Ch. 9 Flashcards
Balloon Clause
A clause within a mortgage that makes the final payment significantly larger than previous payments. If the loan is a second mortgage for an owner-occupied property, the owner may be able to request a six-month extension.
Deed IN Trust
An instrument used to place a property into a trust. The trustee’s deed could later be used to remove a property from a trust.
Deed OF Trust
A deed of trust is a security instrument used to create a mortgage lien that includes a power-of-sale clause that provides for a nonjudicial foreclosure.
Deficiency Judgment
When the funds from a judicial (court-ordered) mortgage foreclosure sale are insufficient to satisfy the debt, a judgment may be issued against the borrower for the deficiency. In MD, a deficiency judgement, if applicable, can be filed within 3 years following the foreclosure.
Maryland’s Protection of Homeowners in Foreclosure Act (PHIFA)
Applies where a homeowner’s mortgage is at least 60 days in default. The law sets forth the activities that constitute foreclosure-consulting services offered to a homeowner in that situation.
Power-of-Sale Clause
In a deed of trust, a borrower would pre-authorize the sale of property in the event the homeowner defaults. Because the document gives the lender the right to sell due to defaults, it allows for a nonjudicial foreclosure.
Satisfaction of Mortgage
The borrower is responsible for making sure the lender records a document acknowledging the final payment of a mortgage debt; can also be a release deed.
Short Sales
Where the sales price agreed upon is less than the seller owes on the property. Licensees are not allowed to negotiate directly with the seller’s lienholders; it would be outside of their expertise.
