Vocabulary for Foreclosure Flashcards
a debt that is not paid
Default
lender agrees to accept keys and deed in lieu of foreclosure; allows time to repay the lender; can occur in either mortgage or deed of trust foreclosures; friendly foreclosure
Deed in Lieu of Foreclosure
lender allows borrower to hold off payment until they can make the payment; might be used if someone just lost their job and is looking for another; can occur in either foreclosure types
Moratorium or forebearance
a soldier cannot be foreclosed upon while being deployed; can occur in both mortgage and deed of trust foreclosures
Soldiers and Sailor’s Act
the lender’s right to call the entire loan all due and payable; the minute you are late on a payment, you owe everything at once and this notice is given
Acceleration
a deed in lieu of foreclosure is provided, bankruptcy is filed or the property is sold and proceeds pay off the debt
Ways to stop acceleration
a lawsuit is filed in court within 90 days of notice of acceleration
Court Foreclosure Action
the waiting period between filing suit and a court date
Equitable period of redemption
once there is a judgment, this is issued authorizing a sheriff’s sale
Writ of Execution
once sold at auction, the purchaser receives this and i now the lien holder but not the owner
Certificate of Sale
a 6 month period mandated by law where mortgagor can attempt to redeem the property with a lump sum payment; during this time mortgagor may live in the property
Statutory Period of Redemption
a 30 day period where the mortgagor never lives on the property; if tis happens, the statutory period of redemption begins again
Abandonment
a deed that is issued after the statutory period of redemption is completed and redemption is not made
Sheriff’s deed
extra money after the loan, interest, taxes and attachments are paid
Excess Monies
if this occurs, a lender can go after anything in order to recoup its losses (only in certain circumstances) and not on single family residential or duplexes, or properties under 2.5 acres
Deficiency or Lender’s Loss
non-judicial foreclosure
Deed of Trust Foreclosure
judicial foreclosure
Mortgage Foreclosure
following default on a loan, this notice is provided to the trustee that a default has occurred and to begin foreclosure proceedings
Beneficiary’s Notice
the trustee initiates foreclosure proceedings under this clause of the deed of trust
Power of Sale
the trustee gives constructive notice by signing and recording this notice
Notice of Sale
the period between recording the default and the trustee sale, this 90 day period begins where the trustor can get the debt paid; constructive notice and actual notice must be given and the trustees sale can then occur after 90 days
90- Day Reinstatement Period
property is auctioned off to the highest bidder who is awarded the trustee’s deed and instant ownership; all cash must be paid by 5:00 the following day
Trustee’s Sale
seller “takes bac” the note or part of the note for part of the purchase price
Carryback
vendor (seller) extends credit to vendee, permitting buyer to make normal down payment and pay the balance in installments; buyer (vendee) has possession an equitable title ($ they put in and future interest) while seller has legal title; AKA Land Contract
Agreement for Sale AKA Land Contract
a mortgage given by a buyer (mortgagor) as part of the consideration for the price; usually carried by the seller; fills a gap between down payment and new first mortgage or assumable mortgage (PMM); mortgagor (buyer) holds title.
Purchase Money Mortgage
trustor (buyer) conveys legal title to trustee (3rd party) who holds it as security for beneficiary (seller)
Trust Deed or Deed of Trust
a lender that prefers short term customer or construction loans
Commercial Bank
a short term loan based on draws during the construction process
Construction Loan
real estate loans that are not insured by a governmental agency
Conventional Loan
a loan charge in addition to interest that increases the Lender’s yield
Discount Points
appraising net present value based on expected future income (in secondary mortgage market)
Discounting
like signing over a check, it is a signing over of a lien to a 3rd party (secondary markets);used in assignment of a loan
Endorsement
a document used to verify terms and balances of existing leases or loans; certification by the borrower of amount owed and interest rate on a loan
Estoppel Certificate
insures deposits for the depositor up to a certain dollar amount
FDIC (Federal Deposit Insurance Corporation)
purchases paper in the secondary market from primary lenders
FNMA (Fanny Mae) Federal National Mortgage Association
insured the deposits of Savings and Loans until recently
FHLB (Federal home Loan Bank)
determines how much money is in the system and what the discount rate is
FRB Federal Reserve Board
an action taken by which property used as security is sold to pay the debt
Foreclosure
a document given to the winner of a tax lien
Certificate of Purchase
the legal right of the lender through court action to collect from a borrower the remaining debt still owed after foreclosure
Deficiency or Deficiency Judgment
in trust deed foreclosure, it is the type of notice required where the trustees notice to sell is recorded and published in a newspaper
Constructive Notice
a copy of the trustees notice is delivered to the borrower (trustor) by egistered mail or by putting notice on door
Actual Notice
beneficiary (lender) sends to trustee a notice to “wake up” and begin foreclosure proceedings
Beneficiary’s Notice to Trustee
contract where seller finances buyer’s purchases of realty and retains legal title; vendee has equitable title; also know as Agreement for Sale
Land Contract AKA Agreement for Sale
a clause in the deed of trust authorizing sale of the property by the trustee when in default
Power of Sale
occurs in mortgages and not in deed of trust foreclosure
Judicial Procedure
the party who is holding a note for value and has the protection of law for its enforcement; an entity or person who buys “bad paper” eg Bank of America
Holder in Due Course
rent paid for the use of money
Interest
the calculations of all financing charges pertaining to a loan, expressed as an annual rate
Annual Percentage Rate (APR)
interest paid on interest
Compound Interest
interest rate the court assigns to those documents that have no specified interest rate
Legal Rate
minimum interest rate charged by commercial banks to their strongest clients; factors for fluctuation are the demand for new loans and decisions by FRB to increase or decrease money supply
Prime Rate
interest that is computed only on principal balance
Simple Interest Rate
a short term loan sometimes called a gap or bridge loan
Interim Financing
mutual fund that trades in short term debt
Primary Money Market
lenders who supply funds to borrowers directly
Primary Mortgage Market
the entities that are sold the “paper” on loans; this creates funds for additional mortgages
Secondary Mortgage Market
a banker who lends money for mortgages
Mortgage Banker
like a dating service, this person puts together a borrower and lender and gets paid for the introduction
Mortgage Broker
a security document given to ensure payment of a note
Mortgage
the buyer assumes the seller’s mortgage and agrees to pay the debt
Assumption of Mortgage
the party who gives and is the maker of the security
Mortgagor
the lender under the mortgage-type transaction who receives the security instrument
Mortgagee
grantee taking title is not personally liable to the mortgagee for payment of the note; if defaults, can lose the equity and the house but no deficiency payment
“Subject To” Mortgage
a document that is evidence of a debt; an obligation
Note
a repayment plan that includes principal and interest the total of which is the same amount
Level Payment
Lender may adjust the interest on a loan based upon an index
Variable Rate
a fee charged by the lender for processing a loan
Origination Fee
a clause in a note that indicates no pre-payment penalty
“Or More” Clause
a loan repayment record that is consistent
Seasoned loan
a written promise by a person to pay a debt under the terms of the note
Promissory Note
the original obligator is relieved of any further loan obligation
Novation Clause
a written document that when endorsed can be assigned to another
Negotiable Instrument
an additional charge for paying off a debt before it time
Prepayment Penalty
a lending term referring to a note and security instrument; note is personal property
Paper
authorizes holder of junior mortgage to protect that mortgage by curing any default under a prior mortgage; is concerned with default and foreclosure
Prior Mortgage Clause
requires disclosures of closing costs to buyers and sellers within 72 hours of the loan application; residential up to 4 plex; HUD booklet Settlement Costs and You
RESPA or Real Estate Settlement Procedures Act
a document issued by a lender bor buyer’s benefit stating the existing loan balance
Reduction Certificate
a junior mortgage placed on the property to help finance the purchase price; a purchase-money second mortgage is an example
Secondary financing
an increase in value on a property due to owner’s labor
Sweat Equity
Truth in Lending Laws apply to residential financing; requires full disclosure of all financing charges; interest rates are expressed in APR
Truth in Lending - Regulation Z
charging a higher rate in interest than the law allows
Usury
a line of credit extended by a commercial lender to a mortgage banker; the banker warehouses a number of these loans to be sold later to larger financial institution; as these are sold the mortgage banker earns money over the life of these loans
Warehousing
seller of a negotiable instrument may not be held responsible for it future payments; investor takes a loss if it goes bad
Without Recourse
the financial benefit received from an investment
Yield
