Chapter 13: Mortgages. Key Terms

Question 1

Acceleration clause

Answer 1

A clause stating that in case of default, the whole debt is immediately payable.

Question 2

Alienation cause

Answer 2

A clause stating that if a property is sold, that it’s debt is immediately payable.

Question 3

Bond

Answer 3

A personal promise to repay money; similar to a note.

Question 4

Default

Answer 4

A failure to live up to any part of a mortgage agreement.

Question 5

Defeasance clause

Answer 5

A clause ensuring that after repayment, a lender has no claim on the property.

Question 6

Estoppel certificate

Answer 6

A borrowers statement of how much remains on mortgage debt.

Question 7

Foreclosure

Answer 7

to seize and sell property pledged for a debt

Question 8

Deficiency judgment

Answer 8

A court order that the borrower pay money lost by lender after foreclosure.

Question 9

Hypothecation

Answer 9

A pledging of property as security without surrendering the possession.

Question 10

Mortgage

Answer 10

A written pledge of real estate as security for a loan.

Question 11

Mortgagee

Answer 11

This is the lender. For example: banks and lending institutions sometimes investors.

Question 12

Mortgagors

Answer 12

This is considered the borrower.

Question 13

Note

Answer 13

A personal promise to repay a loan; similar to a bond.

Question 14

Reduction certificate

Answer 14

A lender statement of how much remains on the debt.

Question 15

Real estate owned or REO

Answer 15

A term used in the United States to describe a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction. Property acquired by lenders after a foreclosure.

Question 16

Satisfaction of mortgage

Answer 16

A lenders statement that debt has been repaid in full.

Question 17

Sheriffs deed

Answer 17

A document given to purchaser of foreclose property.

Question 18

Sheriff’s sale

Answer 18

A proceeding to auction foreclosed real estate.

Question 19

Short sale

Answer 19

A lender agrees to except sale proceeds, even if less than the debt.

Question 20

Subordination agreement

Answer 20

An arrangement by which mortgage holder gives up priority.

In a subordination agreement, a prior lienholder agrees that its lien will be subordinate (junior) to a subsequently recorded lien. Example: Let’s say you want to refinance your primary mortgage, which is in the amount of $300,000 with 7.5% interest, to get a lower interest rate, by doing this the initial loan is paid off and the refinance loan becomes second in line, the originator of the refinanced mortgage will ask the second lender if they would subordinate their position allowing the refinancee to take first place.

Question 21

Usary

Answer 21

The charging of a higher interest rate then is allowable by law.