Accelerate An option given to lenders through an "acceleration" clause in the mortgage or deed of trust requiring the borrower to pay the entire balance of the loan all at once if their loan is in default, or if they have breached other provisions of their loan documents such as the “due on sale” clause.
Affidavit A sworn statement in writing usually given while under oath or in the presence of a notary.
Amortization The gradual, systematic payment of a debt, such as a mortgage or other loan, in installments of principal and interest for a definite time, so that at the end of that time, the debt will have been paid in full
Appraisal The process in which a licensed or authorized person gives an estimate of property value.
Appreciation The difference between the increased value of the property and the original value.
Articles of Incorporation A document filed with a U.S. state by the founders of a corporation. After approving the articles, the state issues a Certificate of Incorporation.
Asset Anything having commercial or exchange value that is owned by a business, institution or individual. A business' assets might include its real estate, equipment inventory, intellectual assets such as copyrights or trademarks, and accounts receivable.
Assignee The person or business entity who is given, obtains, or buys the right to an asset.
Assignment The transfer of the rights, title or interest of any debt instrument or property that is properly owned by another party.
Assignment of Deed of Trust or Mortgage A document that transfers the beneficial interest (ownership) to another party.
Assignor The person giving or selling an asset, and subsequently, forfeiting rights to that asset.
B
Bad Debt Any debt that is delinquent and has been written off as uncollectible.
Balance sheet A financial statement that shows a business' current financial condition, with assets on the left side and liabilities and net worth on the right side.
Balloon The balance of principal that is due and owing in its entirety at a specified point in time, but in any event, less than the time required to fully amortize the debt.
Bankruptcy A state of insolvency of an individual or organization. A legal proceeding that allows a debtor to discharge certain debts or obligations without paying the full amount. It gives the debtor time to recorganize his / her financial affairs in order to repay his / her debts. A bankruptcy does not discharge obligations secured by a deed of trust.
Beneficiary The person or party (lender) entitled to receive the benefits, or proceeds- ( to whom the obligation is owed).
Bid The offered amount for a property for sale at auction.
Bill of Sale A document used to transfer the title of certain goods from seller to buyer.
C
Cash flow The flow of cash through a business or household. In business terms, cash flow involves the flow of cash into a company in the form of revenues, and out of the company in the form of expenses.
Certificate of Sale In a judicial foreclosure or a sheriff’s sale, it is the document given to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.
Clear Title A title that is not burdened with defects, such as mortgages or liens.
Collateral Something of value (land, a home, a car, etc.) that is pledged as security to ensure the payment of a debt. Collateral is promised to a lender until a loan is repaid. If the borrower defaults, the lender has the right, by law, to seize the collateral.
Collectibility Refers to the lender’s ability to collect future income stream payments from a borrower.
Commission Fee paid to an intermediary for executing a financial transaction. Usually commissions are payable only to licensees, such as real estate agents.
Corporation A legal entity, chartered by a state which is separate and distinct from the persons who own it. It is regarded by the courts as an artificial person; it may own property, incur debts, sue or be sued.
Credit Bid A bid on behalf of the lender at a foreclosure sale. The credit bid amount must be less than or equal to the balance of the loan in default.
Creditor One who is owed payments on a debt by a debtor.
D
Decree A judicial decision.
Debt to Value Ratio The ratio between the amount of all outstanding debts against a property and the current market value of the property. Measured by dividing the amount of the debt, by the value of the property.
Declaration of Default A document instructing the trustee to prepare and record a Notice of Default, and, if necessary, to sell the trust property in order to satisfy the unpaid obligation.
Deed A signed document that transfers ownership of property from one party to another.
Deed-in-lieu of Foreclosure An instance where borrowers voluntarily convey their rights in a property to the lender.
Deed of Trust A written document describing the real property being given as security or the repayment of an obligation, which is recorded with the county recorder’s office
Default The omission or failure to perform or fulfill a legal duty, obligation, or promise (i.e. to pay a debt). Missing a scheduled payment when due on a loan is an event of default.
Deficiency Judgment A personal monetary judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
Due Diligence Exhaustive research on a property, person, transaction, income stream, business opportunity. Due diligence may involve appraisals, title searches, lien and property tax searches, investigations, property and neighborhood inspections, broker and contractor opinions.
E
Encumbrance A recorded document burdening ("encumbering") the title to real estate. Money encumbrances such as mortgages and trust deeds are "liens".
Equity The value or interest an owner has in property over and above any indebtedness owed on the property.
Equitable Title The present right to possession with the right to acquire legal title once a preceding condition has been met.
Escrow The system by which money documents, personal property, or real property is held in trust for another party by a disinterested third party until the terms and conditions of the escrow instructions are completed or terminated.
Extension Agreement An agreement that extends the due date of a loan.
F
Fair Market Value The price a property would sell for on the open market.
Free & Clear Ownership of property free of all indebtedness and leins
Foreclosure A popular term used to describe the procedure for enforcing a creditors rights when an obligation secured by a deed of trust is in default. A legal proceeding in court to seize property given as security for a debt that is in default.
Funding Source An individual investor or an investment company that makes loans or buys income streams.
Full Reconveyance A document prepared by the trustee when the obligation secured by a deed of trust is paid in full. When recorded, the reconveyance eliminates the lien from the title of the property.
H
Hypothecation Borrowing funds from a lender, giving the lender a security interest in a debt instrument such as a promissory note as the collateral for the loan.
I
Institutional lenders Savings and loan associations, local and regional banks, mortgage companies, finance companies, and commercial lenders. Sometimes called conventional lenders.
Intangible Personal Property (not real property) Something that has value but is not a tangible asset, like, a car, boat, furniture, or jewelry. Intangible property is something like a copyright or other intellectual property.
J
Joint Venture A business entity established for a specific task, operation, or goal between two or more parties.
Junior Lien A legal claim upon real property recorded subsequent to another legal lien (mortgage lien, tax lien, mechanics lien, judgment, or easement). The lien with an earlier date of recording is a Senior Lien.
Judicial Foreclosure A foreclosure that is processed by a court action.
L
Legal Description A formal description of real property sufficient to locate it by reference to government surveys or approved recorded maps.
Lender A person who lends money for temporary use on condition of repayment with interest (i.e., the bank, mortgage company, etc.).
Leverage The ratio of debt to total assets
Lien A charge upon real or personal property for the satisfaction of some debt or duty ordinarily arising by operation of law, more ordinarily known as the security interest created by a mortgage
Limited Liability Company A form of business structure designed to combine the best of corporate and partnership attributes into one entity.
Lis Pendens A recorded notice of a pending lawsuit.
Loan-to-Value Ratio A measure of how heavily mortgaged a property is and how likely the owner is to default on his or her debts. Measured by dividing the amount of the subject loan, by the amount of the valuation of the property.
M
Market value The price at which a ready, willing, and informed person would buy something; the fair price property commands in the current market.
Military Affidavit A sworn, written statement, affirming that the property owner is the entitled to any rights under the Soldiers in Sailors Civil Relief Act of 1940.
Mortgage A written instrument that creates a lien by pledging real property as security for a debt.
N
Non-Judicial Foreclosure The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default without a court proceeding.
Notary A public officer licensed by the state to attest to and certify the validity of signatures of others. A notary is often referred to as a notary public.
Notice of Default A written document which gives notice in the public record that a borrower has failed to perform his / her obligation. The non-judicial foreclosure process commences when the notice is recorded.
Notice of Sale A notice giving specific information about the loan in default and the details of how and when the property will be sold. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.
Notice of Trustees Sale A document that is published, posted and recorded, setting forth the time and location of the trustee's sale.
O
Owner Financing A type of financing in which the seller of a tangible item accepts a promissory note as a portion of the purchase price. Also called seller financing.
P
Partnership A common form of joint ownership of a business or investment
Payee Person or business receiving a payment.
Payor The person or entity making a payment.
Partial Any part of a payment stream that is less than the full amount due.
Personal Guaranty A contractual agreement between a funding source and a borrower, whereby the borrower assumes personal responsibility and liability ( in addition to an entitiy’s liability) for the obligations of the debt instrument.
Personal Property Property other than real property consisting of things temporary or movable.
Portfolio A group or package of income streams of the same type.
Posting To publish, announce or advertise an upcoming foreclosure sale of a property by physically attaching a notice to an object.
Postponement A verbal announcement made at the time at location of the scheduled trustees sale, postponing the sale to a future date and time.
Privately Held Owed to a private individual or business rather than to a bank or other financial institution.
Profit and loss Statement A financial statement that shows a historical record of a business' income and expenses.
Promissory Note A written promise to pay a specified amount to a specified party over a certain period of time under specific terms and conditions.
Publication Letter The letter that, when signed by the beneficiary, authorizes the trustee to prepare, publish and record the Notice of Trustees Sale.
Publication Period The period of time beginning after recording of the Notice of Default (this period varies by state), when the Notice of Trustees Sale is published, posted and recorded.
R
Real Property Real estate.
Rescission of Notice of Default After a default has been cured, this document, when signed by the lender and recorded by the trustee, will remove the effect of the previously recorded Notice of Default.
Reinstatement Period The time period that commences when the Notice of Default records and ends five business days before the trustees sale (this period varies by state). The default may be cured at any time during this period by the borrower by paying all delinquent amounts, including the trustees fees and costs.
Replevin A legal proceeding in court to seize property (other than real estate) given as security for a debt that is in default.
Request for Notice A recorded document requiring a trustee send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.
Right of Redemption A borrower's right to reacquire property ( for a limited period of time) sold pursuant to a judicial foreclosure.
Request for Notice A recorded document requiring a trustee send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.
S
Satisfaction The discharge of an obligation by paying a party the full amount due (i.e., the satisfaction of an IRS lien or the satisfaction of a mortgage).
Seasoning The length of time since its creation payments have been made on a note or other debt instrument.
Secondary Market The marketplace where individuals and businesses can sell privately held income streams to funding sources for cash.
Security Interest An interest in property, other than real estate, which is given as security for a debt or other obligation. A security interest is created by execution of a security agreement and one or more financing statements under the Uniform Commercial Code.
Seller The person or company that owns a property, or debt instrument and wants to sell it.
Servicing The collection of payments of interest and principal, and trust fund items such as fire insurance, taxes, etc., on a note by the borrower in accordance with the terms of the note. Servicing by the lender also consists of operational procedures covering accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquent loan follow-up and loan analysis.
Soldiers' and Sailors' Civil Relief Act of 1940 An act passed by Congress for the financial protection for those individuals serving in the military.
Sole Proprietorship A business owned and operated by an individual in his or her own name instead of in a legal entity such as a corporation or LLC
Subordination The act of a creditor acknowledging in writing that a debt due to it by a debtor shall be inferior to the debt due to another creditor by the same debtor.
Subject To The purchase of a property with an existing lien against the title without assuming any personal liability for the lien.
Substitution of Trustee A written document in which the beneficiary appoints a successor trustee to the trustee of record.
T
Time Value of Money Concept that addresses the way the value of money changes over a period of time.
Title The instrument that is evidence of a person's right in real property (i.e., a deed). Also, the status of the current ownership of property along with any encumbrances liens or other defects recorded against the property.
Title Commitment A commitment on the part of the insurer, once a title search has been conducted, to provide the proposed insured with a title insurance policy upon closing, subject to the limitations or exceptions disclosed in the commitment.
Title insurance Title insurance can benefit either the Trustor or the Lender. Should either party suffer any damages due to clouded or false title to real estate, title insurance recompenses the damaged party to the extent of the damages.
Title Policy An insurance policy that insures a party against loss due to a defective title.
Trustee The party who holds title to real property in trust for the benefit of another. The trustee's most common functions are to process trustee sale proceedings and to issue a full reconveyance.
Trustor The borrower / owner at the time the deed of trust is created.
Trustees Deed A document signed by the trustee that transfers ownership of real property to the purchaser at a trustee's sale.
Trustees Sale A public auction sale of property, described in a recorded Notice of Trustees Sale.
U
Uniform Commercial Code (UCC) Standardized set of guidelines enacted as law that set down how business transactions are regulated.
Unseasoned A lease or note that has had few, if any, payments made.
Writ An order or mandatory process in writing issued in the name of a court or judicial officer commanding the person to whom it is directed to perform or refrain from performing a specified act.
Data
on this site is for informational purposes only and is not intended as
a substitute for individual due diligence and analysis or any type of
professional advice.
