Short sale, residential mortgages

Question 1

What is a short sale?

Answer 1

All lienholders agree to allow property to be sold for less money than will pay the debt

Short sales are often used as an alternative to foreclosure.

Question 2

In a short sale, the lender releases its ___ so property can be sold free and clear to the new purchaser.

Answer 2

mortgage

Question 3

What is a deed in lieu of foreclosure?

Answer 3

Nonjudicial procedure where the title is transferred from the defaulting borrower (mortgagor) to the lender (mortgagee)

This process can help avoid the lengthy foreclosure process.

Question 4

What is a receivership clause?

Answer 4

It outlines the circumstances under which a lender has the right to petition a court to appoint a receiver to manage the property if the borrower defaults on the loan

A receiver is a neutral 3rd party professional appointed by the court to take control of the property when the borrower defaults.

Question 5

What clause is typically found in a mortgage loan used to finance income-producing property?

Answer 5

receivership clause

Question 6

What does a receivership clause allow?

Answer 6

It allows a receiver to be appointed to collect income from the property and use the income to make mortgage payments in the event of default.

Question 7

What is a lis pendens?

Answer 7

Constructive notice of pending legal action involving real estate.