RE Finance Unit 13: Loan Defaults and Foreclosures

Question 1

Acceleration

Answer 1

The clause in a mortgage or trust deed that stipulates the entire debt is due immediately if the mortgagor defaults under the terms of the contract.

Question 2

Auction

Answer 2

Selling property to the highest bidder.

Question 3

Crunch Down

Answer 3

Recasting an existing loan to a lower level to avoid a foreclosure.

Question 4

Deed in Lieu of Foreclosure

Answer 4

Voluntarily signing over to the creditor the property pledged as collateral on a defaulted loan.

Question 5

Default

Answer 5

Nonperformance of a duty; failure to meet an obligation when due.

Question 6

Deficiency Judgment

Answer 6

A personal judgment levied against the mortgagor, under the terms of the note, when a mortgage foreclosure sale does not produce sufficient funds to repay the mortgagee the outstanding loan balance, interest, and cost.

Question 7

Delinquency

Answer 7

Late payments or nonpayments of principal, interest, taxes, or insurance.

Question 8

Equitable Redemption Period

Answer 8

A period of time established by custom, usually six months, that allows a defaulting borrower to redeem property by bringing all payments current before foreclosure.

Question 9

Eviction

Answer 9

Legally dispossessing occupants of real property for unlawful detainer.

Question 10

Forbearance

Answer 10

The postponement for a limited time of a portion or all of the payments on a loan in jeopardy of foreclosure.

Question 11

Forclosure

Answer 11

Court action initiated by a lender for the purpose of recovering the borrower’s real estate to pay the balance owed on a defaulted loan.

Question 12

Grace Period

Answer 12

A time allowed, usually 15 days, for making late payments without a penalty being imposed.

Question 13

Judgement Decree

Answer 13

Specifies the awards granted by the court in a civil case.

Question 14

Judicial Foreclosure

Answer 14

A court procedure utilized by lenders to secure clear title to a property under a defaulted real estate loan.

Question 15

Late Payment Charge

Answer 15

Penalty imposed for late payments.

Question 16

Lis Pendens

Answer 16

Indicates that a lawsuit is in process.

Question 17

Moratorium

Answer 17

A temporary suspension of payments due under a financing agreement in order to help a distressed borrower recover and avoid a default and foreclosure.

Question 18

Notice of Default

Answer 18

In junior finance, where the borrower gives the senior lender permission to notify the junior lender in the event of a default.

Question 19

Power-of-Sale

Answer 19

The lender’s attorney’s authority to confess a judgment without process to speed a foreclosure.

Question 20

Recast

Answer 20

A redesign of an existing loan balance into a new loan for the same period or longer to reduce payments and help a distressed borrower.

Question 21

Reinstate

Answer 21

In delinquent deeds of trust, the time prior to exercising the power of sale in which the errant borrower may bring the loan current.

Question 22

Statutory Redemption Period

Answer 22

Legislated redemption period allowing borrower time to redeem defaulted property.

Question 23

Strict Forfeiture

Answer 23

Under a land contract, enables a lender to foreclose in as little as 30 days when the defaulting borrower has less than 20% equity.

Question 24

Trustee’s Deed

Answer 24

In a foreclosure, the deed given by the trustee under a deed of trust to the successful bidder at the auction.

Question 25

Unlawful Detainer

Answer 25

Persons in default and illegally retaining possession of property.

Question 26

Voluntary Conveyance

Answer 26

Voluntarily signing over to the creditor the property pledged as collateral on a defaulted loan.

Question 27

Workouts

Answer 27

The various ways to offset a foreclosure; payment moratoriums, waivers, adjustments.