Chapter 10 - Defaults and Foreclosures

Question 1

A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. IF accepted by the mortgagee, this is a way for the mortgagor to avoid foreclosure.

Answer 1

default in lieu of foreclosure

Question 2

The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

Answer 2

default

Question 3

Court-ordered ruling that allows the lender to seek a portion of a borrower’s debt, not satisfied in the foreclosure sale, from the defaulted party’s general assets.

Answer 3

deficiency judgment

Question 4

Time granted before the sale of the property, allowing the borrower to make up late payments and charges; length varies by state.

Answer 4

equitable redemption period

Question 5

A legal process to oust a person from possession of real estate.

Answer 5

eviction

Question 6

An agreement by the lender for a full or partial waiver of payment for a set period of time.

Answer 6

forbearance

Question 7

A provision for a late charge if a monthly payment is not made within a certain period after the due date.

Answer 7

grace period

Question 8

A special hotline number that borrowers at risk of foreclosure can call for advice.

Answer 8

HOPE NOW

Question 9

Process by which a court orders the sale of property at public auction.

Answer 9

judgment decree

Question 10

Some states require the use of a mortgage instead of a deed of trust, which requires court action to foreclose.

Answer 10

judicial foreclosure

Question 11

A temporary suspension of payments due under a financing agreement to help a distressed borrower recover and avoid a default and foreclosure.

Answer 11

moratorium

Question 12

A nonjudicial type of foreclosure usually performed by exercising the trustee rights under a deed of trust.

Answer 12

power-of-sale method

Question 13

A lender can reconfigure the remaining balance into a new loan over a new term, resulting in a reduction in the monthly payment.

Answer 13

recast

Question 14

Allows delinquent property taxpayers to redeem their property for a period of six months after the tax sale has occurred.

Answer 14

statutory period of redemption

Question 15

Court establishes a specific time for the balance of the loan to be paid off; if not paid, full legal title is awarded to the lender. Rare today except in case of land contract.

Answer 15

strict foreclosure

Question 16

The right acquired by the title company to any remedy or damages available to the insured when a title company makes a payment to settle a claim covered by a policy.

Answer 16

subrogation

Question 17

A borrower owes more than the property is worth.

Answer 17

upside down or underwater

Question 18

Efforts made by a lender to avoid foreclosure, including payment waivers, refinancing, and loan modifications.

Answer 18

workouts