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


Multiple Listings Service (MLS)
Is a service which contains all the listings of properties for sale in a certain area, not including properties that are for sale by owner.

NAR Code of Ethics
Is a formal code of ethics and standards of practice as established by the National Association of Realtors (NAR) where all members must abide.

Needs-based pricing
Is an asking price based on factors like the amount of funds required to pay off the seller`s mortgage, the cost of remodeling or the purchase of another home.

Negative amortization
A situation that occurs when a borrowers monthly payment is too small to cover the principal and the interest on a loan, therefore the outstanding balance of the loan actually grows larger with each payment.

Negative equity
Is a position where outstanding loans on property exceed its value.

Neo-traditional planning
Is a planned community that favor new home development with traditional features such as grid-street patterns, prominent front porches, backyard garages, multi-use buildings and housing clustered near commercial service areas.

Net cash flow
Is the 'after expenses' income that is gained from investment property.

Net listing
Is a listing agreement where the commission that the broker earns is an amount above a net price set by the owner. If the net price is not met, the broker does not get a commission.

Net worth
The net worth of an individual is based on the difference between their total assets and liabilities.

No-cash-out refinance
Is the amount of a new mortgage covering the remaining balance of the first mortgage plus closing costs and liens, and yields no more than 1 percent of the new mortgages principal in cash.

No-documentation loan
Is a loan application not requiring verification of income; granted in such cases where a large down payment is deposited.

Non-conforming loan
Is a loan not meeting the qualifications or is too large to be purchases by Fannie Mae or Freddie Mac. The current loan limit is $252,700.00.

Non-judicial foreclosure
Is foreclosure on a mortgage without filing a lawsuit or obtaining a court order; generally this occurs because the borrower has signed a document such as deed of trust giving a trustee the right to sell property to pay off debt.

Non-liquid asset
Is an asset not easily turned into cash.

Non-solicitation order
Is an order issued to brokers and agents by the Secretary of State, prohibiting them from soliciting listings in a designated area.

Nonassumption clause
Is a loan provision prohibiting the transfer of a mortgage to another borrower without a lenders consent.

Nonrecurring closing costs
Is a one-time-only fee for items such as an appraisal, loan points, credit report, title insurance and home inspection.

Notary
Is someone who is legally empowered to witness signatures and certify a document's validity and to take depositions.

Note
Is a legal document requiring a borrower to repay a mortgage at a specified interest rate over a specified period of time.

Note rate
Is the interest rate specified in a mortgage note.

Notice of default
Is a lenders initial action in response to a borrowers defaulting on mortgage payments and the attempts to reconcile the issue out of court have failed.

Notice of rescission
Is a legal document used when the defaulting party has corrected their default.

Notice of sale
Is the notice of an impending foreclosure sale as required by the state. It reads the legal description of the property being foreclosed upon and provides the time, date and place of the pending sale.

Novation
Is the release of liability on a loan to a first borrower, and the substitution of a next borrower with the lenders approval.

One action rule
Is a rule of law, that is heavily used in California, which forces a lender to bring only one court action or proceeding against a borrower in a foreclosure. This rule makes it difficult for a lender to obtain a deficiency judgment against a borrower.

Open house
Is where a listing agent schedules an open house for the public to view a property without an agent or an appointment.

Open listing
Is a property with several brokers marketing it at the same time.

Open mortgage
Is a mortgage that matured or is overdue and, therefore, is 'open' to foreclosure at any time.

Open space
Undeveloped reserved areas for parks, walking paths or other natural locations used in a planned community.

Option
Is a situation where the buyer places a sum of money down for the right to purchase a property within a specified time period. When the time period expires the the buyer does not have an obligation to purchase it.

Option listing
Is a listing agreement which contains a clause giving the listing broker the right to purchase the property.

Oral agreement
Are contractual arrangements that are not done in writing and therefore are usually not legally binding.

Original principle balance
Is the amount of principal owed on a loan before the borrower makes any payments.

Origination
The creation of a new loan.

Origination fee
A fee that is charged by lenders to cover the direct costs of arranging a loan; this is also commonly called 'points'.

Ostensible agency
Is an agency relationship which does not involve any written agreement or documentation.

Out-of-court foreclosure
Is a foreclosure on a mortgage without filing a lawsuit or obtaining a court order. Generally these such sales occur when the borrower has signed a document, such as a deed of trust, giving a trustee pre-authorization to sell the real estate to pay off the debt.

Overimproved property
Is property which was not sold at a price high enough to recover the cost of its improvements.

Owner financing
Is a transaction where the seller of a property agrees to finance all or part of the purchase.

Owner occupied
When the borrower who owns the home lives in it.

Parcel
A piece of land.

Partnership
Where unmarried individuals buy a piece of property together.

Passive loss
Is a tax term referring to any loss from a passive activity, like the ownership but not the operation of a piece of rental real estate.

Passive solar system
A system that supplies solar heat without the use of electric fans or pumps.

Patent defect
Is a deficiency in a property that is visible.

Payment cap
Is the legal limit that a monthly payment can increase with an adjustable rate mortgage.

Per-diem interest
Is the Interest that is charged or accrued daily.

Personal property
Unattached and movable property in a house.

Pest-control inspection
Is an inspection of the property for an insect infestation.

Planned community
Is any town or neighborhood built within certain guidelines or goals.

Planned unit development (PUD)
Is a residential project consisting of a cluster of homes surrounded by areas of commonly owned open space maintained by a nonprofit community association.

Portfolio lender
Is a lender that makes loans using its own funds and keeps the loans on the company`s books rather than selling the loans on a secondary market.

Possession
Is the term used when a buyer officially takes possession of a property after signing the closing papers and receiving the keys.

Posting
Is placing legal notice of a foreclosure sale on public display as legally specified.

Postponement
Means to put off to a later time. In the case of a foreclosure sale, this is done by an announcement at the original sale or by posting notices establishing the new date and time the foreclosure sale will take place.

Power of attorney
Is a document authorizing an individual to act on behalf of someone else.

Pre-approval
Is the completion of a loan application, the thorough assessment that the lender makes of a potential borrowers ability to pay for a property and the confirmation of the amount to be borrowed.

Pre-approval letter
Is a letter from a lender that advises the borrower the amount of money that can be borrowed.

Pre-sold home
Is a home sold before it is built.

Prepaid expenses
Are expenses paid before their due date.

Prepaid fees
Are funds collected by the lender from the borrower to pay in advance certain recurring items.

Prepaid interest
Is interest paid before it is due.

Prepayment penalty
Is a penalty a lender may impose on the payment of a loan off before its expected end date.

Prequalification
Is the preliminary assessment a lender does on a buyer`s ability to pay for a home and an estimate on how much the buyer can borrow.

Price range
Is the upper and lower limit a buyer is willing to pay for a home.

Prime lending rate
Is the minimum short-term interest rate charged by commercial banks to their most creditworthy clients.

Principle
Is the amount of money originally borrowed in a mortgage, minus any payments made.

Principle and interest
Is the combined amount of a loan that includes the principal and the interest; or the total amount that must be repaid.

Principle of conformity
Is the idea that a house will appreciate in value when the size, age, condition and style are similar to other houses in the neighborhood.

Principle of progression
Is an appraisal term which states that real estate of a lower value is enhanced by the proximity of higher-end properties.

Principle of regression
Is an appraisal term stating that the value of higher-end real estate can be brought down by the close proximity of lower-end real estate.

Principle paid over life of loan
Is the sum of the scheduled principal payments as calculated by the lender to equal the face amount of the loan.

Private Mortgage Insurance (PMI)
Is a type of insurance lenders require on a loan when the borrowers down payment or property equity is less than 20 percent of the property value.

Probate
Is the process of establishing the validity of a will before a duly authorized court or person.

Processing fee
Is a fee charged by lenders for putting togther the necessary information to process a loan.

Procuring cause
Is a legal term used to determine whether a broker is entitled to a commission.

Production home
Are homes mass-produced by one builder.

Property line
The official dividing line between properties.

Property report
Is a disclosure filed with the state when a time-share project or subdivision is sold.

Property tax
Is tax paid on privately owned property and based on local tax rates and a property value assessment.

Property tax deduction
Is a tax deduction for the amount homeowners have paid in property taxes.

Property value
Is the value of a property based on the price buyers will pay at a specific time.

Prorate
Means to allocate percentages of certain expenses t0 be paid by the buyer and seller at the time of closing.

Purchase agreement
Is a document detailing the purchase price and conditions of the transaction.

Purchase contract
Is a legal document binding the buyer and the seller to the purchase and sale of a property.

Purchase-money mortgage (PMM)
Is a mortgage obtained by a borrower as partial payment for a property.

Qualifying
Is the process a lender undertakes prior to agreeing to make a loan that evaluates a buyer`s income and credit, the property's physical condition, and compares figures with the lender's guidelines.

Qualifying ratio
Is a ratio calculated by the lender to determine how much a potential buyer can borrow.

Quiet title suit
Is a lawsuit filed to determine who has the legal rights to a property.

Quitclaim deed
Is a document releasing a party from any interest in a piece of real estate.

Rate cap
Is the maximum interest rate charge allowed on a monthly payment of an adjustable rate mortgage during the adjustment period.

Rate lock
Is the lenders guarantee to the borrower that locks in a specific interest rate for a limited amount of time.

Rate type
The rate type determines if and how payments are adjust over the term of a loan.

Rate-improvement mortgage
Is a loan that includes a clause entitling the borrower to have a one-time interest rate reduction without the need to refinance.

Real estate
Is land and/or buildings.

Real estate agent
Is an individual licensed by the state to represent a buyer or seller in a real estate transaction in exchange for a commission.

Real estate broker
Is an individual, corporation or partnership, licensed by the state, to represent a buyer or seller in real estate transactions. Brokers supervise licensed sales agents acting for the broker.

Real estate owned
Is property that is acquired by a lender through foreclosure and held in inventory.

Real estate professional
Is any individual, broker, sales agent or attorney holding a real estate license.

Real property
Is any land and permanent fixtures on it.