An acceleration clause is a loan provision that allows the lender to demand full repayment of the outstanding loan balance if the borrower violates specific terms of the loan agreement.
Arrears in real estate refer to payments that are overdue or are scheduled to be made at the end of a specific period.
A Credit Default Swap (CDS) is a financial derivative contract in which a buyer makes periodic payments to a seller in exchange for compensation if a third party defaults on a loan or bond. Unlike insurance, the buyer doesn’t need to have a vested interest in the third party.
A Credit Rating (Report) is an evaluation of an individual's or business's capacity and history of debt repayment. It provides creditors with an understanding of a borrower's reliability, aiding in the decision-making process for loans and credit.
A Deed to Secure Debt is a type of mortgage used in many states where property is deeded to a lender to secure a debt, offering a streamlined foreclosure process.
In real estate, default refers to the failure to fulfill an obligation or promise, or to perform specified actions as agreed upon in a contract. This term is frequently used in scenarios involving mortgages or leases where the borrower or tenant fails to meet the terms agreed upon.
Defeasance is a clause in a mortgage that gives the borrower the right to redeem the property after a default, typically by paying the full indebtedness and any additional fees incurred.
Delinquent refers to the state of having an unpaid amount after the due date and any grace period has passed. This term is often used before default is declared.
A provision in a mortgage that pledges multiple properties as collateral, potentially including newly acquired properties owned by the borrower. A default on one mortgage constitutes a default on the one with the dragnet.
An ejectment action is a legal process utilized to regain possession of real property from someone who is unlawfully occupying it, particularly when there is no lease agreement in place.
A first mortgage, also known as a senior mortgage, is a mortgage that has priority as a lien over all other mortgages and is satisfied first in cases of foreclosure.
Flipping a loan involves repeatedly refinancing an existing mortgage, often luring the borrower with seemingly better interest rates while charging substantial fees for the new loan and prepayment penalties for the old loan. This predatory lending practice can lead to excessive debt and ultimately default and foreclosure for the borrower.
Foreclosure is the legal process through which a lender attempts to recover the remaining balance on a loan from a borrower who has stopped making payments, typically by selling the asset used as collateral.
Forfeiture refers to the loss of money or anything else of value because of failure to perform under a contract. It often occurs in legal and real estate contexts, where breaching a contract can result in the forfeiting party losing their rights to certain property or assets.
A grace period is a set duration of time after a deadline during which a borrower or debtor can perform an obligation without facing any penalties or being considered in default.
Nonjudicial foreclosure is a process used in certain states that allows lenders to sell a property directly without court involvement. This method is typically faster and less expensive.
A Note is a financial instrument that acknowledges a debt and provides a promise to pay. It often accompanies a mortgage, pledging property as security for the debt.
A Notice of Default is a formal notification sent to a borrower or a tenant indicating that they have failed to make the required payments or comply with the terms of a loan or lease agreement. It often includes details on the grace period provided to cure the default and the penalties that will be applied if the default is not resolved.
Partial Payment is a payment that is less than the required monthly mortgage payment. Normally, lenders do not accept partial payments, but a lender may make exceptions during times of difficulty.
A clause sometimes inserted in mortgages or deeds of trust; grants the lender (or trustee) the right to sell the property upon certain defaults. The property is to be sold at auction but court authority is unnecessary.
A prior lien is a legally enforceable claim or hold on a property that takes precedence over other liens. It is established before any subsequent liens and typically has higher priority in the event of default.
Recourse refers to the legal right of a lender to claim money from a borrower in the event of default, in addition to repossessing the property pledged as collateral.
The act of curing a default by paying off all overdue loan payments and applicable penalties before a lender can initiate foreclosure proceedings.
The reinstatement period is a phase in the foreclosure process during which the homeowner has an opportunity to stop the foreclosure by paying the money that is owed to the lender.
A security instrument is an interest in real estate that allows the property to be sold upon a default on the obligation for which the security interest was created.
Termination in real estate entails the conclusion of contractual obligations such as leases, loans, or options either by performance or by breach.
Title theory states are where the law splits the title of mortgaged property into legal title, held by the lender, and equitable title, held by the borrower. The borrower gains full title to the property upon retiring the mortgage debt. Lenders are granted a more immediate cure for a default than in lien theory states.
A workout agreement entails a mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default. It generally involves substantial reduction in the debt service burden during an economic depression.
