| Acceleration
Clause - The clause in a mortgage or deed of trust that can be enforced
to make the entire debt due immediately if the borrower defaults on an
installment payment or other covenant.
Appreciation - The difference
between the increased value of the property and the original value.
Bankruptcy - An action filed
in a federal bankruptcy court that allows a creditor to reorganize or discharge
credit obligations due to insolvency. A property owner may halt foreclosure
action by filing bankruptcy. Bankruptcies remain on a credit record for
seven years and can severely limit a person's ability to borrow.
Contingency - A specified condition
that must be fulfilled before a contract becomes firm and binding.
Deed in lieu of foreclosure
- A process whereby the owner, with the approval of the lender, deeds the
property to the lender to avoid foreclosure. Lenders are generally reluctant
to accept a "deed in lieu" unless the title is free and clear of any other
encumbrances junior to theirs and the owners execute an estoppel affidavit
acknowledging that they are acting volitionally, with informed consent.
Due Diligence - Such a measure
of prudence, activity, or assiduity, as is properly to be expected from
a reasonable and prudent man under the particular circumstance.
Equity Right of Redemption
- The right to avoid foreclosure action by paying off the debts, interest,
and fees that have accumulated on the property.
Fair Market Value - The amount
at which property would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or sell and both having
reasonable knowledge of the relevant facts.
Foreclosure - A legal procedure
whereby property used as security for a debt is sold to satisfy the debt
in the event of default in payment of the mortgage note or default of other
terms in the mortgage document. The foreclosure procedure brings the rights
of all parties to a conclusion and passes the title in the mortgaged property
to either the holder of the mortgage or a third party who may purchase
the realty at the foreclosure sale, free of all encumbrances affecting
the property subsequent to the mortgage.
Hypothecate - When you use
something as security and still retain possession of it.
Instrument - A legal
written document.
Judicial
Foreclosure - A foreclosure process which is executed via a court action. |
B |
Junior
lien - A lien that is subordinate or junior to a senior lien.
Lis pendens
- A term meaning "legal action pending" that gives notice of an action
or proceeding affecting the title of the property.
Mechanic's
lien - A claim created by state statutes for the purpose of securing
priority of payment of the price or value of work performed and materials
furnished in erecting or repairing a building or other structure, and as
such, attaches to the land as well as buildings and improvements erected
thereon.
Mortgage
- An interest in land created by a written instrument providing security
for the performance of a duty or the payment of a debt.
Mortgagee
- The entity, usually a bank or financial institution, who lends money
to a borrower.
Mortgagor
- The person who borrows the money from a lender to purchase a property.
Notice of
Default (NOD) - A notice that is sent out by the lender when a mortgage
payment is late in an attempt to cure or make the loan current.
Notice of
Rescission - A legal document used when the defaulting party has cured
or corrected the default.
Power of
Sale - A clause commonly inserted in mortgages and deeds of trust that
are in default, giving the mortgagee (or trustee) the right and power to
advertise
and sell the mortgaged property at public auction to satisfy the debt.
Pre-Foreclosure
- Term used to discuss delinquent properties before they go to the foreclosure
auction.
Quit Claim
Deed - A deed of conveyance that releases any title, interest, or claim,
which the grantor may have in the premises.
Real Estate
Owned (REO) - Property acquired back by the lender after it has gone
to auction.
Redemption
Period - The time allotted to the mortgagor to reclaim his/her property
after it has been sold at an auction. Not all states have a redemption
period.
Second Mortgage
- A second loan placed upon a property in addition to an existing first
loan.
Sheriff's
Sale - The sale of a property to satisfy a debt or judgment. |
