Copy of `Understanding forclosure - Foreclosure Terminology`

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Understanding forclosure - Foreclosure Terminology
Category: Economy and Finance > Foreclosure
Date & country: 21/01/2008, UK
Words: 583


Addendum
Is an addition to a completed written document. Commonly this is an explanation or proposed change in a contract, or some point that has been the subject of negotiation after the contract was originally proposed by one party. Real property sales agreements often have addenda as the buyer and seller go through negotiations of fine points (how paymen …

Adjustable rate mortgage (ARM)
Is a loan with an interest rate that can go up or down at certain intervals or periods, and within certain limits, that are called caps. It is secured by a house, on which the lender will foreclose on if the loan is not repaid.

Agent
someone who is authorized to act for another.

Agreement of sale
A document that is initiated by a buyer, which includes the terms and conditions for the transfer of title for a given property.

All-inclusive deed or trust
A form of deed of trust that, also with other amounts actually financed, includes the amounts of any prior deeds of trust. Also called a 'Wrap around contract'.

Amortization
Is a periodic payment plan to pay a debt where the interest and a portion of the principal are included in each payment. This is determined by an established mathematical formula. Commonly it is used on a real property loan, financing of an automobile or other purchase. This is done by figuring the interest on the declining principal and the number …

Appraisal
The process in which a licensed or authorized person gives their estimate of property value.

Appraise
To give an estimate of the market value of a property after an inspection of the property

Appreciation
Is an increase in the value of a property from changes in the market conditions, inflation or or other changes to the value of surrounding properties.

Arrears
Is money that is not paid when it is due. It is usually the sum of a series of unpaid amounts, like rent, installments on an account or promissory note, or alimony. These are sometimes called 'arrearages.'

Assessor
Is a public official employed by the municipality who determines the value of property for taxation purposes.

Assignee
Is a person with whom property is transferred to by a sale or gift, particularly real property.

Assignment
Is the act of transferring an interest in property or some right

Assignor
Is a person that transfers rights and interests of a property.

Assumable mortgage
Is a mortgage or loan that can be assumed by a new owner, by paying the seller the difference between the sales price and the balance on the loan.

Back title letter
Is a notice from a title insurance company to a person who is searching for and certifying that a title search has been completed on a property.

Back-end ratio
Is a calculation comparing a borrower`s total debt to their gross monthly income to assess the ability of the borrower to carry a mortgage or loan.

Back-to-back escrow
Are arrangements an owner makes to oversee the sale of one piece of property and the purchase of another at the same time.

Backup offer
Is a secondary bid for a property that places you next in line if the accepted offer falls through.

Balance owed on the loan
Is the part of the original loan remaining unpaid by the borrower at a given point in time.

Balloon loan
Is a loan with small monthly payments over a period of time, with one final payment in full made at the end of the contract.

Balloon payment
Is the final installment payment, it is larger than previous installments that pays off a debt in full.

Balloon payment
Is the final lump-sum payment made at the maturity date of a balloon mortgage and pays the loan in full.

Bankruptcy
Is an action that is filed in a federal bankruptcy court allowing a creditor to reorganize or discharge their credit obligations due to insolvency. A property owner may restrain foreclosure action by filing bankruptcy.

Bargain sale
Is the sale of piece of property for less than its market value.

Base loan amount
Is the amount which loan payments are based upon. Any other charges accrued are to be added to the base loan amount.

Basis point
Is one one-hundredth of a percentage point. For example, the difference between a loan at 9.25 percent and a mortgage at 9.37 percent is 12 basis points.

Bearer
Is the lender who keeps the promissory note until it is paid in full.

Before-tax income
Is a persons gross earnings before taxes are deducted from it.

Beneficiarys statement
Is a written statement of the conditions and remaining balance on a loan secured by a deed of trust.

Bid
Is an offer by an intended purchaser to pay a designated price for property which is about to be sold at an auction.

Bill of complaint
Is the initial paperwork filed in many states to begin a foreclosure. It is part of the process of filing a lawsuit.

Bill of sale
Is a document in which the title to personal property is passed from seller to buyer.

Blanket insurance policy
Is an insurance policy that covers more than one person or property, such as areas that are owned in common. This type of policy does not cover dwellings or contents of dwellings.

Blanket mortgage
Is a loan secured against more than one piece of property. Usually refers to a commercial property.

Blighted area
Is an unsightly area or community where the infrastructure and buildings have deteriorated.

Blockbusting
Is the illegal practice of inducing homeowners to sell their properties by making representations regarding the entry of a particular race into the neighborhood.

Board of equalization
Is a government agency that ensures uniform property tax assessments.

Bona fide
Is a llegal term referring to actions made in good faith, at a fair market value, and without deceit or fraud.

Bond
Is secured by a mortgage or deed of trust.

Book value
Is the value of a property based on its cost plus any additions made to it, minus depreciation.

Boundary
Is the limit of a property.

Breach of contract
Is the failure to meet obligations in a contract without a legal excuse.

Breach of covenant
The continuing failure to meet legal obligations in a contract or property deed.

Breach of warranty
Is a seller`s inability to pass the clear title of a property to a buyer, as by a defect in title.

Break-even point
Is the point at which the return on an investment is equal to the amount invested.

Broker price opinion
Is a real estate broker's estimate on the price for which property can reasonably be sold. The broker price opinion is often cheaper than a professional appraisal, however it is often just as good, or even more useful because it tells the owner what price the property can successfully be marketed.

Building moratorium
Is a temporary or permanent halt on construction of a home or building.

Building restrictions
Are regulations that appear in building codes or title documents which limit the manner where a property can be renovated or built upon.

Bundle of rights
Are the legal rights that an owner has regarding a property.

Buydown mortgage
Is a financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discounted points are given to the lender by the builder or seller to buy down or lower the interest rate paid by the buyer, thus reducing the monthly payments for a set length of time.

Buyers agent
Is a person with a state or provincial license who represents a buyer or a seller in a real-estate transaction in exchange for a commission.

Buyers broker
Is a person representing a buyer of a property. The broker earns a commission at the closing, for assisting in the negotiation of the sale.

Buyers market
Is when sellers significantly outnumber the buyers, thus giving the advantage to the buyers and driving prices down.

Buyers remorse
Is the emotional anxiety that a buyer feels after closing on a property or after signing a sales contract.

Call option
Is a clause in a home loan agreement giving the lender the right to request the balance due and payable at any time.

Cancellation clause
Is a clause in a contract that gives the right for either party to terminate the agreement upon the occurrence of specified events.

Cap
Is a limit in adjustable rate mortgages, on the amount of the interest rate or how much the monthly payment can increase.

Capital expenditure
Is money spent to make improvements to a property and add to its value.

Capital gain
Is an increase in the value of a property. When the property gets sold the investor makes a profit from it.

Capital improvement
Are improvements to a structure or other asset that adds value to it.

Capitalization
Is a formula that investors use to estimate the value of a property using the rate of return on investment and the properties annual net operating income.

Capitalization rate
Is the estimated percentage rate of return which will be returned from the owner`s investment.

Capitol improvement
Improvements to a structure or other asset that adds value.

Carryback financing
Is financing where a seller agrees to take back a note for a set amount of the sale of the home.

Cash flow
Is the net income generated from a property sale after all of its expenses and loan payments are paid up.

Cash-out refinance
The refinancing of a mortgage on the same property where the amount to be borrowed is greater than the amount owing on the previous mortgage.

Certificate of occupancy
Is a document that is issued by a local municipality stating that a building is suitable for occupancy. It confirms that the dwelling complies with the safety and health by-laws.

Certificate of sale
Is a document that is given to the winning bidder in a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.

Chain of title
Is part of a title search. Legal records that list, in chronological order, the ownership of a property.

Chattle
Personal property, such as household goods or fixtures.

Chattle mortgage
A mortgage on personal property.

Clear title
Is a title not burdened with defects.

Client
The one by whom a broker is employed (the principal) and who will compensate the broker.

Closing costs
Is the total of all of the expenses related to the sale of a property, paid at closing. This includes the loan, title and appraisal fees.

Closing date
The date which the buyer will take over the property.

Closing statement
Is a document which details the financial specifics of a real estate transaction; including details of fees that are paid by the seller and the buyer.

Cloud on the title
Are conditions such as an encumbrance, lien or a claim which is revealed when doing a title search. The condition adversely affects the title to real estate and often cannot be removed except by a quitclaim deed release or a court action.

Co-housing
Is a housing arrangement where all living units have access to a shared space with a large kitchen, dining area, laundry and childrens play area.

Co-insurance
Is a insurance coverage technique that is used in larger developments. The coverage is shared between several insurance companies, each covering a certain percentage of the total value of the property.

Co-maker
Is a person who signs the loan document along with the principal borrower; the co-makers signature guarantees equal responsibility for the loan and that the loan will be repaid should the borrower fail to make payment. Also known as a guarantor, or co-signer.

Co-signer
Is a person who signs the loan document along with the principal borrower; the co-makers signature guarantees equal responsibility for the loan and that the loan will be repaid should the borrower fail to make payment. Also known as a co-maker or guarantor.

Codicil
Is a supplement or appendix to a will that adds or subtracts provisions or makes clarifications to the document.

Collections
Are activities in which lenders or their agents employ various techniques putting pressure on borrowers to pay what they owe.

Collusion
The deceitful actions of two or more people in an attempt to defraud others.

Color of title
Is an apparent, invalid, title.

Commercial bank
Is a financial institution that provides a broad range of services, including checking and savings accounts to business loans and credit cards.

Commercial property
Property designed for business or retail purposes.

Community property
Ownership of property is presumed to be equally owned by both the husband and wife unless it was acquired as a separate property of either spouse. Community property is not in all states.

Condemnation
Is the process of the government to take private property under the right of eminent domain, for public use without the owners consent. Also, is a determination that a building is not fit, is dangerous and must be destroyed.

Conditional sales contract
Is a contract for the sale of property stating that, although delivery is to be made to the buyer, the title is to remain vested in the seller until the conditions of the contract have been fulfilled.

Conforming loans
Loans that meet FNMA standards.

Conservatorship
Is a state of affairs where a bank or savings and loan association have been taken over by the FDIC or RTC and are being managed by these federal institutions, either directly or through hired managers.

Consideration
Is something of value exchanged between parties in a contract. This may consist of goods, services, or promises.

Constructive notice
Is information that a person is assumed, by law, to have simply because it could be ascertained by proper diligence and inquiry, for example, information that is to be found in the public records.

Contingency fee
Is an employment arrangement in which the attorney is paid a percentage of whatever money damages are awarded at the final judgment in a lawsuit.

Contract for deed
Is a sales arrangement where the seller holds title until the buyer finishes paying for the property.

Conventional lender
Is a lender that makes conventional loans.

Conventional loan
Is a loan that is not insured or guaranteed by any agency of the federal government. This is a private loan.

Conversion
Is the exchange of personal real property of one character or use for another.