Mortgage Note and Deed of Trust Difficult Terms Lexicon
E
to P
To help note holders out we’ve compiled a list of the more difficult terms used in real estate and their definitions.
Escrow: An agreement that places property or contracts with a third party until all other participants have fulfilled their obligations – typically payments.
Exclusive Right to Sell: The real estate broker’s sole right to sell a property within a specified period.
Fee Simple/Fee Absolute: The highest legal form of ownership, granting unconditional right to sell.
FHA: Federal Housing Administration. The division of HUD that provides mortgage insurance for mortgages be approved lenders.
Foreclosure: The act that removes a mortgagor’s property rights. This is a serious blow to a mortgagor’s credit history. All parties in any land contract should work to minimize the risk of foreclosure due to nonpayment.
Habendum Clause/”To have and to hold clause:” The clause that defines the extent of the estate.
Hereditaments: Property that may be inherited.
Hypothecate: To use property as security without releasing possession.
Judgment Lien: A lien placed by the court.
Judicial Foreclosure: The court-ordered sale of property due to a debtor’s nonpayment.
Junior Mortgage: The mortgage that is second in lien to another, primary/senior mortgage.
Land Contract: An agreement to pay for land by installment, but where the owner does not relinquish the deed until payment has been made in full.
Land Trust: An arrangement that allows for anonymous control of a property.
Legal Rate of Interest: An interest rate set by law, rather than by contract.
Legatee: The entity who receives property (not just real estate) according to the terms of a will.
Lien: An arrangement that secures a debtor’s property (not just real estate) against his debts to ensure repayment. Mortgages are technically liens, but the term is more usually used for the involuntary arrangements that creditors secure.
Life Pendens: Public notice of a legal action that affects property, filed through the county clerk’s office.
Long-term Financing: Mortgages or deeds of trust whose terms exceed ten years.
LTV/Loan-to-Value Ratio: T the amount of money loaned on a property relative to its actual value. For example, a $100,000 loan on a $500,000 property would be a 20% LTV ratio.
Mortgage: A secured loan to purchase property such as a house or piece of farm land. The assets are registered as the legal property of the borrower but the lender can seize them and dispose of them if they are not satisfied with the manner in which the repayment of the loan is conducted by the borrower. Once the loan is fully repaid, the lender loses this right of seizure and the assets are then deemed to be unencumbered.
Mortgage Broker: An individual or corporation who matched borrowers with lenders.
Mortgagee: The lender in a mortgage.
Mortgagor: The borrower in a mortgage, who typically gains property rights as a function of the mortgage.
Non-qualifying Assumption: A mortgage or deed of trust that lacks a Due on Sale clause. Its title can be transferred without the mortgagee’s permission.
Open Listing: A real estate listing that any broker can use, but which only pays commission to the broker who secures the sale.
Opinion of Title: A lawyer’s certificate expressing an opinion about a property’s legal status.
Option: The guaranteed right to purchase or lease a property within a specific period, no matter what other offers have been made on that property.
Paper: A mortgage, deed of trust or land contract given instead of cash. It may be traded back in exchange for a mortgage or other such arrangement upon the property being purchased.
Parcel: A piece of property.
Estoppel Letter/Payoff Letter: A letter that states the balance due on a mortgage at the time of issue.
Per Annum In: “For each year.” Annually.
Plat: The map or plan of a parcel of land.
Plat Book: A public record containing the borders and locations of land parcels.
Power of Sale: A clause that allows a mortgagee or trustee to sell a property to recover debts from a mortgagor.
Prepayment Clause: A clause that gives the mortgagor the ability to paying the mortgage off before it is due, often with some modification to the amount due.
Promissory Note: A promise to pay a specific amount to a specific person (which could be defined as the note’s bearer) under set conditions. The possible use of promissory notes as an alternative currency has led to restrictions on their use.
Proration: The act of dividing closing credits and debits between buyers and sellers.
|
