Real Estate / Foreclosure Glossary

A

• Abandonment – When a homeowner leaves a property permanently.

• Acceleration Clause – A lender’s right to immediately demand all money owed.

• Acceptance – When both the Buyer and Seller have reached an agreement of the terms of sale.

• Accrued Items of Expense – Expenses that are not yet payable.

• Adjustable Rate Mortgage (ARM) – A type of loan with a variable interest rate.

• Amortization – A debt repaid in installments. 

• Appraisal – Professional estimation of a property’s value.

• Appraisal by Comparison – Estimation of a property’s value through comparison of the sale prices of similar properties.

• Appurtenance – Something in the surrounding land that adds to the value of the property.

• As Is – Property is not guaranteed free of defects.

• Assessed Valuation – Property value for tax purposes.

• Assessor – Person who assesses property value.

• Assignment – Transferring of a right or contract.

• Assignment of Rents – Rights given to the lender, company or other individual to receive rent money from a tenant.

• Assumes and Agrees to Pay – Buyer takes over seller’s old loan.

• Assumption of Mortgage – When a Buyer accepts another mortgage liability.  This process usually requires Lender approval and me be a violation of the mortgage without the approval.

• Auction – Property sale to the highest bidder.

• Automatic Stay- A court order stopping all collections.

B

• Balance Owed on Loan – The amount still owed on a loan.

• Balloon Payment – Final, larger payment that pays off a debt.

• Bill of Sale – Is what I call the receipt of the sale.  This document is executed by the Seller and given to the Buyer at closing.

• Broker Price Opinion – Broker’s realistic market estimation of a property’s value.

C

• Capitol Improvement – Change that improves property’s value.

• Certificate of Sale – Document stating right of redemption after foreclosure sale.

• Chain of Title –A History of all Title transfers on the property.

• Chattel – Personal property related to a house.

• Chattel Mortgage – Mortgage on personal property.

• Clear Title –A property should be purchased with clear title.  A property free of any liens, judgments, mortgages, open permit, etc. is a property with clear title.

• Closing Date – A date agreed to between a Buyer and Seller as the date of finalizing the purchase of the property from Seller to Buyer.

• Cloud on the Title – Any claims that would affect title on the property such as outstanding lien or mortgage.

• Collateral – Property that is put up as security for a debt.

• Condemnation – When government forcibly buys private property for public use.

• Conditional Sales Contract – A contract for a sale of property that has conditions such as a finance contingency. 

• Conforming Loans – Loans that meet the standards of Fannie Mae.

• Constructive Notice – A way of giving notice to a homeowner, after personal notice has failed.  This is usually done by way of publication in a common newspaper.

• Contract for Deed – A contract where the seller holds the title until the buyer completely pays for the property.

• Covenants – Written addendums to deeds detailing restrictions on a property.

• Coverage – Amount of an insurance claim.

• Credit – Past record of how a borrower has repaid loans.

• Cured Default – Correction to borrower’s failure to make loan repayments.

• Current Value – Value of a property when appraised.

D

• Damages – Money received after a lawsuit.

• Debt Service – Yearly amount paid on a loan.

• Decree – Final court decision.

• Deed – Legal document used in transferring real estate ownership.

• Deed in Lieu of Foreclosure – Giving the deed to a lender instead of forcing them to foreclose a house.

• Deed of Trust (Trust Deed) – Type of mortgage where the legal title is security for a loan.

• Default – Failure to repay loans.

• Defendant's Original Answer – The defendant’s first response during a lawsuit.

• Deficiency – The difference the borrower still owes after a foreclosure sale.

• Deficiency Judgment – Court decision that the borrower owes a deficiency.

• Delinquency – When a loan payment is overdue.

• Demand Note – A note payable on demand.

• Department of Veterans Affairs – Department of the federal government dealing with services for veterans.

• Discharge of Indebtedness or Debt – When a loan no longer needs to be repaid.

• Discovery – During a lawsuit when factual documents are obtained by both parties.

• Documentary Transfer Tax – A tax imposed by the state when property is transferred.  This tax varies among the states and within their counties.

• Down Payment – Initial cash payment paid to purchase property.

• Due on Sale – Loan must be paid off in full if the property is sold.

E

• Earnest Money – A down payment.

• Earnest Money Contract – Agreement by both parties to the sale and purchase of a property.

• Easement – Right of others that may be exercised on someone’s property.

• Encroachment – Part of a building that is on someone else’s property.

• Entry and Possession – Type of foreclosure where the lender takes over the property from the borrower. 

• Equity – Market value of property that is over the remaining loan.

• Equity Cushion – Equity needed so that a lender will make a loan.

• Equity Loan – A loan based on part of the equity.

• Equity Right of Redemption – Right to pay off a debt and avoid foreclosure.

• Equity Skimmer – Scam artist who steals the up front cash on loans.

• Escrow – Money held for some purpose.

• Eviction – Legal procedure to kick someone out of a property.

• Exclusive Right to Sell – Agreement to sell to a specific broker.

• Execution Sale – Carrying out a court order to sell property.

• Extending Loan Term – More time for paying back a loan.

• Extension Agreement – An agreement for an extension of time to repay a mortgage.

F

• Fair Credit Reporting Act – Law regarding a person’s rights regarding credit bureaus and credit reports.

• Fair Market Value –The value of a property based on the surrounding properties and the market.

• Fannie Mae – A government corporation that buys mortgages from mortgage companies.

• FCL – Foreclosure.

• Federal Deposit Insurance Corporation (FDIC) – Government agency that insures deposits.

• Federal Home Loan Mortgage Corporation (Freddie Mac) – A government corporation that buys mortgages from savings and loan institutions.

• Federal Housing Administration (FHA) – Government agency that regulates the real estate industry.

• Federal National Mortgage Association (Fannie Mae) – A government corporation that buys mortgages from mortgage companies.

• Federal Savings and Loan Insurance Corporation (FSLIC) – Old government agency that is now the FDIC. 

• FHA Guidelines – Rules and requirements for an insured loan.

• FHA Mortgage – Federally insured loan.

• FHLMC – A government corporation that buys mortgages from savings and loan institutions.

• First Lien – Highest priority debt against a property.

• First Mortgage – Loan with highest priority against a property.

• FNMA – A government corporation that buys mortgages from mortgage companies.

• For Sale by Owner (FSBO) – Selling property without a real estate broker.

• Forbearance – Agreement where the lender accepts reduced payments or no payments for a specified period of time to help out a borrower.

• Foreclosure – Forced sale to pay debt.

• Fraud – Deliberate false information that results in someone’s financial loss.

• Freddie Mac – A government corporation that buys mortgages from savings and loan institutions.

• Freeze Order – Court order that prevents foreclosure, repossession, or eviction.

• FSA – Federal Savings Association.

G

• Good Repair – Responsibility to keep mortgaged property in good condition.

• Government National Mortgage Association – Government Corporation that purchases loans.

• Grace Period –A period of time that a lender will allow a borrower to pay after payment is due before the loan is considered in default.

• Grant – A transfer in deeds of conveyance.

• Grant Deed – Transfer document where seller grants a sole interest

• Grantee – Person receiving the title to property. 

• Grantor – Person giving the deed.

• Guarantee – Federal insurance that covers certain losses on loans that defaults and could lead to foreclosure.

H

• Hearing – Court proceeding.

• Homestead – A homeowner’s primary residence.

• Housing and Urban Development (HUD) – Federal government department that deals with housing programs.

I

• Impound Account – Account that pays expenses related to owning the property.

• Encumbrance – Anything interfering with the use or transfer of property.

• Installment – Portions of a debt paid at agreed intervals.

• Instrument – A legal document.

• Internal Revenue Service (IRS) – Government agency that collects taxes.

• Involuntary Lien – Lien imposed without the owner’s consent.

J

• Jeopardy – Property in danger of a negative court decision.

• Joint Tenancy – Joint ownership of property with right of survivorship.

• Judgment – Final court decision.

• Judicial Foreclosure – Court ordered foreclosure.

• Junior Lien Holder – Subordinate lien holder to another lien holder’s right to a forced sale.

• Junior Mortgage – Mortgage subordinate to than another mortgage.

L

• Late Payments – Payments past due date.

• Lease With Option To Buy – Leased property that can also be bought on certain terms.

• Lender Approval – Lender’s review of creditworthiness and income.

• Liability – Debt repayment obligation.

• Lien – Forced sale of property to pay debts.

• Lien Holder – An owner of a lien.

• Life Estate – Ownership of title for the duration of a person’s life.

• Life Tenant – Right to retain ownership for the duration of their life.

• Liquidating Plan – Missed payments are repaid slowly over a period.

• Liquidation Appraisal – Property value in a forced sale.

• Lis Pendens –Is a formal notice filed in the court of a current lawsuit pending.

• Listing Agreement – Owner hires a real estate broke to sell property.

• Loan Balance – Amount still owed.

• Loan Modification – Changing the terms of a loan.

• Loan Officer – Person who looks for borrowers.

• Loan Pool – Mortgages that investors own shares in.

• Loan Processor – Person who approves a loan. 

• Lot Book Report – Document that records encumbrances against a property.

M

• Marketable Title – A title that is risk free from litigation.

• Maven – An expert.

• Mechanic's Lien – A lien placed on a property for the price of labor and materials on improvements of a property.

• Metes and Bounds – Boundaries of a lot of land.

• Misrepresentation – False statements during a business deal.

• Mortgage – A legal document recorded in the public records as security for payment of a debt.  This document is a lien against the property.

• Mortgage Guaranty Insurance Corporation (MGIC) – Private mortgage loan insurer. 

• Mortgagee – Lender.

• Mortgagee's Title Policy – Lender’s title insurance.

• Mortgagor – Borrower.

• Motion to Lift Stay – Request to unblock a stay that prevents a lender from foreclosing on the property.

N

• Negative Equity – Property is not worth as much as the loans on it.

• Non-judicial Foreclosure – Foreclosure without court order.

• Notary Public – Person who legally certifies documents.

• Note – Document giving terms of a loan.

• Notice Of Default – Reminder loan payment is late.

• Notice Of Rescission – Terminates notice of default.

O

• Origination – Loan creation.

• Owner-Occupied – Borrower’s primary residence.

P

• Partial Payments –Payments made that are less than the full payment actually due.

• Performance Bond – Guarantees contract completion.

• Plat Book – Public records showing boundaries of lots of land.

• PMI-Assisted Presale – Losses on a house are partially paid by PMI when the house is sold.

• Positive Equity – Property is higher value than mortgage amount.

• Posting – Public notice of foreclosure sale.

• Power of Attorney – Document allowing an attorney to act in an owner’s place.

• Power-of-Sale Clause – Allows the sale of property to pay off debts.

• Prepaids – All those fees paid in full and not included as part of the mortgage amount.

• Prepayment Clause – Right to pay off debt early.

• Private Mortgage Insurance (PMI) – Insurance protecting against defaults on loans.

• Property Condition – Physical condition of a piece of property.

• Prorations – Dividing of costs and credits at closing between buyers and sellers.

Q

• Qualifying – Steps a lender takes to evaluate a buyer’s credit and income before agreeing to make a loan.

• Quiet Title Suit – Type of lawsuit that checks whether or not a person has a right to certain piece of property.

• Quitclaim Deed – An owner’s rights and interest in a property.

R

• Real Estate Owned (REO) – Property that is obtained after it has gone to auction.

• Recasting – An old loan that is recalculated with a new interest rate and term. 

• Receivership – Takeover of a bank by the FDIC to liquidate its assets.

• Reconveyance – A recorded document that states a debt is fully paid on a deed of trust. The title is transferred back to the borrower. 

• Recording – All changes to the title to a piece of property are officially recorded in the public records.

• Recourse – Right of a current owner to claim against a previous owner regarding a piece of property.

• Redemption – Right of an owner to retrieve property after its foreclosure sale for purposes of settling unpaid taxes.

• Refinance – Replacing an old loan with a new loan bearing a different interest rate and term. 

• Release Clause – Right of an owner to partially pay off the debt making the property partially free from a mortgage.

• Release Of Liability – A recorded document that releases an individual from paying a loan.

• Relief – Payment plans or other forms of assistance for people who have missed payments.

• Removal – Transfer of a foreclosure case to a federal court.

• Repayment Plan – Plan for repayment of missed payments over a period of time.

• Request For Notice of Default – A recorded document that allows the requestor to obtain a copy of a default notice.

• Right of Rescission –A homeowner has a three day right of rescission to cancel a loan that is a refinance of the primary residence.  This may vary among states.

• Right of Survivorship – Ability of a living joint owner to take over the portion of a deceased joint owner’s property.

S

• Sales Contract – A document that records the terms of sale for a property.

• Satisfaction Piece – Receipt recording the completion of payments on a mortgage.

• Second Mortgage – An additional mortgage made on a property on top of an existing mortgage.

• Sheriff's Deed – Satisfies a court ordered sale.

• Short Sale – Arrangement where the lender receive less than the full amount of the loan in order to do a quick sale.

• Simple Assumption – Arrangement where the buyer takes over the seller’s old loan.

• Special Assessment – Fee collected for public improvement.

• Subdivision – Land divided into lots.

• Subordinate Clause – Gives priority to a later mortgage.

• Subrogation For Mortgage Insurers – Right of mortgage companies to file a lawsuit to recover losses from a default.

• Substitution of Trustee – A legal document that changes the person named in a deed of trust.

• Summary Judgment – When one side wins without trial through the resolution of only legal issues.

• Survey – Measurement of plot of land.

T

• Tax Sale – When property is sold due to unpaid taxes.

• Temporary Injunction – Court order to maintain the existing state of affairs until full trail can be established.

• Temporary Restraining Order – Court order to maintain the existing state of affairs until a settlement can be reached.

• Tenancy At Will – License to use another’s lands and property.

• Tenancy By The Entirety – Estate that husband and wife jointly own with right to survivorship.

• Tenancy In Common – Estate owned by two or more people with no right to survivorship.

• Title – Proof of ownership of property.

• Title Defect – Claims against the ownership of property that blocks the title.

• Title Insurance – Insurance that protects against loss caused by problems with the title.

• Title Report – Current condition of the title.

• Title Search – Search of public records to find out information regarding the title. 

• Trust Deed – Type of mortgage that allows the lender to foreclose and take a title.

• Trustee – Person who can foreclose and sell property to repay a loan.

• Trustee's Deed – Deed given to the buyer at foreclosure.

• Trustee's Sale – Auction and sale of property by a trustee.

• Trustee's Sale Guarantee – Insurance on the title benefiting the trustee in a sale. 

• Truth In Lending Act – Law that requires lenders to provide certain facts about a loan to the borrower.

• Turnover Order – Court order to give the title to the lender.

U

• Underwriter – Person who decides whether or not to grant a loan.

• Undivided Interest – Occupants who jointly own property under the same title.

• Upside-Down Home – Property that owes more on its mortgage than its actual value.

V

• Vendee's Lien – Forced sale of property to secure a deposit.

• Verification Of Deposit – Document sent to a bank to verify cash deposit.

• Verification Of Employment – Document sent to an employer to verify employment and salary.

• Veterans Administration – Department of the federal government dealing with services for veterans.

W

• Wage Earner's Plan – Another name for Chapter 13 bankruptcy.

• Warranty Deed – Guaranteed transfer of land and title.

• Without Recourse – The holder cannot look to the endorser of this note in the case of missed payments.

• Workout – Borrower and lender work out a deal to avoid foreclosure.

• Wraparound – Type of mortgage that includes an obligation to pay an earlier lien mortgage.

• Wraparound Loan – A new loan that includes all previous loans. 

• Writ of Execution – Court order to sell a debtor’s property for payment of judgment.

• Writ of Garnishment – Court order to give all assets of a debtor up.

• Writ Of Possession – Court order to evict a person.

• Wrongful Foreclosure – An unlawful foreclosure.

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