Attornment is the formal agreement by a tenant to recognize a new owner of the property as their landlord, typically due to a sale or foreclosure.
A charge-off in real estate refers to the portion of principal and interest recognized as a loss when a loan is deemed uncollectible. Lenders resort to charge-offs when they perceive that further collection efforts on a delinquent account will not be fruitful.
Confirmation of Sale refers to the official recognition and approval of the sale of property by a court of law. This process validates that the sale was conducted properly according to legal standards.
A legal ruling issued by a court that determines the outstanding mortgage amount and mandates the sale of the property to pay off the debt.
A deed in lieu of foreclosure is a legal process where a borrower voluntarily transfers ownership of the property to the lender to avoid foreclosure proceedings.
A Deed of Trust is a legal instrument used in many states instead of a mortgage to secure the repayment of a loan. Legal title to the property is vested in one or more trustees, who hold it as security for the loan.
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.
A default point in real estate refers to the critical juncture at which a borrower fails to meet their financial obligations, resulting in potential foreclosure or other legal actions. It is conceptually similar to the break-even point in financial analysis.
In mortgage finance, a deficiency refers to the shortfall of funds recovered through the sale of a property that had secured a foreclosed loan compared to the total debt owed. This typically includes the unpaid loan balance, accrued interest, foreclosure expenses, and any damages incurred by the lender.
A deficiency judgment is a court order that mandates the borrower to pay the outstanding balance on a loan when the collateral or security for that loan does not entirely cover the defaulted debt.
A distress sale involves selling assets, typically real estate, at a significantly reduced price to generate quick cash due to financial exigencies or other compelling circumstances.
Real estate that is under foreclosure or impending foreclosure due to insufficient income production, leading to negative cash flow or default on mortgage payments.
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.
Equity of Redemption refers to the right of a property owner to reclaim their property even after defaulting on a mortgage, by paying off the due amounts before the foreclosure is finalized.
The Equity of Redemption is a legal concept in real estate that allows mortgagors to reclaim their foreclosed properties by paying off the outstanding mortgage debt and associated fees before the foreclosure sale is finalized.
Equity skimming is a type of real estate fraud where an investor takes out a loan exceeding the property's value, often via fraudulent means, and then collects rent on the property without making mortgage payments, increasing negative equity.
An exculpatory clause is a provision in a mortgage allowing the borrower to surrender the property to the lender without personal liability for the loan. This means the borrower can walk away from the property if unable to meet the mortgage obligations, without other personal assets being pursued for the debt.
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.
The landmark 1990 court decision regarding a lender’s exposure to liability for environmental cleanup if the lender acquires the property by foreclosure.
FLIP involves the purchase and immediate resale of property, often within hours or days, aiming for quick profit. It can carry a negative connotation when associated with illegal activities that exploit innocent parties.
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.
Horizontal Property Laws are state statutes that enable condominium ownership of property, adjusting traditional property laws to allow for individual ownership of units within a building while maintaining shared interest in common elements.
Insurance (Mortgage) is a service, generally purchased by a borrower, that indemnifies the lender in case of foreclosure of the loan. Indemnification is generally limited to losses suffered by the lender in the foreclosure process.
Involuntary alienation refers to the loss of property ownership against the owner's will, often caused by nonpayment of debts such as taxes or mortgage foreclosures.
Jeopardy in real estate refers to the risk or danger of losing a property, typically due to default on a loan or failing to meet certain contractual obligations, leading to potential foreclosure or other legal actions.
A judgment lien is a court-ordered claim upon a debtor's property, established to satisfy a debt ruled upon in a court of law. This lien ensures the creditor's right to a debtor's asset in case of non-payment.
A junior lien, also known as a junior mortgage, is a type of lien or security interest that is registered on a property after a primary, or senior, lien. These liens are subordinate to the senior lien in terms of priority and repayment during foreclosure.
A junior lien, also known as a subordinate lien, refers to any lien that will be paid after earlier liens have been paid. It denotes the secondary position of the lien in order of payment priorities.
States whose laws give a lien on property to secure debt. This is contrasted with title-theory states where the lender holds the title. In lien-theory states, borrowers have the right to use and enjoy the property unless they default, at which point lenders may foreclose.
Lis Pendens, meaning 'suit pending' in Latin, is a recorded notice indicating that a lawsuit has been filed which may affect the title to a certain piece of land. This notice serves to inform other interested parties that the property is subject to litigation.
MERS is a corporation created by financial institutions to serve as a private alternative to public registration systems for mortgages, aimed at reducing recording fees and providing efficient management of loan information.
Mortgage Guarantee Insurance Company (MGIC) is a private institution that provides insurance to lenders, ensuring loan repayment in case of default or foreclosure by the borrower.
A mortgage lien is an encumbrance on a property that is used to secure a loan. The holder of the lien has a claim to the property in case of loan default, making it a critical aspect of real estate financing.
Mortgage relief involves the alleviation or settlement of mortgage debt. This can occur through the assumption of mortgage by another party or the repayment of debt. In tax-free exchanges, mortgage relief can be considered as boot received and could have tax implications.
A 'Mortgagee in Possession' situation arises when a lender takes possession and control of a mortgaged property following the foreclosure of a loan secured by the mortgage. The lender holds the property, collecting any income produced, until it is sold at the foreclosure sale.
A decision by the Department of Veterans Affairs (VA) to pay the guaranteed amount to the lender rather than acquiring the property in foreclosure when a guaranteed loan goes into default. This typically occurs when the property's value has declined significantly.
A nondisturbance clause in a real estate contract ensures that a tenant's lease will continue even if the property owner faces foreclosure, or that surface development will not be impeded by subsurface mineral rights.
Nonrecourse financing refers to loans secured by collateral, typically real estate, where the lender's ability to recover the debt is limited to the proceeds from the sale of that collateral alone, with no further recourse to the borrower's other assets.
Notice in real estate refers to the official communication of a legal action or one’s intent to take an action. It serves to inform individuals or parties of important legal actions or changes regarding property and tenancy.
An open mortgage is a mortgage that has matured or is past its due date and hence remains open to foreclosure or repayment without any prepayment penaltiesat any time. It allows for flexibility for both the borrower and the lender.
ORE, or OREO, specifically refers to real estate assets that lending institutions hold due to foreclosures. These are properties not used for bank operations but retained as a consequence of loan defaults.
The period of redemption is a specific timeframe within which a borrower can reclaim their foreclosed property by paying off the total debt owed.
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 pre-foreclosure sale is a transaction in which a third-party buyer purchases a property after the underlying mortgage has been posted for foreclosure but before the property has been repossessed by the lender or liquidated to pay the debt.
In real estate, 'Priority' refers to the order in which creditors will be repaid in the event of a foreclosure. This can significantly impact which stakeholders are paid first and who might not receive any repayment if funds are exhausted.
A public sale refers to an auction sale of property with notice to the general public, usually carried out after foreclosure or other legal proceedings.
Real Estate Owned (REO) refers to properties that a lender, typically a bank, has acquired through foreclosure. These properties are held in the lender's inventory until they are sold.
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 redemption period is the time during which a former owner can reclaim their foreclosed property by paying off the debt and any associated legal fees.
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.
Real Estate Owned (REO) refers to properties that have reverted to the lender, typically a bank, after an unsuccessful foreclosure auction. These properties are then listed for sale as part of the lender’s inventory.
REPO stands for reposition, and in the real estate context, it refers to the repossession of properties. It may also relate to the repurchase of notes, generally focusing on distressed assets.
Repossession refers to the forced retrieval of property by a lender or lessor when a borrower or lessee defaults on contractual obligations, such as missing payments. This legal process primarily involves reclaiming collateral used to secure a loan or leased items and is often juxtaposed with the term foreclosure.
The right of redemption is a legal provision allowing a mortgagor to reclaim their property once they've satisfied debts before foreclosure is completed, thereby preventing loss of property ownership.
A Robo-Signer is an individual employed by financial institutions to sign hundreds of foreclosure documents daily without verifying the information, often leading to wrongful foreclosures.
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.
A senior mortgage, also known as a first mortgage, is the primary loan taken out on a property that holds the highest claim on the borrower's assets in case of foreclosure. It holds precedence over all other loans or claims on a property in the event of the borrower's default.
A Sheriff's Deed is an evidence of ownership provided by a court or law enforcement agency following the auction or sale of a property due to the owner's unpaid taxes or a foreclosure. While it transfers ownership, it does not come with a personal guarantee of a clear title.
A specific lien is a claim on a specific piece of property used as collateral for a loan. This differs from a general lien, which is a claim on all assets of an individual.
The statutory right of redemption allows a mortgagor to redeem their property within a specified time after a foreclosure sale, as provided by state law.
Strategic default is the intentional cessation of payments on a debt despite having the financial means to fulfill the obligation, typically done for perceived financial benefits.
A subordinated ground lease is a lease agreement wherein the mortgage on the property holds priority over the ground lease. This structure can affect the leaseholder's rights, particularly in cases of foreclosure.
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 Trustee's Deed is a legal document that conveys property ownership from a trustee to a buyer, commonly used in real estate transactions involving foreclosed properties.
A trustee's sale is a type of foreclosure sale conducted by a trustee under the stipulations of a deed of trust, where the property is auctioned off to recover the owed debt.
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.
Wrongful foreclosure occurs when a lender improperly or illegally forecloses on a borrower’s property. This type of foreclosure typically arises due to failure to follow correct legal procedures or agreements made between the lender and the borrower.
