Real Estate Investment & Finance Notes and Mortgages

Vocabulary flashcards covering the key mortgage and foreclosure concepts from the lecture notes.

Amount Borrowed

The principal sum loaned by the lender to the borrower, to be repaid with interest.

Rate of Interest

The percentage charged by the lender on the loan principal.

Payment Amount

The periodic amount due from the borrower as scheduled, usually including principal and interest.

Due Date

The date on which a payment is required.

Number of Payments

The total count of payments in the loan amortization schedule.

Maturity Date

The date by which the loan must be paid in full.

Application of Payments

How each payment is allocated among interest, principal, penalties, and other charges.

Default

Failure to meet loan obligations, such as missing payments or violating covenants.

Penalties for Late Payment

Additional charges assessed when payments are not made by the due date.

Forbearance Provisions

Lender agreement to temporarily suspend or reduce payments.

Early Payments / Prepayment

Paying off all or part of the loan before the scheduled due date, sometimes with penalties.

Acceleration Clause

A provision enabling the lender to declare the entire loan balance due upon default.

Nonrecourse Clause

Limitation of the lender’s remedy to the collateral, not the borrower's personal assets.

Loan Assumability

Whether the loan can be assumed by a new borrower; original borrower may remain liable.

Due on Sale

Prohibition or triggering of full repayment upon transfer of the property.

Assignment Clause

Lender’s right to assign the loan to another party.

Future Advances (Line of Credit)

Additional borrowings under a line of credit beyond the initial amount.

Maximum Amount

The ceiling on the total loan principal.

Maximum Loan-to-Value (LTV)

Highest allowed ratio of loan amount to appraised property value.

Release of Lien

Lender’s release of the mortgage lien from the property under specified conditions.

Note

The written promise to repay the debt evidenced by the mortgage.

Mortgage

Pledge of real property as security for the loan.

Personal Liability

Borrower’s legal obligation to repay the loan; created by the note.

Interest that can be Mortgaged

Types of property or interests that can be pledged (land, buildings, fixtures, easements, etc.).

Mortgagor

Owner/borrower who gives the mortgage.

Mortgagee

Lender who receives the mortgage.

Covenants of Seisin

Promise that the grantor owns the property and has the right to convey it.

Covenant of Warranty

Promise that the title is free of encumbrances and will be defended.

Dower (Curtsey) Rights

Spousal rights to the property; typically released by the mortgage instrument.

Taxes & Insurance Fund

Fund set aside to pay taxes and insurance; often has priority over the mortgage.

Hazard Insurance

Property insurance against hazards such as fire, floods, etc.

Property Preservation and Maintenance

Obligations to keep the property in good condition to preserve value.

Reinstatement

Borrower’s right to cure default and resume the original terms by paying arrears and fees.

Foreclosure

Legal process to terminate the borrower’s rights and sell the property to satisfy the debt.

Lender Possession

Lender’s right to take possession of the property in certain circumstances.

Subordination Clause

Clause that ranks liens; may subordinate one lien to another.

Assumption

Process by which a new borrower takes over the existing mortgage obligation.

Grantee / Grantor

Grantee = buyer; Grantor = seller in an assumption or land contract context.

Release Conditions

Conditions under which the original debtor is released from liability.

Subject to Mortgage

Property conveyed with the mortgage remaining; original borrower remains liable.

Land Contract

Agreement where the seller retains title until performance; may allow the seller to mortgage the property up to the buyer’s indebtedness.

After-Acquired Property Clause

Clause covering property acquired after the loan is created.

Senior Mortgage

First-priority lien that is paid before junior liens.

Junior Mortgage

Lien that is subordinate to the senior mortgage.

Recording Mortgage

Filing the mortgage to protect the lien against third parties.

Purchase-Money Mortgage

Seller-financed mortgage tied to the sale of property.

Redemption (Equity Redemption)

Right to reclaim property after foreclosure by paying the debt, either before (equity) or after (statutory) foreclosure depending on the regime.

Public Auction

Foreclosure sale conducted by public bidding, aiming for the highest bid.

Upset Price

Minimum value fixed by court for foreclosure auction.

Deed of Trust

Alternative security device in some states; a trustee holds title and foreclosure is expedited.

Trustee

Third party who holds title under a deed of trust until payoff.

Mortgage Discharge vs Deed of Trust Reconveyance

Mortgage discharge is a simple acknowledgment of satisfaction; deed of trust reconveyance returns title.

Nature of Title at Foreclosure

The purchaser acquires the mortgagor’s rights, but title defects may persist.

Judgment Creditors

Creditors with judgments who may participate in the foreclosure process.

Trustees in Bankruptcy

Trustees appointed in bankruptcy who may interact with foreclosure rights.

Joinder

Bringing additional parties into a foreclosure action; others not joined keep their rights after sale.

Unsecured Creditor

A creditor whose claim is not secured by a lien after foreclosure.

Deficiency Judgment

The shortfall remaining after foreclosure sale, often a continuing claim.

Tax Lien

A tax claim that has priority over mortgage liens.

Tax Sale

Sale to satisfy tax debts; may require paying back taxes to regain property.

Chapter 7

Straight bankruptcy; liquidation of assets.

Chapter 11

Bankruptcy option for business restructuring and reorganization.

Chapter 13

Personal wage-earner bankruptcy with a repayment plan.