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 person’s 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 (the assignor) who transfers their held rights to another person, company or entity (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 real property ownership, 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 if 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.
The failure to make payments when they are due.
Equity in Real Estate
This is the difference between the outstanding balance of the mortgage loan (as well as any other liens on the property) and the home’s market value. 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 for and insurance on the home.
An account where a portion of each monthly mortgage payment is added to cover necessary expenses such as property taxes and insurance.
Federal Housing Administration (FHA)
A government agency that provides insurance for mortgage lenders who comply with specific government regulations. If a borrower defaults on an FHA-insured mortgage loan, the FHA may cover the lender’s losses.
Fair Market Value
Refers to how much the property is worth in the current real estate market.
A mortgage in which a first-priority claim is placed against the property. In the event the owner defaults on their loan, creditors with first-priority status will be able to collect before non-priority claim holders.
A mortgage loan that has a fixed interest rate for the life of the loan.
An agreement made between the lender and the borrower that creates a “forbearance period,” which is a specified period of time where the borrower is allowed to reduce or stop making payments on a loan. Once the forbearance period has lapsed, the borrower is required to resume making payments in full as well as pay back additional money for the time missed following the end of the forbearance. The borrower is also responsible for paying back and interest, taxes and/or insurance that accrued during the forbearance period.
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 predatory scam that targets people who are falling behind on their mortgages and who are afraid of losing their home due to foreclosure. Homeowners who are behind on their mortgage or in default are promised relief from foreclosure and are given the option of remaining in their home if they sign over the title of their home to the fraudulent investor.
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)
The process by which an owner borrows money against the equity in one’s home to pay for things such as home repairs or other 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 against the property, the holder of the first lien will be paid out first, then the second lien holder will be paid and so on until all liens are fulfilled.
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.
A mortgage company may originate in addition to servicing the loan. The lender who originated your mortgage may service your loan, but they may not as well.
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 party or person who is filing a lawsuit against another individual or party in an effort to seek a compensation for damages.
The amount of money (referred to as the amount financed) granted by a lender to a borrower.
Primary or Principal Residence
The property where the homeowner lives most of the time.
A decrease in the principal loan balance as a means of decreasing a mortgage’s financial burden on a homeowner usually in an effort to avoid foreclosure.
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 puts up an asset, such as a house or vehicle, as collateral for the loan. This then makes the loan a secured debt, which means if the owner defaults on their loan, the creditor has the right to seize the asset that was put up as collateral.
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, managing escrow accounts, ensuring payment of taxes and insurance related to the loan, facilitating communications with the homeowner, mitigating financial loss due to short sales or foreclosure, and initiating foreclosure proceedings.
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.
A condition in which the property has negative equity or the homeowner owes more on the loan or property than the property is worth at current market value.
Unpaid Principal Balance
The remaining balance on a loan due to the lender, which doesn’t include interest or any additional charges.
An written order or mandatory process issued in the name of a court or judicial officer that commands a named individual to do or refrain from doing a specific thing.