property Profile — Documents furnished to a buyer containing details of the title and property.
Property Type — available property type search options include: Single Family, Condominium, Multi?Family, Other Res., Commercial, Industrial, Agricultural, Land, Other, Unknown.
PUD (Planned Unit Development) — A building development and regulatory process governing the design and grouping of varied and compatible land uses in a contained area or subdivision.
Purchase and Sale Agreement — A document detailing the specific terms and conditions of a transaction. In property transactions, a purchase and sale agreement is developed through a series of negotiations between buyer and seller and may include details regarding: property disclosures, final sale price, down payment and earnest money deposits, terms of financing, closing and occupancy dates, contingencies and timeframes for completion of the offer.
Purchase Money Deed of Trust — A deed of trust securing payment of all or a portion of the purchase price of real property; purchase money deeds of trust can be of any priority in a chain of title.
Purchase Money Loan (Mortgage) — A mortgage securing payment of all or a portion of the purchase price of real property; purchase money loans can be of any priority in a chain of title.
Q —
Qualifying — The registration process, prior to a Trustee?s Auction, where the identity of bidders and the amounts and forms of money to pay for successful bids are confirmed.
Qualifying Guidelines — The varying criteria used to determination a party?s loan eligibility.
Qualifying Ratios — Calculations used by lenders to determine a borrower?s loan eligibility, typically an analysis of debt and recurring monthly obligations to gross monthly income. Ratios can vary with market conditions and are influenced by other risk factors associated with a mortgage.
Quiet Title — A legal proceeding to establish a party?s title to real property by compelling any adverse claimants to establish a verifiable claim or to cease assertion of said claim.
Quitclaim Deed — A deed that transfers a grantor’s rights, interest and claims in real property without profession of validity of the rights or interests and no warranties of ownership.
R —
Rate Cap — Protections purchased by buyers of variable interest rate mortgages that limit the amount of interest a rate may increase during an adjustment period.
Rate Lock — A lender?s written guarantee for a specific interest rate on a loan if the loan closes within a specified timeframe. Also known as a Lock-in Rate.
Ratification of Bankruptcy Plan — A court order approved and enforced by a bankruptcy court confirming a debtor’s plan to pay the debts owed to creditors as of the date of the bankruptcy petition filing. Also known as Confirmation of Bankruptcy Plan.
Ratified Sales Contract — A contract signed by all parties establishing that both the buyer and the seller agree to the sale of the property at the specified terms. The sales contract may include contingencies for inspections, repairs, closing dates, mortgage terms and types, etc.
Real Estate Owned (REO) — Real property listed in the portfolio of a bank or lending institution that has reverted to the beneficiary institution because it was not sold at a trustee auction. Also see Bank Owned.
Real Estate Settlement Procedures Act (RESPA) — A U.S. Housing and Urban Development (HUD) consumer protection statute, designed to assist consumers in shopping for the lowest cost mortgages and to avoid costly or harmful loan offers, requiring that lenders and mortgage brokers provide standard disclosures at various times in a transaction and outlawing kickbacks that increase the cost of settlement services. Standard ?good faith estimates? provided by a mortgage lenders or brokers disclose the estimated and itemized amount of fees and associated costs likely to be incurred in connection with a mortgage transaction including: closing costs, inspections, title insurance, taxes and other charges; this estimate must be provided within three business days of applying for a loan.
Real Property — Land and land improvements ? including structures trees and minerals.
Reconveyance — A document filed with the county recorder releasing a lien on real property held as collateral for a loan, once the loan obligation has been met.
Reconveyed — The removal of a voluntary encumbrance on real property by the filing of a reconveyance after a loan obligation has been met, releasing the lender?s interest in the property.
Recorder — The public official or office charged with the maintenance and recording of official transaction records which affect real property in a designated area. Also called the ?County Clerk.?
Recording — The official process of filing of a lien or legal document with the county recorder?s office in the residing county. Recording dates determine priority of liens.
Recourse Loan — Loans in which, if a property held as collateral is sold at auction as a result of loan default, the borrower is liable for any deficiency in the balance, if the proceeds of the collateral sale are insufficient to fully pay the debt.
Redeem — Exercising the right to pay off a mortgage lien in full, plus costs, during a foreclosure proceeding, to release the property from the foreclosing encumbrance.
Redemption Period — the specified period of time during which a lien, plus interest and other fees may or must be repaid.
Redemption Right — The right of a borrower to recover mortgaged property lost in a foreclosure on repayment of the loan amount, in full plus costs, thereby releasing the lender?s claim on the property. IRS tax laws also permit the redemption of property used to secure a Federal tax lien.
Refinance — Procurement of a new mortgage, with all or a portion of the proceeds being used to satisfy an existing mortgage.
Rehabilitation Mortgage — A mortgage loan that covers the costs of repairing or improving real property; some rehabilitation mortgages allow for the costs of home purchases and rehabilitation to be rolled into a single loan.
Reinstate — The sufficient payment of existing default money, including fees and costs, to reinstate a loan currently in default.
Reinstatement Right — The right to pay the default amount of a loan rather than payment of the balance of the loan in full.
Relief from Stay — An order from a bankruptcy court order that, when granted, allows a lender to proceed with actions and pursue remedies to recover a debt.
Remaining Term — The amount of time or number of payments remaining until a loan is completely paid off.
Repayment Plan — An arrangement between a borrower and lender to pay down past due amounts with additional funds while maintaining regularly scheduled payments.
Request for Notice — A recorded document requiring that a trustee provide copies to the requestor of any Notice of Default or Notice of Trustee Sale concerning a specified property.
Res Judicata — A guiding principal of common law establishing that once a final judgment has been handed down on a case, the case is no longer subject to appeal or further claim. This doctrine also applies to judgments of previously identical cases and the issuance of identical judgments.
Rescission — The cancellation or annulment of a contract or transaction by operation of law or mutual consent. Borrowers retain certain rights to rescission on certain mortgage refinance and home equity transactions within three business days after closing, or for up to three years in certain instances.
Reservation price — In negotiations, the minimum price a seller is willing to accept and the maximum price a buyer is able to pay.
Reverse Mortgage — ee Home Equity Conversion Mortgage.
Revolving Debt — Debt without fixed payment, made at regular intervals and usually a percentage of the outstanding balance; credit cards are the most common form of revolving debt.
Right of First Refusal — An agreement requiring that the owner of a property grant another party the first opportunity to purchase or lease the property before offering it for sale or lease to others.
Rural Housing Service (RHS) — A U.S. Department of Agriculture (USDA) agency which operates a range of programs to: facilitate home ownership options to individuals; provide housing rehabilitation and preservation funding; provide rental assistance to tenants of multi-family housing complexes; provide farm labor housing; develop multi-family housing projects or apartment buildings for elderly and disabled assisted living; and develop community facilities, such as libraries, child care centers, schools, and municipal buildings for Indian groups, nonprofit organizations, communities and local governments. Known as Rural Development Housing and Community Facilities Programs.
S —
Sale-Leaseback — A financial transaction in which one party sells an asset and leases the asset back from the buyer for a specified period of time.
Second Mortgage — A mortgage with a lien position that is junior or subordinate to a first mortgage.
Secondary Mortgage Market — The sale of mortgages by lenders and the institutional trade (purchase and sale) of mortgage-backed securities.
Secured Loan — A loan backed by real property.
Securities — A negotiable instrument or certificate establishing the ownership of a share or shares in an organization or denotes a loan of money to an entity or government organization; commonly referred to as stocks (shares) and bonds (loans).
Security — Property pledged or provided as collateral for a loan.
Seller Tak — ack ?See Owner Financing.
Seller’s Market — A property market with more buyers than sellers.
Service Members Civil Relief Act — Federal legislation designed to ease the economic and legal burdens on military personnel which protects active duty military personnel from the enforcement of civilian debt, including, but not limited to: mortgage relief, termination of leases, eviction protection, stay of proceedings and the reopening of default judgments. Passed in December 2003, the Service Members Civil Relief Act restates and renames of the Soldiers and Sailors Relief Act of 1940.
Service of Process — The verifiable procedural delivery of writs, summonses or other court documents to the party to whom the documents ought to be delivered which enables the party respond to the proceedings associated with the documents.
Servicer — A firm that performs mortgage the servicing functions for lenders, including the collection of mortgage payments, payment of the borrower?s taxes and insurance management of borrower escrow accounts.
Servicing — Tasks lenders perform in the management and protection of mortgage investments, including the collection of payments, tax and insurance payments, escrow account management and delinquency mitigation.
Settlement — The completion of a loan transaction when mortgage documents are signed and recorded, funds disbursed, and property transferred. Also known as Closing or Escrow.
Settlement Statement — A document detailing all of the closing costs associated with a consumer mortgage transaction.
Sheriff?s Sale — In a judicial foreclosure proceeding, the public auction at which a property being foreclosed is offered for public bid.
Short Rate — The interest rate at which a party can borrow money for a short period of time.
Short Sale — The sale of a real property in which the proceeds of the sale fall short of the balanced owed on the loan(s) secured by the property. In a short sale, lenders agree to discount the loan balance and accept a short sale offer based on financial hardship of the mortgagor.
Simultaneous Priority — Two or more liens on real property, recorded at the same time against the same property that hold the same lien precedence.
Single Family Residential Townhouse — Attached multi-story housing unit intended for occupation by one family.
Single-Family Properties — Real property, classified under applicable state laws as intended for occupancy by one family, including: detached homes, townhouses, condominiums and manufactured homes affixed to permanent foundations.
Soft Second Loan — A second mortgage with payments deferred or forgiven until property resale.
Sold to Third — Indicates that a property was sold at auction to someone other than the bank that owned the note.
Soldiers and Sailors Relief Act of 1940 — Passed in December 2003, the Service Members Civil Relief Act restates and renames of the Soldiers and Sailors Relief Act of 1940. See Service Members Civil Relief Act.
Special Defense — Facts found to be consistent with allegations of a plaintiff complaint but establish that the plaintiff has no remediable cause of action; any material facts that would repute the establishment, validity or enforcement of a claim.
Spreader Clause — See Dragnet Clause.
Standing Mortgage — An interest-only loan with no amortization of the principal balance during the life of the loan; the interest is paid over the term of the loan and the principal balance becomes due in a balloon payment upon maturity.
Stay — A court order halting any act, including foreclosure that can be construed as an act against the interests or property of a party, the debtor, in a foreclosure.
Streamlining — The refinancing of an FHA insured loan with a minimum of documentation, underwriting and costs. Eligible mortgages must be current; the refinance must result in a lower monthly principal and interest rate payment, and cannot be used for equity cash-outs. ?No cost? streamlining constitutes no out-of-pocket expenses to the borrower but a higher interest rate; closing costs can be added to the principal balance if it is determined that sufficient equity exists.
Subdivision — The recognized division of a parcel of real property into smaller parcels.
Subject To — A purchase agreement in which a party agrees to sell a property to a buyer “subject to” existing financing without the assumption of any liability for existing liens. The buyer agrees to cure loans in default and to make regularly schedule loan payments until the property is refinanced or sold. A “subject to” agreement could violate a “due on sale” clause of the current owner?s loan.
Subordinate Financing — A voluntary encumbrance recorded after and with lower priority than a first mortgage.
Subordination — A change in the priority of liens on real property; a subordination agreement must be recorded.
Subordination Agreement — A document establishing the position of lien recorded at a later date of higher priority than a lien on real property recorded earlier; both parties with security in the property must agree to the subordination.
Summary Judgment — A determination by the court in a case without a full trial, used when there is no dispute of the material facts of the case and where the party is entitled to a judgment as a matter of law. Summary judgments may be used to simplify a case and may dispense with all or part of the claim or defense.
Summons — A legal document issued by a court or government agency notifying a party that a documented legal proceeding has been started against a party and announcing the date and time at which the party must appear in court or respond in writing to the court or opposing party.
Super Priority — In a chain of title, the establishment of the senior position of a lien despite the recording date of the lien; property tax liens will have super priority regardless tax due dates.
Survey — An accurate determination of the relative position of real property by a licensed professional, to establish or confirm property dimensions, relative terrestrial location and boundaries of ownership.
Sweat Equity — Labor, to build or improve a property, performed as part of a down payment for the purchase of a property.
T —
Tax Search — The process of determining taxes owed on real property.
Taxes and Insurance — Property taxes and insurance associated with real property. If the property is held as security for a loan, generally, a lender will manage tax and insurance payments through an escrow arrangement and pay these taxes from the escrow account when due. If tax and insurance expenses are not managed through an escrow account the homeowner is responsible for prompt payment of required funds.
Tenant — A person or group occupying, holding or possessing the real property of another for a period of time, usually for rent.
Termite Inspection — A visual inspection of a property, by a licensed professional, to determine the extent of, or potential for, the infestation of termites or other wood destroying organisms. Termite inspections are required in many parts of the country, prior to the sale of a property.
Third-Party Origination — A transaction in which a lender has another party to completely or partially originate, fund, underwrite, service or process a mortgage loan.
Title — A document establishing a party?s legal or equitable interest in a real property. Possession or occupancy of real property may accompany ownership, but is not sufficient to prove it unless by title or deed.
Title Insurance — Insurance, based on an Opinion of Title, protecting lenders and homeowners against financial damages due to legal problems or faults associated with a property title.
Title Plant — Index records of a title company showing current instruments of record affecting the title of real property.
Title Search — A detailed review and compilation of public records to ensure that a seller has the legal right to sell a real property and to identify any liens, claims or encumbrances against the property. Types of title search include: Lot Book, Current Owner Abstract of Title, Preliminary Reports, Trustee Sale Guarantee, Full Abstract of Title and Abstract of Title Date Down/Bring Down.
Trade Equity — Other real estate or assets given to a seller as part of a buyer?s down payment for a property being purchased.
Transfer Tax — A transaction fee charged on the passage of the title for a real property from one party to another, where there exists a legal requirement for the documented registration of the transfer.
Treasury Index — A fluctuating compilation of interest rates, based on the auction of U.S. Treasury bills and securities, commonly used to determine interest rate changes for certain adjustable-rate mortgages.
Trust Deed — See Deed of Trust.
Trustee — In a Deed of Trust loan agreement, the legal term referring to the third party who, on behalf of the beneficiary, holds the title to real property as security for the repayment of a loan. In the event of default, the trustee has the right to foreclose on the secured property; the trustee has a fiduciary responsibility to the both the borrower (to hand over the deed if paid in full) and the lender (to foreclose in the event of default).
Trustee Sale Number — Also known as TS #, this number is the trustee’s way of tracking the property.
Trustee’s Deed — See Deed of Trust.
Trustee’s Discretion — A decision by the trustee to postpone an auction sale. The most common reason is that they are unable to reach the lender for sale instructions.
Trustee’s Sale — The non-judicial sale of real property conducted by a trustee on behalf of a beneficiary as part of a foreclosure.
Trustee’s Sale Guarantee (TSG) — A title report for trustees, disclosing ownership, encumbrances and other pertinent details of the interests in a real property, specifying all parties who have recorded notification requests for any filings against a particular trust deed in foreclosure and lists of all the local publications that qualify to advertise the Notice of Trustee’s Sale. The TSG protects trustees and the beneficiaries from consequences resulting from title record errors associated with the foreclosure proceedings.
Trustor — A party who voluntarily establishes a deed of trust against their property.
Truth-In-Lending Act (TILA) — Federal laws designed to assure meaningful disclosure of credit or lease terms to enable ready consumer comparison of various credit or lease terms to protect the consumer against inaccurate and unfair credit billing, credit card and leasing practices. The Act limits balloon payments in consumer leasing, enables comparison of lease terms with credit terms where appropriate, and assures meaningful and accurate disclosures of lease and credit terms in advertisements.
Two- to Four-Family Property — A residential property with a single deed of ownership but consisting of living space (dwelling units) for two to four families. These properties can qualify for single-family residential mortgages.
Two-Step Mortgage — A long-term mortgage loan with an initial (typically below market) interest rate for the fixed, often 5 to 7 year, period of time and another (prevailing market) interest rate for the remainder of the loan.
U —
U.S. Department of Veterans Affairs (Veterans Affairs/VA) — A cabinet-level federal agency that provides patient care and federal benefits to veterans and their dependents.
Underbid — A bid at a foreclosure auction that is lower than the minimum bid.
Underwriting — The process used to assess overall risk and the eligibility of a consumer for a mortgage loan, involving an investigation and evaluation of a borrowers ability to repay a mortgage and the value of the property offered as security for the loan.
Underwriting Requirements — Assessment standards exercised by lenders to determine risks associated with lending to a particular borrower.
Uniform Commercial Code (UCC) — Uniform acts governing various commercial transactions primarily involving personal property in the 50 United States and various territories.
Uniform Consumer Credit (U-CCC) — Federal and state statutes designed to protect consumers who finance the purchase of goods or services on credit by mandating full disclosure of terms by creditors and by defining and limiting creditors? ability for recourse.
Uniform Residential Loan Application — The standard mortgage loan application used by all lenders, detailing the purpose of the loan, the property associated with the loan and the financial information of the borrower. Also called the HUD-1 or URL-1003.
Unlawful Detainer — See Eviction.
Unsecured Loan — A loan not secured by collateral.
Usury — Charging excessive interest on a loan.
Utilities — Organizations and property dedicated to the maintenance and provision of public infrastructure.
V —
VA Guaranteed Loan — U.S. Department of Veterans Affairs (VA) guarantee loans made by private lenders to eligible veterans for the purchase of homes for personal occupancy. The VA guarantees a portion of a loan to the lender protecting the lender against loss up to the amount guaranteed, allowing veterans to obtain more favorable financing terms.
VA-Specified Bid — An opening bid at the Trustee Sale of a property used to secure a U.S. Department of Veterans Affairs loan. The VA specifies the opening bid amount at the trustee?s sale of the property.
Variable-Rate Loan — See Adjustable?Rate Mortgage (ARM).
Venue — The place, county or geographical location, where a hearing and determination may occur, defined by the court with jurisdiction in a given area.
Vested Interest — the right to possession or some aspect of a property.
Vestee — A person named with a vested interest.
Vesting — The granting of a vested interest.
Voluntary Lien — An encumbrance attached to real property with the owner’s consent, such as a mortgage.
W —
Waiver — A voluntarily relinquishment of a known right or privilege.
Walk-Through — Examination of a property being purchased prior to the close of escrow.
Warranty Deed — Deed in which a grantor guarantees a clear title to real property with the right to sell the property.
Winning Bid — The highest bid amount of a property sold at auction; in the event of no higher bids at auction this amount will be the same as Opening Bids and the property will be sold back to the bank.
Writ of Assistance — A court order directing a law enforcement officer, the sheriff (or other local official) to enforce relief granted to a party by the court. A writ of assistance would be used to order a party to turn over a deed or right of ownership or to evict someone from a property after a foreclosure. Also known as Writ of Restitution or Writ of Possession.
Writ of Execution — An order issued by the court in order to satisfy a judgment obtained by a plaintiff, granting the authority to seize assets of the defendant.
Writ of Possession — See Writ of Execution.
Writ of Restitution — See Writ of Execution.
Z —
Zone — Designations of geographic areas for specified purposes, based on the correct placement of elements, population concentrations and level of required attention for human intervention.
Courtesy Foreclosureradar.com