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Abandonment

Situation in which homeowner leaves house with no intention to return.

Abstract Of Judgment

Summary of a judgment in a lawsuit; includes who won, who lost, amount owed, the court making the decisions, date of judgment,

and winning attorney. Once recorded (filed with county clerk or recorder), it creates a general lien on judgment debtor's property

that's usually discovered by title company in conjunction with property sale. Most title companies require lien be paid as a condition

of insuring resale.

Acceleration Clause

Part of trust deed or mortgage that gives lender right to call/demand all money owed as due and payable immediately in the event a

specific event (such as a sale) occurs.

Acceptance

When seller's or agent's principal agrees to terms of the agreement of sale, approves negotiation on the part of agent, and

acknowledges receipt of deposit.

Accrued Items of Expense

Incurred expenses not yet payable; seller's accrued expenses credited to purchaser in closing statement.

Adjustable Rate Mortgage (ARM)

Loan with an interest rate that can vary up or down at certain intervals (periods) and within certain limits (caps); loan is secured by

house on which lender will foreclose if loan is not paid.

Alienation

Transferring property from one person to another.

Alienation/Acceleration/Due on Sale Clause

States that on sale or transfer of certain property, a loan is immediately due and payable.

All-Inclusive Deed or Trust

Also known as a wraparound contract, a mortgage document that includes amount actually financed as part of a property purchase

as well as amounts of any prior deeds of trust.

Amortization

Repayment of a debt in installments.

Amortization Mortgage

A debt in which periodic repayments reduce the outstanding principal and pay off current interest charges.

Apportionment

Adjustment of income, expenses, or carrying charges on real estate, usually computed to the date of closing of title so seller pays

all expenses to that date and buyer assumes all expenses after that.

Appraisal

Estimate of property's value as made by a trained, licensed professional.

Appraisal by Comparison

Estimate of property value made by comparing sale prices of similar properties in the same area.

Appurtenance

Something outside of a property but belonging to the land and adding to its greater enjoyment, such as a right-of-way, barn, or

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dwelling.

As Is

When a property is sold as is, its seller does not warrant or guarantee the property is free of defects; buyer accepts property in

present condition without modification.

Assessed Valuation

Value placed on property by public officer or board as basis for taxation.

Assessment

Charge against real estate made by a unit of government to cover a proportionate cost of an improvement such as a street or sewer.

Assessor

Official who has responsibility for determining assessed valuation.

Assessor's Parcel Number

Numeral assigned by county tax assessor to identify parcel of real property.

Assignment

Method or manner by which a right or contract is transferred from one person (the assignor) to another (the assignee).

Assignment of Rents

Procedure in which borrower gives lender the right to receive rents collected from a tenant in a house owned by borrower.

Assumes and Agrees to Pay

Clause in deed or related document in which a buyer who takes over payments on a seller's old loan also agrees to pay the old

loan; buyer normally receives title and makes payments. Clause is often found in section of document that transfers title from the

seller to the buyer; seller may or may not be released from liability.

Assumption of Mortgage

Occurs when person takes title to property and assumes liability for payment of existing note or bond secured by mortgage against

the property.

Auction

Process of selling property at public sale to highest bidder.

Automatic Stay

Court order when bankruptcy is filed that prevents any creditor from attempting to collect any debt from the person who declared

bankruptcy; creditors may not undertake foreclosure, repossession, eviction, or seizure, or even call or write the debtor demanding

payment, and instead must join all other creditors and go through bankruptcy court to seek any money owed them.

Balance Owed on Loan

The part of the original loan that remains unpaid by the borrower at a given point in time.

Balloon Payment

Final installment on a loan that pays off debt; larger than previous installments.

Bankruptcy

Action filed in federal bankruptcy court that allows creditor to reorganize or discharge credit obligations due to insolvency; property

owner may restrain foreclosure action by filing bankruptcy.

Bearer

Lender in whose hands the promissory note remains until it is paid in full.

Beneficiary

(1) One entitled to the benefit of a trust; (2) one who receives profit from an estate, the title of which is vested in a trustee; (3) lender

on a security of a note and deed of trust.

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Beneficiary's Statement

Also known as a "benny statement", a written statement of conditions and remaining balance on loan secured by a deed of trust.

Bill of Complaint

Initial paperwork filed in many states to begin foreclosure; part of the process of filing a lawsuit.

Bill of Sale

Document that passes title to personal property from seller to buyer.

Bond

Set sum of money or assets available if needed to pay to court or other named person upon a certain event.

Broker Price Opinion

Real estate broker's estimate of property's reasonable selling price; often less than professional appraisal but often more useful

because it's a realistic marketing price.

Buydown

Arrangement in which seller pays some or all of buyer's loan costs, usually measured by increments (points) of 1 percent of loan;

seller pays enough points so that lender can offer loan at reduced interest rate (and lower monthly payment); cost to seller is small,

but the reduction in payments to buyer can be substantial; often structured to reduce interest rates (and payments) in early years of

loan. In a 3-2-1 buydown, the seller pays enough points to reduce the buyer's interest rate 3 percent the first year, 2 percent the

second year and 1 percent the third year; in the fourth year, the loan interest rate and the monthly payments would return to the

normal market rate of interest as set initially.

Capitol Improvement

Permanent structure change that extends useful life and value of a property, such as a new roof.

Certificate of Sale

Document indicating a property has been sold to a buyer at foreclosure sale subject to right of redemption for a set period after the

sale; redemption periods vary, but with IRS, it's 180 days; foreclosures often take place without a certificate of sale indicating sale is

final or near final, and buyer gets deed instead.

Chain of Title

History of conveyances and encumbrances affecting a title from the time the original patent or right to the land was granted, or as

far back as records are available.

Chapter 13

Chapter in the federal Bankruptcy Code that gives wage earner the right to reduce debt payments through a bankruptcy court order

according to the terms of a plan that will allow the debtor to pay much or even all of the original amounts owed.

Chapter 7

Chapter in the federal Bankruptcy Code that calls for liquidation; a debtor's nonexempt assets are gathered together and given up

or sold for benefit of creditors in order of their priority; debts are not discharged; secured creditors receive continued payments or

the asset as collateral for the loan; unsecured creditors usually get little or nothing.

Chattel

Personal property such as household goods or fixtures.

Chattel Mortgage

Mortgage on personal property.

Clear Title

Ownership rights to piece of real estate that are not diminished by liens, leases, or other encumbrances.

Client

Principal who employs and compensates a broker.

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Closing Date

Date on which buyer takes over the property.

Cloud on the Title

Outstanding claim or encumbrance that, if valid, affects or impairs owner's title.

Collateral

Additional security pledged for payment of debt.

Collections

Activity in which lenders or their agents employ various techniques to pressure borrowers to pay what's owed.

Color of Title

Apparent invalid title.

Condemnation

Acquisition of private property for public use with what's considered fair compensation to the owner.

Conditional Sales Contract

Contract for sale of property that calls for seller to deliver property, but title remains vested in the seller until conditions of contract

are fulfilled.

Condominium

Land ownership arrangement in which one owns an individual unit and a percentage of common area.

Conforming Loans

Loans that meet Federal National Mortgage Association (Fannie Mae) standards.

Conservatorship

When the Federal Deposit Insurance Corporation takes over and runs a bank or S&L until it can be sold either complete or broken

down into its major components. (During the S&L crisis of the 1980s, the Resolution Trust Corporation was also involved in

conservatorship.)

Consideration

When parties in a contract exchange something of value such as goods, services, or promises.

Constructive Notice

Information someone is assumed by law to have because it could be ascertained by proper diligence and inquiry in public records.

Contingency Fee

Employment arrangement commonly used by attorneys in which payment is a percentage of whatever monetary damages are

awarded in a lawsuit's final judgment.

Contract for Deed

Sales arrangement in which seller holds title until buyer completes payment for property and then receives title/deed; terms of sale

and payments are set in written contract signed by buyer and seller.

Conventional Lender

Group or individual that makes conventional loans.

Conventional Loan

Private loan not insured or guaranteed by any agency of the federal government.

Conversion

Exchange of personal real property of one character or use for another.

Conveyance

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Process of transferring title or some interest in real estate to a new owner.

Correlation

Final state of the appraisal process in which appraiser reviews data and estimates property's value.

Covenants

Agreements written into deeds and other instruments promising performance or nonperformance of certain acts or stipulating

certain uses or restrictions on a property.

Coverage

Amount of money insurance company will pay in response to a claim.

Cram-down

Chapter 13 bankruptcy arrangement in which plan to repay lenders and creditors developed by debtor's attorney is ordered into

effect by the court; it's crammed down on sometimes unwilling creditors.

Credit

Willingness of borrower to repay loaned money; usually measured by borrower's past record of payments on loans and debts as

maintained in a credit report.

Cured Default

When borrower's failure to make payments or meet the terms of a loan is corrected to the lender's satisfaction.

Current Value

Value of a property at time of appraisal.

Damages

Monetary compensation set by court for loss suffered by party to a lawsuit.

Debt Service

Annual amount to be paid by debtor for money borrowed.

Decree

Final order of a court in many states.

Deed

Legal document commonly used to transfer ownership of real estate from one owner to the next.

Deed in Lieu of Foreclosure

Borrower deeds property, usually to lender, instead of waiting for lender to force sale of house in foreclosure.

Deed of Reconveyance

Instrument that releases and discharges deed of trust.

Deed of Restriction

Limits use of land; might include clauses preventing sale of liquor on property or defining size, type, value, or placement of

improvements.

Deed of Trust (Trust Deed)

Type of mortgage given by property owner to secure performance of an act (such as making payments on a loan).

Default

Failure to fulfill duty or promise, or to discharge an obligation; omission or failure to perform an act. In property foreclosure, usually

the failure to pay loan installment repayments when they become due.

Defeasance Clause

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Part of a mortgage that permits borrower to redeem his or her property on payment of mortgage obligations.

Defeased

To lose ownership; in medieval times ownership rights constituted a fee and to be defeased meant to lose the fee.

Defendant's Original Answer

First responsive pleading of a defendant in a lawsuit.

Deficiency

Money that a borrower who has lost real estate in foreclosure still owes to the lender because the foreclosure sale failed to

generate enough money to pay off the loan. Frequently lenders acquire title to real estate at foreclosures and often only credit fair

market value of property against balance due on the loan; any unpaid balance on loan after all just credits are applied generally is

amount of deficiency. Many states limit or restrict deficiencies.

Deficiency Judgment

A court judgment that the defaulting borrower owes a deficiency.

Delinquency

The state of affairs when payments on a note or other loan obligation are past due.

Demand Note

A note payable on demand of the holder.

Department of Veterans Affairs

Federal government department that guarantees loans and performs other services for veterans; formerly known as Veterans

Administration (VA).

Discharge of Indebtedness or Debt

Lender informs borrower a loan does not have to be repaid.

Discovery

Phase of lawsuit when parties may ask each other formal written and oral questions, obtain copies of documents, and in general

find out facts related to the lawsuit.

Documentary Transfer Tax

Applicable to transfers of real property, notice of payment entered on face of the deed or on a separate paper filed with the deed.

Double Whammy

When lenders refuse to permit loan assumptions while, at the same time, insisting on hefty prepayment penalty when a

nonassumable loan is paid off early.

Down Payment

Initial cash a borrower pays to seller to purchase a property; does not include closing costs.

Due on Encumbrance

Clause in mortgage preventing a borrower from encumbering title to the property with liens, leases, or other encumbrances without

the lender's consent.

Due on Sale

Mortgage clause demanding that borrower pay off the loan in full if the house is ever sold; lender can't prevent sale but can demand

payment in full on the loan balance. Without a due on sale clause, loan is assumable without lender's consent; older FHA and DVA

loans are assumable without lender's consent.

Earnest Money

Down payment made by purchaser of real estate as evidence of good faith.

Earnest Money Contract

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Agreement in which seller agrees to sell and the buyer agrees to buy.

Easement

Right that may be exercised by the public or individuals on, over, or through the property of others.

Encroachment

Building, part of building, or obstruction that intrudes on the property of another.

Entry and Possession

Method of foreclosure in some states in which lender, who already owns property, reenters it and takes possession away from

borrower, either peacefully or by court order.

Equity

Excess of fair market value over the outstanding loan balance.

Equity Cushion

Amount of equity required before lender will make a loan.

Equity Loan

Junior (subordinate) loan based on a percentage of the equity.

Equity Right of Redemption

Right of property owner to avert foreclosure by paying the debt, interest, and costs.

Equity Skimmer

Scam artist who assumes loan, collects money up front, and possibly rents, then refuses to pay the payments on assumed loan

while keeping cash paid up front.

Escrow

Deposit held ready for some use, such as to pay taxes and insurance on a mortgaged property.

Estate

Degree, quantity, nature, and extent of interest (ownership) that a person has in real property.

Estoppel Certificate

Instrument executed by the mortgagor setting forth status of and balance due on mortgage as of date of certificate execution.

Eviction

Legal procedure to forcibly remove a tenant from dwelling.

Exclusive Right to Sell

Agreement to give, for a specified period, only one broker the right to sell a property; if sale during term of agreement is made by

owner or any other broker, the broker holding exclusive right is entitled to compensation.

Execution Sale

Sale of property by a sheriff pursuant to a court order.

Extending Loan Term

Giving borrower more time to repay a loan.

Extension Agreement

Accord that extends life of a mortgage.

Fair Credit Reporting Act

Federal law regulating credit bureaus and credit reports that grants individuals certain rights regarding both.

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Fair Market Value

Amount a willing and knowledgeable buyer would pay and seller would accept in a property transaction.

Fannie Mae

See Federal National Mortgage Association.

FCL

Abbreviation for foreclosure, used on borrower's credit record.

Federal Deposit Insurance Corporation (FDIC)

Agency set up by the federal government to insure deposits at banks and S&Ls.

Federal Home Loan Mortgage Corporation (Freddie Mac)

A government-chartered, privately owned entity that buys mortgages from S&Ls.

Federal Housing Administration (FHA)

Federal agency that regulates many aspects of the real estate industry and insures repayment of certain home loans.

Federal National Mortgage Association (Fannie Mae)

Government-chartered, privately owned corporation that buys mortgages from mortgage companies.

Federal Savings and Loan Insurance Corporation (FSLIC)

Corporation formerly run by the federal government that insured deposits in S&Ls; FDIC took over its function; leftover FSLIC

deposit insurance funds were transferred to Savings Association Insurance Fund (SAIF).

FHA Guidelines

Rules specifying income and credit requirements for borrower and condition and value of property to allow an insured loan of a

specific amount.

FHA Mortgage

Loan insured by Federal Housing Administration.

FHLMC

See Federal Home Loan Mortgage Corporation.

First Lien

Debt recorded first against a property.

First Mortgage

Loan with priority as a lien over all other mortgages; in cases of foreclosure, the first mortgage must be satisfied before other

mortgages are paid off.

FNMA

See Federal National Mortgage Association.

For Sale by Owner (FSBO)

A property marketed by its owner without help of a real estate broker.

Forbearance

Lender voluntarily accepts lower payments than originally agreed to in loan documents for a specific time period to allow borrower

to recover financially; borrower eventually must repay missing or reduced payments and all other remaining payments on loan.

Foreclosure

Forced sale of real estate to repay debt.

Fraud

Intentional false statements believed and relied on by an individual who suffered a loss as a result.

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Freddie Mac

See Federal Home Loan Mortgage Corporation.

Freeze Order

Automatic stay; bankruptcy court order that prevents creditors from attempting to collect debt from individual who declared

bankruptcy. Creditors may not undertake foreclosure, repossession, eviction or seizure, or even call or write the debtor demanding

payment, and instead must join all other creditors and go through bankruptcy court to seek any money owed them.

FSA

Designation for Federal Savings Association.

Full Assumption

Arrangement in which buyer takes title to property and takes over payments on seller's old loan with the full permission of lender;

new buyer also must prove to lender (qualify) adequate income and creditworthiness.

Ginnie Mae

See Government National Mortgage Association (GNMA).

Good Repair

Borrower's obligation to maintain condition of mortgaged property.

Government National Mortgage Association

Also known as Ginnie Mae (GNMA), arm of federal government that purchases loans.

Grace Period

Additional time allowed to perform an act or make payment before a default occurs.

Grant

Term used in deeds of conveyance of land to indicate a transfer.

Grant Deed

Conveyance document that implies grantor (seller) is granting an actual interest and has not previously granted such interest to

anyone else.

Grantee

Party to whom the title to real property is conveyed.

Grantor

Person who conveys real estate by deed; the seller.

Guarantee

Federal Insurance, such as from the Department of Veterans Affairs, agrees to cover loss up to a certain dollar figure on a loan

made by a private lender if it goes into default and foreclosure.

Hearing

A proceeding in court.

Homestead

Special legal protection that many states give to an individual's principal residence.

Housing and Urban Development (HUD)

Department of federal government that administers housing programs.

Hypothecate

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To use something as security without giving up possession of it.

Impound Account

Account held by lender, used to advance payments of certain expenses or charges incidental to property ownership and that may

protect lender's security.

Incumbrance

Any right to or interest in property interfering with its use or transfer, or subjecting it to an obligation; with foreclosures, incumbrance

likely includes mortgages and unpaid tax claims.

Installment

Parts of the same debt, payable at successive periods as agreed; payments made to reduce a mortgage.

Instrument

Written legal document.

Internal Revenue Service (IRS)

Arm of the U.S. government that collects taxes.

Involuntary Lien

Lien imposed against property without consent of owner—such as taxes, special assessments.

Jeopardy

To have property or liberty subjected to a possibly adverse decree of a court or agency.

Joint Tenancy

Ownership of property by two or more individuals, each with an undivided interest and right of survivorship.

Judgment

Final decision of court.

Judicial Foreclosure

Foreclosure action executed by the court.

Junior Lien Holder

Holder of a right to force sale of property that is subordinate to another lien holder's right to do the same. A junior lien holder who

forces the sale of real estate must either pay off senior lien or make arrangements to make payments on it to prevent it from being

foreclosed. Foreclosure of first lien eliminates right of junior lien holder to foreclose, but foreclosure of a junior lien does not affect

right of senior lien to foreclose.

Junior Mortgage

Mortgage second or subsequent in lien to a previous mortgage.

Land Sale Contract

Document transferring ownership rights but not title that may be used to sell property.

Late Payments

Set amount that may be paid past its due date in accordance with loan documents.

Lease With Option To Buy

Arrangement in which property owner rents to a tenant who has the right to purchase the property on agreed terms.

Lender Approval

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Lender's agreement to allow assumption after review of borrower's creditworthiness and income; can also apply to initial loan.

Lender Liability

Holds lenders legally responsible to pay damages for legal misdeeds committed against borrowers in course of making loans.

Liability

Obligation to pay a debt.

Lien

Right to force sale of property to pay a debt.

Lien Holder

Person or institution that controls a lien.

Life Estate

Conveyance of title to property for duration of the life of grantee.

Life Tenant

Holder of a life estate.

Liquidating Plan

Arrangement in which borrower repays missed payments to lender over time.

Liquidation Appraisal

Estimate of property's value in a forced sale (when it's sold quickly); usually less than fair market value.

Lis Pendens

Recorded notice indicating a lawsuit is in progress that could affect title to a piece of land.

Listing Agreement

Accord in which seller hires a real estate broker to sell a property, usually for a commission.

Loan Balance

Amount a borrower owes on a loan.

Loan Modification

Procedure in which a loan's terms, such as interest rate, monthly payment, or duration, are altered.

Loan Officer

Person who is paid commissions to find and sign up borrowers for loans.

Loan Pool

Group of mortgages in which investors own shares.

Loan Processor

Person who gathers and prepares paperwork used by lender to determine whether to make loan.

Lot Book Report

Document from title company that identifies encumbrances recorded against a particular property; does not identify liens recorded

in the name of the owner that may affect property.

Marketable Title

Property title considered free from defect by court that will enforce its acceptance by purchaser.

Maven

(Also Mavin or Mayvin) Regarded by cohorts as a trusted expert in a particular field, and who seeks to pass his or her knowledge

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on to others.

Mechanic's Lien

Claim that secures the price of labor done on and materials furnished for uncompensated improvements.

Metes and Bounds

Land description that sets forth all boundary lines together with their uncompensated improvement.

Misrepresentation

Making false statements in the course of a business transaction.

Mortgage

Instrument in writing, duly executed and delivered, that creates a lien on real estate as security for payment of specified debt,

usually in the form of a bond.

Mortgage Commitment