Unit 12 Key Terms Flashcards
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 obligation.
Acceleration clause
A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.
Adjustable-rate mortgage (ARM)
The clause in a mortgage or deed of trust stating that the balance of the secured debt becomes immediately due and payable at the lenders option if the property is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lenders approval.
Alienation clause
A loan in which the principal, as well as the interest, is payable in monthly or other periodic installments over the term of the loan.
Amortized loan
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.
Assumption of mortgage
A final payment of a mortgage loan that is considerably larger then the required payments because the loan amount was not fully amortized.
Balloon payment
1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. 2) A lender in a deed of trust loan transaction.
Beneficiary
A database of consumer claims history that allows insurance companies to access prior claims information in the underwriting and rating process.
Comprehensive Loss Underwriting Exchange (CLUE)
Information about an applicants gross income and total debt that lenders generally look at as a percentage to determine qualifications for a loan.
Debt to income (DTI)
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.
Deed in lieu of foreclosure
A document that a trustee uses to transfer the title back to the trustor (borrower) when the note is repaid.
Deed of reconveyance
An instrument that grants a trustee under a land trust full power to sell, mortgage, and subdivide a parcel of real estate. The beneficiary controls the trustee’s use of powers under the provisions of the trust agreement.
Deed of trust
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
Defeasance clause
A personal judgement levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full. In some states, this cannot be sought when the mortgage debt was used to purchase, and is secured by, the borrower’s principal residence.
Deficiency judgement
A unit of measurement used for various loan charges; one point equals 1% of the amount of the loan.
Discount points
The interest or value that an owner has in property over and above any indebtedness.
Equity
A legal procedure whereby property used as security for debt is sold to satisfy the debt in the event in default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure proceedings brings the rights of the 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.
Foreclosure
