Foreclosure Forum
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Foreclosure Glossary (Terms used in the materials and lectures in the "Hands-On" Foreclosure Training Class and defined according to their pertinence to the subject of foreclosure, primarily in a trust deed state.) - A -ABSOLUTE: Unconditional; complete and perfect in itself; without relation to or dependence upon other things or persons. ABSTRACT: A succinct summary; (e.g. an abstract of judgment; an abstract of title, etc.) ABSTRACT OF JUDGMENT: The essentials of a money judgment obtained via an adjudicated lawsuit. When an abstract is recorded in the recorder's office the judgment becomes a general lien on all the debtor's property located in that particular county. ACCELERATION CLAUSE: Clause in a deed of trust or mortgage which "accelerates" the time when the indebtedness becomes due. For example, some deeds of trust contain a provision that the note balance shall become due immediately upon the resale of the land or upon the default in the payment of principal and interest. ACCOMMODATION RECORDING: The recordation of title documents as a courtesy by a title company . . . without the assumption of responsibility for their correctness or validity. ACCOMMODATOR: A party who temporarily holds the sale proceeds of a property, on behalf of the seller, who is involved in an IRS1031 exchange. ACKNOWLEDGMENT: A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents, and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein. ACQUIESCENCE: Implied acceptance by an informed party. Witnessed by conduct that recognizes the existence of a transaction and permits it to be carried into effect; implied acceptance. ACTUAL NOTICE: Notice in fact to a party . . . directly and personally. ADJUDICATION: A judicial determination. ADJUSTABLE RATE MORTGAGE (ARM): A loan with an interest rate that fluctuates based on a specified financial index, such as Treasury securities, or the 11th District Cost of Funds, etc. ADVANCES: Moneys paid, on behalf of an owner, by a junior interest holder. Done to temporarily cure a delinquency on a senior encumbrance that threatens to extinguish the junior's position. Thereafter the junior lien holder can start their own foreclosure if they are not immediately reimbursed for the advances paid out. ADVERSE POSSESSION: A method of acquiring title to real property by physical possession of the property for a statutorily set time period, under certain conditions, by a person other than the owner of record. In California, see Code of Civil Procedure §324. AFFIDAVIT: A sworn, notarized statement that's signed by the affiant before witnesses. AGREEMENT OF SALE: Also known as an agreement to convey. A signed, written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) under certain specific terms and conditions. ALIENATION: The transfer of an interest in or title to property to another. ALL-INCLUSIVE DEED OF TRUST (AITD): A junior trust deed that includes in its balance the amounts of the senior included trust deeds. Interest is charged on the over-all total of the AITD, invariably at a higher rate than that charged on the included trust deeds. The interest rate differential accrues to the benefit of the beneficiary of the AITD, boosting the effective yield on their equity in the all-inclusive. Also known as a "wrap-around", or over-riding T.D. ALTA: Refers to a type of title insurance adopted by the American Land Title Insurance Association and is used nationwide. It usually refers to a loan policy, but can also insure an owner. AMORTIZATION: The gradual repayment of a debt in a series of equal periodic amounts until the total debt, including interest, is paid in full. Senior loans are typically amortized over 30 years, whereas junior loans are generally amortized over a much shorter time period. APPRAISAL: Statement of value as of a certain date. It is commonly prepared by a licensed and/or credentialed expert who has complied with the training requirements of the state and/or one of several recognized appraisal institutes. APPRECIATION: Increase in value or worth. The difference between the increased value of property and the original sales price. ARREARS: Generally, being overdue in an installment payment. ASSESSMENT: A bonded tax imposed to pay for public improvements (e.g. street/alley paving, curbs, sidewalks, etc.) beneficial to a limited area . Paid semi-annually over a 10 year period to the Bond Division of the city or county treasurer's office where the property is located. ASSIGNEE: One to whom a transfer of an interest is made (i.e. assignee of a deed of trust). ASSIGNMENT: Written document by which property, other than real property, is transferred from one person to another. Assignment of mortgage, assignment of deed of trust, assignment of lease, assignment of rentals, etc. are common assignments. The "assignee" receives the property assigned. ASSIGNMENT OF RENTS CLAUSE: An additional clause in a deed of trust wherein the trustor agrees to let the beneficiary collect the rents generated by the secured property in the event of a foreclosure action. Actually accomplished by getting a court appointed receiver installed. ASSIGNOR: One who transfers property by assignment. ASSUMPTION OF MORTGAGE: A formal agreement with a lender in which a new property owner agrees to be personally liable for the repayment of a pre-existing lien. Generally entails paying the lender an assumption fee and sometimes a higher interest rate. Doesn't release the original borrower from further liability unless the agreement specifically provides for it. ATTACHMENT: The seizing (by a Sheriff or other authorized officer) of property belonging to the defendant as security for any judgment the plaintiff may get in a court action. ATTORNEY-IN-FACT: An agent authorized to act for another. Commonly evidenced by a recorded Power of Attorney. Holder of the power can exercise it only as long as it has not been revoked and the grantor remains alive and competent enough to act on their own behalf if need be. - B -BALLOON PAYMENT: A lump sum final installment payment of a promissory note that is much larger than the regular installment payments. BANK RATINGS: Consumers can obtain a rating report on a specific bank by calling Veribanc at (800) 837-4246. The cost is $10 for one institution and $5 for each additional rating ordered at the same time. Ratings are available free from Bauer Financial Services by calling (800) 388-6686. BANKRUPTCY: A proceeding in U.S. District Court wherein debtors who can not meet the claims of their creditors may be adjudged bankrupt by the court. There are three different types of bankruptcy proceedings:
"BARE BONES" PETITION: Initial, tentative filing of a bankruptcy petition that qualifies the petitioner to the benefits of the automatic stay pending the filing of the full petition within the following 15 days. Failure to complete the filing of the full petition will result in the dismissal of the "face sheet filing" and a bar to any subsequent refiling for the next 180 days. BENEFICIARY ("Bene"): One for whose benefit a trust is created; a lender secured by a deed of trust. BENEFICIARY'S DEMAND: Payment required by a beneficiary under a deed of trust before authorizing a reconveyance. BENEFICIARY'S STATEMENT: Statement by a beneficiary under a deed of trust as to the total balance due on a promissory note and other information concerning the loan. BID: Trustee's sales are conducted by verbal bid, with the auctioneer/trustee starting off with a minimum bid (total of all moneys due the beneficiary) on behalf of the beneficiary and then opening up the bidding to other qualified bidders. BILL OF SALE: Written document by which title to personal property (goods or chattels) is transferred from one party to another. BINDER: A deposit that secures the right to buy or rent something (e.g. real property; insurance; etc.). BLANKET DEED OF TRUST: A deed of trust secured by more than one lot or parcel of land. BLIND POOL: An investment pool, from which money is used to buy property, without prior commitment as to which particular properties are going to be purchased. BONA FIDE PURCHASER: A buyer in good faith, for fair value and without notice of any off-record adverse claim or right of third parties, and who consequently, takes title free of such defects. BONDED IMPROVEMENTS: See Assessment. BOOTLEG IMPROVEMENT: Building, expanding, or modifying a structure without benefit of a required permit. BUSINESS DAY: Any day except Sunday or the following business holidays: New Years Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas. BUY-DOWN: An up-front payment to a lender to reduce a loan's interest rate, either temporarily (the first year or two) or permanently. BUYER'S MARKET: A market with a lot fewer buyers than there are sellers. Indicated by a prolonged marketing time of more than 90 days and generally high mortgage interest rates of more than 12%. - C -CAL-VET: A California state loan program that provides low interest rate loans to qualified California veterans. The financing is somewhat unique for an institutional loan in that it amounts to a contract-for-deed arrangement. CAP: A negotiated upper limit the interest rate on a variable rate mortgage can rise, both annually and over the life of the mortgage. CASH FLOW: The surplus left over out of the rents after paying out all operating expenses and mortgage payments. CASHIER'S CHECK: A check drawn on the issuing bank's funds and guaranteed payable (except in instances where it is lost or stolen). CHAIN OF TITLE: A chronological list of documents that comprises the title record history to a specific parcel of real property. CHATTEL MORTGAGE: A pledge of personal property to secure the repayment of a loan. CLEAR TITLE: Title that is not encumbered or burdened with defects. CLOSING COSTS: The miscellaneous costs that the buyer and seller incur to complete or "close" a real estate transaction. These costs are in addition to the price of the property. CLOUDED TITLE: Any claim, encumbrance or defect that contradicts the title record as understood by the property owner. Intractable disputes are resolved judicially (quiet title action). CODE: A collection of laws relating to a certain topic, such as real property, patents, etc. COLLATERAL: Anything of value, like real property, pledged as security for a debt. COLLATERAL ASSIGNMENT: Pledges the beneficial interest in a deed of trust as security for a loan. COLLECTION SERVICE: A neutral third party who receives and disburses moneys according to a mutually executed collection agreement signed by the payor and payee of a debt. COMMINGLE FUNDS: To put together in one mass. Combining monies belonging to multiple parties or entities in one account or in such a manner as to run the risk of being unable to trace what monies actuallly belong to what party. COMMISSION: A fee paid to a real estate agent/broker by a principal as compensation for finding a buyer or seller and completing the sale. Usually a percentage of the sale price and commonly amounts to 6 to 7 percent on houses and 10 percent on raw land. COMMITMENT: A promise or firm agreement; a lender's contractual obligation to make a loan to a qualified borrower. COMMON AREA: Property in a condominium project that is jointly owned and used by all owners. COMMON LAW: The unwritten body of English Law founded upon customs, precedents and usage. COMMUNITY PROPERTY: A category of property, existing in some states (viz. California) in which all property acquired by a husband and wife, or by either, during marriage, is owned in common by the husband and wife. COMPARABLES (Comps): Similar properties (situated near the property you're interested in) that are currently listed for sale or have recently sold. CONCURRENT: A simultaneous occurrence. In most instances, it usually relates to the simultaneous recording of two or more documents affecting the same property. The weakness of a property profile, for example, is that it only reports those trust deeds recorded concurrently with the last ownership change rather than disclosing ALL the trust deeds of record. CONDEMNATION: The taking of private property for public use by a governmental entity via the power of eminent domain. CONDOMINIUM: The composite of individual ownership and exclusive possession of an enclosed cube of space in a multi unit building, plus a collective ownership of (and right to use) facilities common to all the separately owned units. CONFORMING LOAN: A loan (not over $203,000) that complies with national secondary market guidelines promulgated by FNMA "fannie mae". CONSTRUCTIVE NOTICE: Notice imparted by the public records (e.g. the county recorder's records). The law presumes that one has knowledge of instruments that are properly recorded. CONTIGUOUS: Two or more parcels of land that abut against each other. CONTINGENT: Dependent upon an uncertain future event. CONVEYANCE: A written instrument that transfers title to or an interest in land from one party to another (i.e. a deed, an assignment, a bill of sale, etc.) COVENANTS, CONDITIONS, AND RESTRICTIONS (CC&R's): A recorded, controlling declaration or deed that limits and qualifies what individual unit owners are free to do (for purposes of maintaining uniformity) in a community such as a condominium project or planned urban development, etc. CONVENTIONAL (Conforming) LOAN: A loan, secured by a trust deed that's truly based on the value of the property, rather than a loan that's primarily secured by a government guarantee (VA) or insurance (FHA). The loan amount usually will not exceed 80% of the property's value, with the maximum now set at $203,000. A larger loan is known as a "Jumbo" loan. CONVEY: The act of deeding or transferring title to another. CRAMDOWN: A controversial procedure in bankruptcy wherein the court reduces a secured debt (i.e. trust deed or mortgage) to the current value of the property. The court actually splits the mortgage debt into two parts. The amount equal to the current value of the home is treated as a secured claim that the debtor must continue to pay. The portion of debt in excess of the property's current value becomes an unsecured claim that's usually not repaid in full. CREDIT BID: The opening bid at a trustee's sale is made on behalf of the foreclosing beneficiary. If it is less than or equal to the total amount of money owed to the beneficiary it will be made on a credit basis. But once the bid surpasses the total payoff amount then the beneficiary must begin to bid with cash at hand, just like all other bidders. CREDIT LINE MORTGAGE: A trust deed or mortgage that provides for an additional future advance(s) to the borrower. An uncertainty can exist regarding the priority of subsequent advances vis-a-vis subsequent junior lienors. It involves whether the advances made were obligatory or optional and whether or not the credit line lender had actual notice or just constructive notice of the existence of the junior lienor at the time an advance was made. The problem facing the foreclosure speculator is that there are no reliable independent elements detailing the true facts in every instance. - D -DATE-DOWN: A supplement to the on-going title search that's undertaken during the foreclosure process via a trustee's sale guaranty. A date-down is done preparatory to recording the Notice of Trustee's Sale and then again, just before the actual trustee's sale. DEALER: One who buys with the intent of reselling rather than holding for investment. DECLARATION: A non-notarized statement made under of penalty of perjury. DECLARATION OF TRUST: A written document that delineates the powers of a named trustee who holds title to certain property for the benefit of others (beneficiaries). Commonly used by the famous or wealthy to keep their ownership of property confidential. DECREE: A judgment by court. DEED: A written document that transfers ownership of land from one party to another. The seller is called the "grantor" and the buyer is called the "grantee". Deeds may be of many kinds. For example, there are grant deeds, quitclaim deeds, gift deeds, guardians' deeds, administrators' deeds, warranty deeds, etc. depending upon the language of the deed, the legal capacity of the grantor, and other circumstances. DEED-IN-LIEU OF FORECLOSURE: Used by owners to voluntarily convey the title of their property to the beneficiary (lender) to avoid the negative credit consequences of a foreclosure. Lenders are generally reluctant to accept a "deed in lieu" unless the title is free and clear of any other encumbrances junior to theirs and the owners execute an estoppel affidavit acknowledging that they are acting volitionally, with informed consent. DEED OF TRUST (TRUST DEED): A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The owner is called the "trustor". The neutral third party to whom the bare legal title is conveyed (and who is called on to liquidate the property if need be) is the "trustee". The lender is the "beneficiary". When the loan is paid off the trustee is directed by the beneficiary to issue a deed of reconveyance to the trustor, which extinguishes the trust deed lien. DEFAULT: Failure to make the loan payments as agreed in the promissory note. DEFAULT JUDGMENT: A judgment against a defendant who made no appearance in court. DEFEASIBLE: Subject to being defeated, annulled, or revoked. DEFICIENCY JUDGMENT: A personal judgment against a debtor for the amount remaining due after a judicial foreclosure of a trust deed. DEMAND: The payoff amount necessary to retire a secured debt. DEPOSITION: Written testimony of a witness taken under oath, outside of court, rather than in open court. DEPRECIATION: A decline in the value of property. Usually due to the obsolescence or wear and tear of the improvements on the land or adverse changes in the neighborhood. DISCLOSURE: Regarding real estate, it is revealing all known facts concerning the property being transferred. DOCUMENTARY TRANSFER TAX: A local tax levied on recorded transfers of title to real property. Our local (Southern California) tax rate is $.55 cents per $500 (or fraction thereof) of owner's equity transferred. The tax declaration is generally found on the face of the deed. DOWN PAYMENT: The up-front cash commitment paid by the buyer. It makes up the difference between the sales price of a property and the loan amount obtainable. "DUE ON SALE" CLAUSE: Provision in a deed of trust calling for the total pay-off of the loan balance in the event of a sale or transfer of title to the secured real property. - E -EARNEST MONEY: An advance payment towards the purchase price of property that binds the parties to a purchase contract for property. It is usually not refundable if the purchase doesn't go through as a fault of the buyer, unless specified otherwise. EASEMENT: A right of way allowing someone to cross over another's property for a limited, specific purpose. A typical example is an easement granted to a utility company. 11th DISTRICT COST OF FUNDS: The average cost of interest that savings institutions in the 11th Federal Home Loan Bank Board District (which includes California) pay for certificates of deposit, savings accounts and other investments. This is a common index for figuring adjustable-rate loans and is more stable than Treasury securities. EMERGENCY PETITION: SEE "Bare Bones" petition. ENCROACHMENT: An intrusion or overlap of an adjoining neighbor's improvement (building, wall, roof, fence or other fixture) into a contiguous neighbor's property. ENCUMBRANCE: A legal right, claim or lien upon real property that diminishes the owner's equity or the land's value. Typical encumbrances are trust deeds, judgments, assessments, mechanic's liens, C C & R's, easements, etc. ENDORSEMENT: Guaranteeing a loan in the event the trustors fail to pay as promised. EQUITABLE TITLE: The present right to possession, coupled with the right to acquire legal title once some condition precedent has been met. EQUITY (IN PROPERTY): The property's current value minus the sum of all liens against it. EQUITY LINE OF CREDIT: A loan that works much like a charge card, wherein a homeowner borrows money as needed, up to a pre-negotiated limit. Interest is paid only on the amount of the loan used and the borrower can pay off the balance as quickly or as slowly as they like. EQUITY PURCHASE: In California it refers to a purchase pursuant to Civil Code Section 1695 when four or less residential units, which are owner-occupied and in foreclosure, are acquired for rental, investment or dealer purposes by a buyer called an equity purchase investor. ESCROW: An impartial third party that acts on behalf of both seller/buyer or borrower/lender in carrying out the principals' instructions through to an eventual "closing". Escrow acts as the custodian for the documents and funds involved - and makes disbursements, delivers documents and effects the consequential changes to the title record of the subject property. ESTATE: The degree, nature and amount of interest or ownership a person may have in any property. Usually used to describe property that's left after death. ESTOPPEL: A bar to the assertion of a right or a defense in consequence of a previous position, act or representation. EXCEPTION: An interest in real property that is excluded from conveyance to the grantee and remains in the grantor. EXCHANGE: The reciprocal transfer of real property that has certain tax advantages over a sale of the same properties. EX PARTE: On one side only. - F -FAIR MARKET VALUE: The highest price a property will bring on the open market, given an informed and freely willing buyer and seller. "FANNIE MAE": Federal National Mortgage Association . . . the largest secondary-market investor in residential mortgages in the United States. Provides a constant and orderly market for banks to go to when they need to sell mortgages in order to keep their loan portfolios in balance with government-mandated liquidity ratios. FEE SIMPLE: The most absolute, complete ownership of land without any limitation to any particular class of heirs or other restrictions. FHA: Federal Housing Administration (formed in 1934). It's now a branch of H.U.D. It's basic function is to spur housing in the directions that Congress mandates by issuing mortgage insurance to institutional lenders on the loans they make under the 47 different loan programs that FHA now sponsors. With such loan insurance lenders are willing to lend with smaller down payments and at lower rates of interest. The sales price ceiling for FHA loan programs pertaining to single-family houses is currently $152,362 whereas the VA's sales price maximum is currently $203,000. FICTITIOUS DEED OF TRUST: A recorded, comprehensive deed of trust containing all of the general terms and provisions (boilerplate sections) of a standard deed of trust. It is used, by reference, in the "short form" deeds of trust in order to cut down the length, and hence the cost, of recording repetitious, multi-page documents. FICTITIOUS NAME: A name adopted for business purposes that is other than the true name of the business owner. FINANCING STATEMENT: The document prescribed by the Uniform Commercial Code (UCC) which provides notice that a security agreement encumbering personal property exists between parties. It is recorded locally or filed with the Secretary of State (depending upon the type of collateral). The procedure does not apply to real estate mortgages. However, since it's sometimes unclear whether specified items are real or personal property, a financing statement is often recorded by a lender. FINDER: A person who brings two or more parties together but does not conduct nor participate in any of the negotiations between them. A finder's fee can be paid to a non-licensed intermediary in California. "FIRST" TRUST DEED: A lien on real property which is superior to any other lien (except property taxes/assessments) of record. FIXED RATE LOAN: A loan bearing a constant interest rate that does not vary over the life of the loan. Monthly payments on a fully amortized, fixed rate loan will not change over time. FLIPPING or PIVOTING: Buying and then reselling property within a very short holding period. FORCED SALE: When one sells or loses his property without actually wanting to dispose of it. FORBEARANCE AGREEMENT: A formal agreement between a borrower and a lender to temporarily postpone an on-going foreclosure. FORECLOSURE: The forced sale of property pledged as security for a debt that went into default. "FORTY THIEVES": The local group of professional foreclosure speculators working in concert at the trustee's sales rather than in direct competition. Their orchestrated, sideline bidding activity acts to keep bidding levels down, resulting in reduced over-bids going to junior interest holders. FREE AND CLEAR: Ownership of property free of all indebtedness. When an owner's equity is equal to the fair market value of her property. FRIENDLY FORECLOSURE: A foreclosure that is actually instigated by the trustor for some ulterior reason - generally to clear up clouded title, etc. FUTURE ADVANCES: Additional moneys lent that are secured by an already existing promissory note and trust deed. - G -GENERAL INDEX: A title company's record of negative items (involuntary liens, bankruptcy, etc.) affecting title to property. It is an alphabetized name index (of individuals or entities) rather than a geographic index by legal description. GENERAL LIEN: A lien against an individual. By operation of law it will automatically attach to any real property the individual owns or comes into title to, once the lien is recorded and becomes part of the public record. GLOSSARY: A collection of glosses or explanations of words and passages of a work or author; a partial dictionary of a work, an author, a dialect, art, or science, explaining archaic, technical, or other uncommon words. GRACE PERIOD: A period of days during which a debtor may cure a delinquency without penalty (before triggering a late charge, a foreclosure or an acceleration of the balance due). GRADUATED RATE LOAN: A loan that starts out with low payments that increase at a pre-determined rate at the beginning of the loan term, and then once the payment is up to a certain level it remains constant for the remaining life of the loan. GRANT DEED: A deed used extensively in California to transfer title. There are a number of implied warranties attributed to it, the main ones being that the grantor has the right to convey the property, and that the grantor hasn't encumbered the property any more than already disclosed. The grantee may hold the grantor liable if the title proves to be defective. GRANTEE: The person acquiring title to real property by a deed. GRANTOR: The person transferring title to real property by a deed. - H -HAZARD INSURANCE: Protects against damage to property from fire, windstorms and other common hazards. "HARD MONEY" LOAN: A loan transaction wherein actual money changed hands rather than an extension of credit. "HIGH-COST" MORTGAGE: A mortgage bearing an annual percentage rate that exceeds the 1-Year Treasury Bill's by 10%, or where the lender's fees exceed 8% of the loan amount or $400.00 (whichever is greater). HOMEOWNER'S' ASSOCIATION: A private, nonprofit organization of homeowners operating in accord with the recorded "covenants, conditions and restrictions" of their particular development. Its primary purpose is to provide for the maintenance of the common area facilities and amenities by assessing each unit owner their proportionate share of the project's operating expenses. HOMEOWNER'S WARRANTY (HOW): An insurance policy that insures the new homeowner against defects in systems such as wiring, plumbing, heating and air-conditioning. HOMESTEAD EXEMPTION: The dwelling in which an owner resides is protected to a limited extent in California from forced sale by a recorded declaration of homestead. It has no effect against voluntary liens, like trust deeds, regardless of their priority. But it does protect the owner's equity from involuntary liens as long as the property's value doesn't surpass the total of all liens plus the homeowner's homestead exemption. - I -IMPOUNDS: Moneys collected monthly (from the owner by the lender) sufficient to pay the annual real estate taxes and insurance premiums on the secured property. Rarely collected any more in states that require lenders to pay interest to owners on their impound balances. Federal law exempts FHA and VA lenders from paying interest on impounds. IMPROVEMENTS: Man-made additions to and on real property that enhance its value. INDEPENDENT CONTRACTOR: A non-supervised individual who undertakes to perform services for another and is independent in the method used to accomplish the task. INDEX: A constantly changing record of the general movement of interest rates. Used by lenders to calculate the interest rate adjustments on their variable rate loans. Most lenders use either the 11th District Cost of Funds or the 1-year Treasury Rate as their index base. To that they will add their margin or spread (e.g. index rate + 2% margin) to arrive at the actual rate they're charging their borrowers at that time. INJUNCTION/TRO: Defensive courthouse tactic compelling the postponement of an ongoing foreclosure action long enough for a judge to determine if the proceeding is just and proper. IN LIEU OF: Substituting for; in place of. An alternative. (See "deed-in-lieu of foreclosure"). INSTITUTIONAL LENDERS: Banks, savings & loan associations, and insurance companies who lend out depositors' money as contrasted with private individuals lending out personal funds. INSTRUMENT: Any legal document such as a deed, trust deed, reconveyance, etc. Also referred to as a document. INSURABLE INTEREST: An interest in property substantial enough to cause the owner of it an actual loss if it were damaged or destroyed. The beneficiary of any insurance policy, even a title insurance policy, must show an "insurable interest" in order to be covered by it. INTEREST: The cost of using borrowed money. It's quoted as an annual percentage of the loan amount. The rate can either be fixed or fluctuate ("adjust") over the life of the loan. INTER PLEADER: A court filing (by a third party holding contested funds) that petitions the court to take custody of a sum of money and distribute it amongst the disputants as it sees fit - absolving the third party from any liability therefrom. If the proposed division of a trustee's sale overbid is disputed between junior equity holders the trustee would probably file a Bill of Inter pleader with a local court, forcing the claimants to submit to a binding judicial allocation. INVOLUNTARY LIEN: A lien imposed upon property by the operation of law rather than at the will of the owner. Property taxes, federal income taxes, bonded assessments and abstracts of judgment are examples of involuntary liens. - J -JOINT TENANCY: An estate owned by two or more parties in equal shares that is created by a single transfer document. Upon the death of a joint tenant the surviving joint tenants take the entire decedent's share of the property, so nothing passes to the heirs of the deceased. JOINT VENTURE: The association of two or more individuals in a business transaction. JUDGMENT LIEN: A general lien (good for 10 years) created by a court ordering a debtor to pay a certain amount of money to the judgment creditor. The lien will bind to the debtor's real property once an abstract of the judgment is recorded. Thereafter the debtor won't be able to resell, refinance or buy any other property in the county without paying off the lien. JUDICIAL FORECLOSURE: A foreclosure that's processed via a court action. Usually limited to a collection action on an involuntary, judgment lien that automatically attached against a debtor's real property by operation of law (such as a recorded abstract of judgment). JUMBO LOAN: A loan that exceeds $203,150 dollars. It's also called a non-conforming loan. JUNIOR BENE BUYOUT: The purchase of a junior beneficiary's trust deed position at a steep discount because of an impending foreclosure on a senior trust deed. If done correctly the new beneficiary will be paid in full via the resale or refinancing of the real property. JUNIOR LIEN: A lien that does not have first claim on the property it is secured by because it was recorded later than a competing lien secured by the same property. JURAT: The portion of a document that states when, where, and before whom it was sworn. - L - |
