A contract term in a mortgage that requires the borrower to pay off the loan immediately if certain requirements are not met.
A sworn written statement usually given while under oath or in front of a notary.
The process in which a licensed or authorized person gives an opinion as to the value of a property.
When a property increases in value, appreciation is the difference between the original value and the increased value.
Loan payments that are past due. With a mortgage, this may include any missed payments, interest on the missed payments and the lender’s collection costs. The arrears are the total amount past due.
A person, company or entity who receives the transfer of property, title or rights from the assignor.
The method by which a right or contract is transferred from one person or entity (the assignor) to another (the assignee).
Assignment of Mortgage
A legal document showing that ownership of a mortgage (and the underlying promissory note) has been transferred (assigned) from the original owner (assignor) to a new owner (assignee). Mortgages are often assigned many times.
A person, company or entity who transfers rights they hold to another entity. The assignor transfers to the assignee.
Process of selling property at public sale to the highest bidder.
A court order that is automatically issued when a bankruptcy is filed. The automatic stay prohibits most collection activities against the person who filed bankruptcy, including filing or continuing lawsuits, repossession and even writing or calling the debtor to demand payment.
A larger than usual one-time payment at the end of the loan term that covers the remainder of the principal. The main benefit of a balloon payment loan is usually lower interest rates/lower monthly payments. Often, the borrower will either sell the home or attempt to refinance before they have to make the balloon payment at the end of the loan.
The amount offered for a property for sale at an auction.
This is the phrase used to state that the owner of real property owns it free and clear of any liens of other restrictions.
A formal document that begins a lawsuit. The party who is being sued is served with the complaint.
The person or entity that money is owed to.
Someone who owes money to another person or business. It is also used to refer to a person or business that files for bankruptcy.
A legal document that transfers ownership of real property, such as a house, from one owner to another.
Deed-in-lieu of Foreclosure
When the homeowner- borrower voluntarily conveys their rights in a property to the lender to avoid foreclosure. This is generally done in exchange for the lender’s agreement not to hold the homeowner liable for the amount still owed on the mortgage.
A borrower is in default when they do not meet the terms of their mortgage loan agreement. The most common default is failing to pay the mortgage on time. Other types of defaults include failure to obtain the necessary insurance or to properly maintain the property.
When talking about foreclosure, a default judgment is when the foreclosing party automatically wins their foreclosure lawsuit against the borrower because the borrower failed to defend the lawsuit.
The person or party who has had a lawsuit filed against them. Typically, anyone with an interest in the real estate will be made a defendant in a foreclosure lawsuit.
A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
Failure to make payment when it is due.
Equity in Real Estate
This is the difference between the home’s market value and the outstanding balance of the mortgage loan (as well as any other liens on the property). This is the amount of cash you would pocket if you sold your house and paid off all the liens including mortgages, tax liens, etc.
Excess of fair market value over the outstanding loan balance.
An account held by the mortgage servicer where a homeowner pays money toward taxes and insurance on the home.
A separate account into which a portion of each monthly mortgage payment is put to cover necessary expenses such as property taxes and insurance.
Federal Housing Administration
FHA for short, this government agency provides insurance for mortgage lenders who follow their regulations. If a borrower defaults on a loan insured by the FHA, the FHA can cover the lender’s losses
Fair Market Value
Refers to how much the property is worth in the current real estate market.
A mortgage that has a first-priority claim against the property in the event the homeowner defaults on the loan.
A mortgage loan with a fixed interest rate that remains the same for the life of the loan.
An agreement with the lender allowing the borrower to either reduce or stop making payments for a certain amount of time. This is called the forbearance period. The borrower will have to resume making full payments in addition to paying back extra for the time missed when the forbearance ends. The borrower will also be responsible for paying back taxes, interest, and insurance that was owed during the time period of missed payments.
The legal process where a creditor with a lien on a property forces a sale of the property in order to collect on the lien. Foreclosure typically occurs when a homeowner defaults on a mortgage.
Foreclosure Rescue Scams
This is a scam that targets people who are falling behind on their mortgages and are afraid of losing their home to foreclosure. The scheme preys on desperate homeowners whose mortgages are in default by offering to prevent the foreclosure.
Debt that a lender writes off as uncollectable. Forgiven debt is generally taxable as income.
Home Equity Loan
A loan made to a homeowner based upon the equity in the house and which is secured by the house.
Home Equity Line of Credit (HELOC)
A way of borrowing money against the equity in one’s home to pay for things such as home repairs, college education, or other personal uses.
A foreclosure that is processed by filing a lawsuit in court. New Jersey is a judicial foreclosure state.
A lien created by recording a court money judgment against the debtor’s property which is often real estate.
A legal claim against property that must be paid before title to the property can be transferred. Examples of liens include mortgages, tax liens and mechanic liens. If there is more than one lien, the claim of the lender holding the first lien will be satisfied before the claim of the lender holding the second lien, which in turn will be satisfied before the claim of a lender holding a third lien, etc.
An individual or entity that provides money expecting that the funds will be repaid. Repayment will include the payment of interest or fees.
A recorded notice of a pending lawsuit.
Lis Pendens for Mortgage Default
Recorded notice of filing a suit for non-payment of a mortgage. This is the first notification of mortgage default.
A debt instrument, which is secured by the collateral of specified real estate, that the borrower must pay back with a predetermined set of payments.
A person or company who currently has the right, under the terms of the mortgage, to enforce it through foreclosure.
Mortgage companies may originate as well as service the loan. The lender who originated your mortgage may or may not service your loan.
The financial institution that loaned you the money to buy the property.
A change in loan terms, usually the interest rate and length of the mortgage. This is usually done when a homeowner cannot make payments under the existing mortgage loan.
A company to which some borrowers make their mortgage payments and which performs other services in connection with mortgages. Many borrowers confuse their mortgage servicer with their lender.
The lender or other entity that lends money to a borrower for the purpose of buying real estate. The lender is known as the mortgagee and the borrower is known as the mortgagor.
Someone who borrows money and signs a mortgage.
Property other than real property consisting of things temporary or movable.
The person or group that is bringing a lawsuit. The Plaintiff is the party that is doing the suing.
The amount a person borrows from a lender. It is also referred to as the amount financed.
Primary or Principal Residence
The property in which the homeowner will live most of the time.
The reduction in the principal loan balance which occurs with each payment of a positively amortized mortgage.
A promissory note is basically the legal version of an ‘I OWE YOU’ note. It is a financial instrument that contains a written promise by one party to pay another party a definite amount of money.
Real Estate Settlement Procedures Act (RESPA)
A federal law designed to protect consumers from certain abusive practices in the residential real estate market.
The process of replacing an existing mortgage with a new one by paying off the existing debt with a new loan that has different terms.
Reinstating a mortgage
Getting current on your mortgage. This is done by making up missed payments and paying the lender interest on the missed payments and reimbursing the lender for various costs and fees incurred during the time you were in default. This is also referred to as curing the default.
Right of Redemption
A borrower’s right to get back property lost due to a foreclosure.
Any creditor or lender that has a security interest over some or all of the assets of the debtor.
A loan in which the borrower pledges some asset (e.g. a car or house) as collateral for the loan which then becomes a secured debt owed to the creditor who gives the loan.
Property that is collateral for a secured debt.
A sale of a house threatened with foreclosure, made with the lender’s agreement so that the homeowner can get out from under their mortgage by selling the house, even if the sale won’t produce enough cash to pay off the entire loan.
A loan that has a second priority claim against a property if the homeowner defaults. The lender who holds the second mortgage gets paid only after the lender holding the first mortgage is paid.
A mortgage company that works for the lender performing services regarding the mortgage. The services include collecting mortgage payments, ensuring payment of taxes and insurance, managing escrow accounts, managing communications with the homeowner, mitigating loss, initiating foreclosures.
Summons and Complaint
Legal documents that are served on a homeowner to begin a lawsuit such as a judicial foreclosure.
A statutory lien imposed on property to secure payment of back taxes.
A property’s title is the document that denotes ownership.
The condition of having negative equity, or owing more on the property than the property is worth.
Unpaid Principal Balance
Amount of a loan that is due to the lender. This does not include additional charges, such as interest.
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.