GLOSSARY TERMS

- A -AccelerationThe right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.

Acceleration ClauseA clause used in an installment note and mortgage (or deed of trust), which gives the lender the right to demand payment in full upon the occurrence of a certain even, such as failure to pay an installment payment by a certain date, change of ownership without the lenders consent, destruction of the property or any other event which endangers the security of the loan.

Adjustable-Rate MortgageA general term for any mortgage in which the interest rate and, generally, the payments change over the life of the loan. The interest rate is adjusted to match the rise or fall of a preselected interest rate index and the borrower's regular payments will increase or decrease accordingly. Different types of adjustable-rate mortgages (ARMs) have different frequencies for these adjustments. Some ARM's have limits on payment and interest rate changes and the maximum interest rate over the life of the loan. To the borrower's advantage, the initial rate of an ARM is usually low, permitting the purchase of real estate that otherwise would be unaffordable with a fixed-rate mortgage, but there is a risk of higher payments later on in the life of the mortgage.

AdministratorA person appointed by a court to administer the estate of a person who died intestate (without a will).

Adverseclearly contrary, such as an adverse party being the one suing you. An adverse interest in real property is a claim against the property, such as an easement

Affidavit Any voluntary written document in which the signer swears under oath before a notary public or someone authorized to take oaths (like a County Clerk), that the statements in the document are true.

Affirmative defensepart of an answer to a charge or complaint in which a defendant takes the offense and responds to the allegations with his/her own charges, which are called "affirmative defenses." These defenses can contain allegations, take the initiative against statements of facts contrary to those stated in the original complaint against them, and include various defenses based on legal principles. AllongeA piece of paper which has been attached to a contract, a check or any promissory note, on which to add signatures because there is not enough room on the main document.

AmendTo improve; to make better by a change or modification; to correct or adjust.

Amended complaintThe results of when the party suing (plaintiff or petitioner) changes the complaint he/she has filed. It must be in writing, and can be done before the complaint is served on any defendant, by agreement between the parties (usually their lawyers), or upon order of the court. Complaints are amended to correct facts, add new causes of action (bases for the lawsuit), substitute discovered names for persons sued as "Does," or to properly plead a cause of action (the legal basis for suing) after the court has found the complaint inadequate.

Amortizationrepayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years). Repayment of a loan by installment payments. As the payments are made, the debt is reduced so that at the end of fixed period or term, no money will be owed. In an amortized loan the payments are equal monthly payments and that means that at the beginning of the loan the amount of interest paid is very high and the amount of principal paid is quite low. Compare that to the end of the loan where the monthly payment consists mostly of principal and very little interest. The reason being that the principal has been steadily paid down and thus there is less interest due because there is less principal due.

AnnulTo erase; to nullify; to wipe out or to make void

Answerin law, a written pleading filed by a defendant to respond to a complaint in a lawsuit filed and served upon that defendant. An answer generally responds to each allegation in the complaint by denying or admitting it, or admitting in part and denying in part. The answer may also comprise "affirmative defenses" including allegations which contradict the complaint or contain legal theories (like "unclean hands," "contributory negligence" or "anticipatory breach") which are intended to derail the claims in the complaint. Sometimes the answer is in the form of a "general denial," denying everything. If the complaint is verified as under penalty of perjury, the answer must be also.

Appearancethe act of a party or an attorney showing up in court. Once it is established that an attorney represents the person (by filing a notice of appearance or representation or actually appearing), the lawyer may make an appearance for the client on some matters without the client being present. In the future that attorney will be required to represent the client.

AppraisalA written analysis of the estimated value of a property prepared by a qualified appriaser.

Appraised ValueAn opinion of a property’s fair market value based on an appraiser’s knowledge, experience and analysis of the property.

AppraiserA person qualified by education, training and experience to estimate the value of real property and personal property.

AppreciationAn increase in the value of a property due to changes in market conditions or other causes.

Arrears money not paid when due, usually the sum of a series of unpaid amounts, such as rent, installments on an account or promissory note, or monthly child support. Sometimes these are called "arrearages."

Assetgenerally any item of property that has monetary value, including articles with only sentimental value (particularly in the estates of the dead).

Assignment of Mortgage ( or Assignment of Deed of Trust)Assumption by a purchaser of liability for payment of an existing mortgage, or deed of trust. May or may not be accompanied by a release of liability of the original borrower. The transfer of a mortgage from one entity to another.

- B -

Balloon MortgageA mortgage with periodic installments of principal and interest that, at the end of such a period, do not fully amortize the loan. The balance of the mortgage due is usually paid in a lump sum at a specified date, usually at the end of the term of such periodic installments .

Balloon NoteA mortgage with periodic installments of principal and interest that, at the end of such a period, do not fully amortize the loan. The balance of the mortgage due is usually paid in a lump sum at a specified date, usually at the end of the term of such periodic installments .

BankruptcyLegal relief from the payment of all debts after the surrender of all assets to a court-appointed trustee. Assets are distributed to creditors as full satisfaction of debts, with certain priorities and exemptions. A person, firm or corporation may declare bankruptcy under one of several chapters of the U.S. Bankruptcy Code: Chapter 7 covers liquidation of the debtor’s assets; Chapter 11 covers reorganization of bankrupt businesses; Chapter 13 covers payments of debts by individuals through a bankruptcy plan.

BeneficiaryThe person designated to receive the income from a trust, estate or a deed of trust.

Bidthe offered amount for a property for sale at auction.

Breach

A violation of any legal obligationBrokerA person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

Broker’s Price Opinion (BPO)Opinion of a real estate agent or broker as to the value of certain property. It is based on a drive by inspection of the property as well as a review of comparable homes that have recently sold in the area.

Building CodeLocal regulations that control design, construction and materials used in construction. Buidling codes are based on safety and health standards

- C -

Capa provision of an adjustable rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease.

Capitalized InterestCapitalized interest has to do with the interest that is associated with just about every type of loan agreement. Basically, capitalized interest can be understood in terms of expensed interest that occurs when the regularly scheduled loan payments are not made on time. In many types of loans, that unpaid interest that is part of the delinquent payment is added to the principal balance of the loan.

However, capitalized interest can does not necessarily only occur when payments are late or are missed. The interest can also be amortized in situations where payments are deferred for some reason. For example, if the borrower works with the lender to suspend payments for a short period of time, this is known as forbearance. During this arranged time, payments are not considered to be delinquent. At the same time, the portion of those deferred payments that would have gone toward the accrued interest on the loan will be added back to the principal, creating capitalized interest.

There are actually some situations in which capitalized interest may be in the best interests of the borrower. This is especially true if the purpose of the loan was to create an asset that will be capable of generating revenue once it is completed. One of these situations would occur when the purpose of the loan is to finance the construction of a building. Seeking a deferred payment arrangement does create more interest and higher payments down the road, but it also frees resources to be devoted to the project. Once the building is complete and can begin generating revenue, the additional cash flow will offset both the higher loan payments and the capitalized interest.

In some cases, a lender may be not be agreeable to a deferred payment schedule, but will be open to receiving only payments on the loan interest for a period of time. In this scenario, the borrower may choose to use part of the loan proceeds to make the payments on the capitalized interest. This allows the borrower to buy some time until the project is completed and the assets begin to generate revenue to cover both the loan principal and the interest.

Certificate of TitleA statement provided by an abstract company, title company or attorney stating that the title to real estate is legally held by the current owner

Certificate of SaleA document given to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.

Certified CheckA check upon which the bank has stamped the words “certified” or “accepted” certifying that the check is drawn upon sufficient funds and will be honored when it is presented for payment.

Chain of titlethe succession of title ownership to real property from the present owner back to the original owner at some distant time. Chains of title include notations of deeds, judgments of distribution from estates, certificates of death of a joint tenant, foreclosures, judgments of quiet title (lawsuit to prove one's right to property title) and other recorded transfers (conveyances) of title to real property. Usually title companies or abstractors are the professionals who search out the chain of title and provide a report so that a purchaser will be sure the title is clear of any claims.

Clear titleholding ownership of real property without any claims by others on the owner's title and no history of past claims which might affect the ownership.

Client1) A person who employees an attorney. 2) a person who discusses with any attorney the possibility of hiring an attorney ClosingA meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs.

Cloud of TitleAny conditions revealed by a title search that adversely affects the title to real estate. Usually clouds on title cannot be removed except by a quit claim deed, release or court action.

CollateralAn asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract

CollectionThe efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary

Complaintthe first document filed with the court ( Clerk of the Court) by a person or entity claiming legal rights against another. The party filing the complaint is usually called the plaintiff and the party against whom the complaint is filed is called the defendant or defendants.

Complaints are pleadings and must be drafted carefully (usually by an attorney) to properly state the factual as well as legal basis for the claim. A complaint also must follow statutory requirements as to form.When the complaint is filed, the court clerk will issue a summons, which gives the name and file number of the lawsuit and the address of the attorney filing the complaint, and instructs the defendant that he/she/it has a specific time to file an answer or other response. A copy of the complaint and the summons must be served on a defendant before a response is required.

CondemnationThe determination that a building is not fit for use or is dangerous and must be destroyed; the taking of private property for a public purpose through an exercise of the right of eminent domain

CondominiumA real estate project in which each unit owner has a title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas

Conflict of interest a situation in which a person has a duty to more than one person or organization, but cannot do justice to the actual or potentially adverse interests of both parties. This includes when an individual's personal interests or concerns are inconsistent with the best for a customer, or when a public official's personal interests are contrary to his/her loyalty to public business. An attorney, an accountant, a business advisor or realtor cannot represent two parties in a dispute and must avoid even the appearance of conflict. He/she may not join with a client in business without making full disclosure of his/her potential conflicts, he/she must avoid commingling funds with the client, and never, never take a position adverse to the customer.

ContractAn oral or written agreement to do or not to do a certain thing

Conventional MortgageA mortgage that is not insured or guaranteed by the federal government contrasted with a government mortgage

Cooperative (co-op)A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit

Counsel1) an attorney; an attorney representing a party in a legal action. 2) Advice, suggestions

Credit BidA credit bid refers to being able to bid the amount of your lien at a foreclosure sale. It allows someone to bid on behalf of a lien w/o having to bring in any actual money. Technically the plaintiff bids it all the time - they never have to bring funds to cover their opening bid at a sale. More often this term is used to refer to a jr. lienholder, though. When a jr. lienholder proves up in either the senior's case (or in our file, we amended jgmt to include the jr. lienholder), there is a sentence in the order that state that they are allowed to credit

bid the amount that they proved up for. In our case in which we amended the judgment, it allows us to bid on both counts. The more common usage is in defensive files in which it allows us to bid as the junior lienholder and we do not have to bring the funds to the sale to cover our own lien when we bid. In other words, when we bid at a sale, we only have to bring to the sale and amount sufficient to payoff the senior lienholder, not our lien as well.

Credit HistoryA record of an individual’s open and fully repaid debts. A credit history helps a lender determine whether a potential borrower has a history of repaying debts in a timely manner

CreditorA person to whom money is owed

Credit reportA report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.

- D -

Debtan amount owed to another

Debtor1. A person who owes a person money. 2) A person who owes another anything. 3) Person seeking relief from a debt by filing a bankruptcy petition

DeedThe legal document conveying title to a property

Deed-In-LieuUsed by a mortgagor to voluntarily convey the title of their property to the mortgagee/beneficiary (lender) to avoid the negative credit consequences of a foreclosure. The title must be free and clear of any other encumbrances and the owners execute an affidavit acknowledging that they are acting volitionally, with informed consent.

Default1) failure to respond to a summons and complaint served on a party in the time required by law. If a legal answer or other response is not filed, the suing party (plaintiff) can request a default be entered in the record, which terminates the rights of the defaulting party to defend the case.2) the failure to make a payment when due, which can lead to a notice of default (demand letter) and the start of foreclosure proceedings if the debt is secured by a mortgage or deed of trust.

Defendantthe party sued in a civil lawsuit or the party charged with a crime in a criminal prosecution. In some types of cases (such as divorce) a defendant may be called a respondent.

Deficiency or Deficiency JudgmentA personal judgment against the borrower for the remaining balance on the loan after a

foreclosure sale.

DelinquencyFailure to make mortgage payments when mortgage payments are due

Demand letterA letter requesting the performance of some obligation or making a claim for something to which the writer is entitled

DepositA sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.

DepreciationA decline in value of property; the opposite of appreciation

Dismissthe ruling by a judge that all or a portion (one or more of the causes of action) of the plaintiff's lawsuit is terminated (thrown out) at that point without further evidence or testimony. This judgment may be made before, during or at the end of a trial, when the judge becomes convinced that the plaintiff has not and cannot prove his/her/its case. This can be based on the complaint failing to allege a cause of action, on a motion for summary judgment, plaintiff's opening statement of what will be proved, or on some development in the evidence by either side which bars judgment for the plaintiff. The judge may dismiss on his own or upon motion by the defendant. The plaintiff may voluntarily dismiss a cause of action before or during trial if the case is settled, if it is not provable or trial strategy dictates getting rid of a weak claim. A defendant may be "dismissed" from a lawsuit, meaning the suit is dropped against that party.

Dismissal1) the act of voluntarily terminating a criminal prosecution or a lawsuit or one of its causes of action by one of the parties. 2) a judge's ruling that a lawsuit or criminal charge is terminated. 3) the act of a plaintiff dismissing a lawsuit upon settling the case. Such a dismissal may be dismissal with prejudice, meaning it can never be filed again, or dismissal without prejudice, leaving open the possibility of bringing the suit again if the defendant does not follow through on the terms of the settlement.

Down paymentThe payment of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage

Due on Sale ProvisionA provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage

- E -

Earnest Money DepositA deposit made by potential home buyer to show that the or she is serious about buying the

house

EncumbranceAnything that affects or limits the fee simple title to a property, such as mortgages, leases, easements or restrictions.

EndorserA person who signs ownership interest over to another party.

EquityThe difference between the fair market value and current indebtedness also referred to as the owner’s interest. The value an owner has in real estate over and above the obligation against the property.

EscrowAn item of value, money, or documents deposited with a third party to be delivered upon fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Escrow AccountThe account in which a mortgagee servicer holds the borrower’s escrow payments prior to paying property expenses

Escrow AnalysisThe periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance and other bills.

Escrow Collectionsfunds collected by the servicer and set aside to an escrow account to pay the borrower’s property taxes, mortgage insurance and hazard insurance

Escrow DisbursementsThe use of escrow funds to pay rel estate taxes, hazard insurance, mortgage insurance and other expenses as they become due

Escrow paymentThe portion of a mortgagor’s monthly payment that is held by the servicer to pay taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.

EstateThe ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

EvictionThe lawful expulsion of an occupant from real property

ExecutorThe person named in a will to administer an estate. The court will appoint an administrator if no

executor is named..

- F -

Fair Debt Collection Practices Act (FDCPA)One of the federal consumer credit protection acts, whose purpose is to eliminate improper collection practices by debt collection agencies.Fair Market ValueThe highest price that a buyer, willing but not compelled to buy, would pay, and the lowest price that a seller, willing but not compelled to sell, would accept.

Federal Home Loan Mortgage Corporation (FHLMC) A publicly owned corporation created by Congress to support the secondary mortgage market. It purchases and sells conventional residential mortgages as well as residential mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA).

Federal National Mortgage Association (FNMA)A publicly owned corporation created by Congress to support the secondary mortgage market. It purchases and sells conventional residential mortgages as well as residential mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA).

FHA LoanA loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans ($155,250 as of 1/1/96), they are generous enough to handle moderately priced homes almost anywhere in the country.

First MortgageA mortgage that is the primary lien against a property.

Fixed Rate MortgageA mortgage in which the rate of interest is absolute, that is not adjusted from time to time

ForbearanceThe act of holding back on doing something that one has the right to do. In the case of a loan in default, an intentional delay in collecting a debt or demanding performance on a contract, usually for a specific period of time. Forbearance is often consideration for a promise by the debtor to pay an added amount.

Forbearance Agreement A verbal or written agreement that the lending institution will delay exercising its right to foreclose on a loan as long as the borrower performs certain agreed-upon terms and conditions

ForeclosureThe legal process by which a party who has loaned money secured by a mortgage or deed of trust on real property (or has an unpaid judgment), requires sale of the real property to recover the money due, unpaid interest, plus the costs of foreclosure, when the debtor fails to make payment. After the payments on the promissory note have become delinquent for several months (time

varies from state to state), the lender can have a notice of default (demand letter) served or mailed on the debtor stating the amount due and the amount necessary to "cure" the default. If the delinquency and costs of foreclosure are not paid within a specified period, then the lender will send out a foreclosure referral. Illinois is a state in which the referral must be a judicial referral. A judicial foreclosure in which the lender can bring suit for foreclosure against the defaulting borrower for the delinquency and force a sale.

Foreclosure salethe actual forced sale of real property at a public auction (often on the courthouse steps following public notice posted at the courthouse and published in a local newspaper) after foreclosure on that property as security under a mortgage or deed of trust for a loan that is substantially delinquent. The lender who has not been paid may bid for the property, using his/her/its own unpaid note toward payment, which can result in a bargain purchase.

ForfeitureThe loss of money, property, rights or privileges due to a breach of legal obligation

- G -

Government MortgageA mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS).

Government National Mortgage Association (GNMA)A government owned corporation within the U.S. Department of Housing and Urban Development (HUD). This was created by Congress on 9/1/68

GranteeThe person to whom an interest in real property is conveyed

GrantorThe person conveying an interest in real property

- H -

Hazard InsuranceInsurance coverage that compensated for physical damage to a proeprty from fire, wind, vandalism or other hazards

Heirn. one who acquires property upon the death of another, based on the rules of descent and distribution, namely, being the child, descendant or other closest relative of the dear departed. It also has come to mean anyone who "takes" (receives something) by the terms of the will. An heir cannot be determined until the moment of death of the person leaving the property, since a supposed beneficiary (heir apparent) might die first. A presumptive heir is someone who would receive benefits unless a child was later born to the current owner of the property the

presumptive heir hopes to get someday. A legally adopted child gains the chance to be an heir upon adoption as if he/she were the natural child of the adoptive parent or parents and is called an adoptive heir. A collateral heir is a relative who is not a direct descendant, but a brother, sister, uncle, aunt, cousin, nephew, niece or a parent. It is noteworthy that a spouse is not an heir unless specifically mentioned in the will. He/She may, however, receive an inheritance through marital property or community property laws. A child not mentioned in a will can claim to be a pretermitted heir, i.e. inadvertently or accidentally omitted from the will, and can claim he/she would (should) have received as an heir.

Homeowners’ AssociationA nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements, In a PUD project, it holds title to the common elements.

Homeowners InsuranceAn insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contests

Homestead exemptionUnder homestead exemption statuses, the immunity from real property from execution for debt. Provided the property is occupied by the debtor as the head of the family.

HUD1 Statement: also known as the "settlement sheet," it itemizes all closing costs; must be given to the borrower at or before closing.

- I -

Indexa number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be changed on the ARM., This interest rate is subject to any caps that are associated with the mortgage.

Initial interest rateThe original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). Sometimes known as “start rate” or “teaser rate”.

InstallmentThe regular periodic payment that a borrower agrees to make to a lending institution.

Installment Land ContractA contract for the purchase of real estate that provides for payment of the purchase price in installments and for title to be conveyed upon the completion of paymentInsured MortgageA mortgage that is protected by the FHA or by private mortgage insurance (PMI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.

Interest1) any and all, partial or total right to property or for the use of property, including an easement to pass over a neighboring parcel of land, the right to drill for oil, a possibility of acquiring title upon the happening of some event, or outright title. While most often referring to real property, one may have an interest in a business, a bank account or any article.

2) the financial amount (money) paid by someone else for the use of a person's money, as on a loan or debt, on a savings account in a bank, on a certificate of deposit, promissory note or the amount due on a judgment. Interest is usually stated in writing at the time the money is loaned. There are variable rates of interest, particularly on savings accounts which depend on funding from the Federal Reserve or other banks and are controlled by the prevailing interest rates on those funds. Maximum interest rates on loans made by individuals are controlled by statute. To charge more than that rate is usury, the penalty for which may be the inability of a creditor to collect through the courts. The interest rates demanded by lending institutions are not so restricted. The maximum legal interest often granted by the courts on judgments is set by the law of the state. Simple interest is the annual rate charged for a loan, and compound interest includes interest upon interest during the year.

Intestateadj. referring to a situation where a person dies without leaving a valid will. This usually is voiced as "he died intestate," "intestate estate," or "intestate succession."

- J - Joint tenancyA form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right of survivorship

JudgmentA decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor’s real property as collateral for the judgment’s creditor.

1) Default judgmentif a defendant in a lawsuit fails to respond to a complaint in the time set by law), then the plaintiff can request that the default be entered into the court record by the clerk, which gives the plaintiff the right to get a default judgment. If the complaint was for a specific amount of money owed on a note, other money due, or a specific contract price (or if the amount due is easy to calculate) then the clerk of the court can enter a default judgment. If proof of damages or other relief is necessary, a hearing will be held in which the judge determines terms of the default judgment. In either case the defendant cannot speak for himself/herself. A defendant who fails to file an answer or other legal response when it is due can request that the default be set aside, but must show a legitimate excuse and a good defense to the lawsuit.

2) Summary judgmenta court order ruling that no factual issues remain to be tried and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. A summary judgment is based upon a motion by one of the parties that contends that all necessary factual issues are settled or so one-sided they need not be tried.

Judgment lien

a lien on the property of a debtor resulting from the decree of a court

Judicial ForeclosureA type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court.

JuniorOf secondary importance, rand or right. Usage, “A secondary mortgage is junior to a first mortgage”

Junior lienholderA mortgage or judgment lien that is secondary to the primary mortgage. Lien priority is determined by the recording date of the lien.

Jurisdiction1) the authority given by law to a court to try cases and rule on legal matters within a particular geographic area and/or over certain types of legal cases. 2) the power that grants the authority to the court to rule on the property or the person. The act of serving summons on the defendant or a member of his/her household. The act of publishing against the property. These are the acts that when done correctly confer jurisdiction on a court to enter its orders.

- K -

- L -

Late ChargeThe penalty a borrower must pay when a payment is made a certain number of days (usually 15) after the due date

Land TrustIt is a revocable, living trust primarily used to hold title to real estate for privacy and anonymity. The owner of the last can transfer title to aland trustee and specifies who will be the beneficial owner and who will have the power of direction over the trust. The beneficial owner has the right to use the land. When real estate is held in a land trust, however, only the land trustee’s name is made public - not that of the trust’s beneficiary. Unless forced to do so by a court order, the land trustee will not disclose this information to anyone.

Legal DescriptionA method of geographically identifying a parcel of land, which can be definitely located by reference to government surveys or approved, recorded maps and is acceptable in a court of law.

Legateen. a person or organization receiving a gift of an object or money under the terms of the will of a person who has died. Although technically a legatee does not receive real property (a devisee), "legatee" is often used to designate a person who takes anything pursuant (according) to the terms of a will. The best generic term is beneficiary, which avoids the old-fashioned distinctions

between legatees taking legacies (personal property) and devisees taking devises (real property), terms which date from the Middle Ages.

Liable Having legal responsibility, responsible, accountable, answerable; obligated to pay

LiabilitiesA person’s financial obligation. Liabilities include long term and short term debt as well as any other amounts that are owed to others.

LienAny official claim or charge against property or funds for payment of a debt or an amount owed for services rendered. A lien is usually a formal document signed by the party to whom money is owed and sometimes by the debtor who agrees to the amount due. A lien carries with it the right to sell property, if necessary, to obtain the money. A mortgage or a deed of trust is a form of lien, and any lien against real property must be recorded with the County Recorder to be enforceable.

Line of Creditan agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower.

Lis pendensLatin for "a suit pending," a written notice that a lawsuit has been filed which concerns the title to real property or some interest in that real property. The lis pendens (or notice of pending action) is filed with the clerk of the court, certified that it has been filed, and then recorded with the County Recorder. This gives notice to the defendant who owns real estate that there is a claim on the property, and the recording informs the general public (and particularly anyone interested in buying or financing the property) that there is this potential claim against it.

LoanA sum of borrowed money (principal) that is generally repaid with interest

Loan to Value percentage (LTV)The relationship between the principal balance of the mortgage and the appraiser value (or sale price) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80%.

Loss MitigationUsed in certain circumstances to help keep individuals and families in their homes. Through the program, borrowers with home mortgages insured by the FHA have several options that may be used to avoid foreclosure. The program is most often successful when delinquencies area result of a temporary financial setback and the borrower and lender take prompt action to resolve the matter

- M -

Maturity Date

the date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable

Mechanic's lienthe right of a craftsman, laborer, supplier, architect or other person who has worked upon improvements or delivered materials to a particular parcel of real estate (either as an employee of the owner or as a sub-contractor to a general contractor) to place a lien on that real property for the value of the services and/or materials if not paid. Numerous other technical laws surround mechanic's liens, including requirements of prompt written notice to the owner of the property (even before the general contractor has been tardy in making payment), limits on the amount collectable in some states, and various time limitations to enforce the lien. Ultimate, last-resort enforcement of the mechanic's lien is accomplished by filing a lawsuit to foreclose the lien and have the property sold in order to be paid.

Modify to change, adjust or moderate

ModificationThe act of changing any of the terms of the mortgage

MoratoriumA period during which a person, usually a debtor has a legal right to postpone meeting an obligation. An individual creditor may declare a moratorium with respect to her debtors, or a moratorium may be imposed by legislation and apply to debtors as a class.

Mortgage"Mortgage" means any consensual lien created by a written instrument which grants or retains an interest in real estate to secure a debt or other obligation. The term "mortgage" includes, without limitation: (a) mortgages securing "reverse mortgage" loans as authorized by subsection (a) of Section 5 of the Illinois Banking Act; (b) mortgages securing "revolving credit" loans as authorized by subsection (c) of Section 5 of the Illinois Banking Act, Section 1-6b of the Illinois Savings and Loan Act and Section 46 of the Illinois Credit Union Act; (c) every deed conveying real estate, although an absolute conveyance in its terms, which shall have been intended only as a security in the nature of a mortgage; (d) equitable mortgages; and (e) instruments which would have been deemed instruments in the nature of a mortgage prior to the effective date of this amendatory Act of 1987.

Mortgagee"Mortgagee" means (i) the holder of an indebtedness or obligee of a non-monetary obligation secured by a mortgage or any person designated or authorized to act on behalf of such holder and (ii) any person claiming through a mortgagee as successor.

Mortgagorthe person who has borrowed money and pledged his/her real property as security for the money provided by the lender (mortgagee)."Mortgagor" means (i) the person whose interest in the real estate is the subject of the mortgage and (ii) any person claiming through a mortgagor as

successor. Where a mortgage is executed by a trustee of a land trust, the mortgagor is the trustee and not the beneficiary or beneficiaries.

Movantthe party in a lawsuit or other legal proceeding who makes a motion (application for a court order or judgment).

MotionAn application made to the court for the purpose of obtaining an order or rule directing something to be done in favor of the applicant

- N -

Notea promissory note, a promise to pay. A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time

NoticeA formal declaration of intention. As defined by the judicial decision, “information concerning a fact, actually, communicated to a person by an authorized person, or actually derived by him from a proper source.”

Notice of ActionThe formal notice which informs that a civil action has been instituted against someone; a summons; a lis pendens.

Notice of AppearanceA written notice filed in an action, or given orally in open court, by a party’s attorney that he/she is appearing in the proceeding. A party who chooses to represent himself is also required to file notice of appearanceNotice to AppearA court order in the form of a summons directing a person to appear or to suffer consequences stated in the notice

Notice of DefaultA formal written notice to a borrower that a default has occurred and that legal action must be taken.

Notice of MotionA formal notice by a party to an action that a motion, the purpose which is stated in the notice will be made to the court on a stated day.

Nunc pro tuncLatin for "now for then." A term applied to the power of the court to allow acts to be done retroactively; this refers to changing back to an earlier date of an order, judgment or filing of a document. Often the judge will grant the nunc pro tunc order ex parte (with only the applicant appearing and without notice). Examples: a court clerk fails to file an answer when he/she received it, and a nunc pro tunc date of filing is needed to meet the legal deadline (statute of limitations); a final divorce judgment is misdirected and, therefore, not signed and dated until the day after the re-marriage of one of the parties-the nunc pro tunc order will prevent the appearance or actuality of a bigamous marriage.

- O -

Ordera determination made by the court; an order of court. A determination made by an administrative agency. A written direction from one person to another to pay money or deliver goods to another person.

Original Principal BalanceThe total amount of principal owed on a mortgage before any payments are made

OverdraftThe condition that arises when a customer of a bank draws a check greater in amount of money that he has on deposit in that account in the bank.OwnerA person who has title to a property and dominion over it.

- P -

ParalegalA person who, although not an attorney, performs many of the functions of an attorney under the attorney’s supervision. The American Bar Association defines a paralegal as a “person qualified through education, training or work experience, who is employed or retained by a lawyer, law office agency, or other entity in a capacity of function which involves the performance, under the ultimate direction and supervision of an attorney, or specifically designated substantive legal work, which work, for the most part, require a sufficiency knowledge of legal concepts that absent such assistant, the attorney would perform the task. Another term for paralegal is legal assistant.

Partial Payment

A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan

Payoffto discharge a debt; to compensate another for goods or property received or services rendered

Per diem Latin for "per day," it is short for payment of daily expenses and/or fees of an employee or an agent

Per Stirpes(purr stir-peas) adj. Latin for "by roots," by representation. The term is commonly used in wills and trusts to describe the distribution when a beneficiary dies before the person whose estate is being divided. Example: "I leave $100,000 to my daughter, Eleanor, and if she shall predecease me, to her children, per stirpes." Thus, if Eleanor dies before her parent, then the $100,000 will be divided among her children equally. A way to make this more clear is to substitute for per stirpes: "…to her children, by right of representation, share and share alike," which is clear to the non-lawyer. If there is no provision for distribution to children of a predeceased child, then the gift will become part of the residue (what is left after specific gifts), and then the grandchildren may not share if there are surviving children of the giver.

Plaintiffthe party who initiates a lawsuit by filing a complaint with the clerk of the court against the defendant(s) demanding damages, performance and/or court determination of rights.

Power of attorney A written document signed by a person giving another person the power to act in conducting the signer's business, including signing papers, checks, title documents, contracts, handling bank accounts and other activities in the name of the person granting the power. The person receiving the power of attorney (the agent) is "attorney in fact" for the person giving the power, and usually signs documents as "Melinda Hubbard, attorney in fact for Guilda Giver." There are two types of power of attorney: a) general power of attorney, which covers all activities, and b) special power of attorney, which grants powers limited to specific matters, such as selling a particular piece of real estate, handling some bank accounts or executing a limited partnership agreement. A power of attorney may expire on a date stated in the document or upon written cancellation. Usually the signer acknowledges before a notary public that he/she executed the power, so that it is recordable if necessary, as in a real estate transaction.

Pre-foreclosure Salea procedure in which the investor allows a mortgagor to avoid foreclosure by selling a property for less than the amount that is owed to the investor

PrepaymentAny amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may results from a sale of the property, the owner;’s decision to pay off the

loan in full, or a foreclosure. In each case, repayment means payment occurs before the loan has been fully amortized.

Prepayment PenaltyA fee that may be charged to a borrower who pays off a loan before it is due.

PrincipalThe amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

Principal, Interest, Taxes and Insurance (PITI)The four components of a monthly mortgage payment. Principal refers to the part of the morthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.

Private Mortgage Insurance (PMI)Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan to value (LTV) percentage in excess of 80 percent.

Probatethe process of administering the estate of a dead person according to the terms of the will, if one exists, or according to state law..The first step is to file the purported will with the clerk of the appropriate court in the county where the deceased person lived, along with a petition to have the court approve the will and appoint the executor named in the will (or if none is available, an administrator) with a declaration of a person who had signed the will as a witness. If the court determines the will is valid, the court then "admits" the will to probate. 2) a general term for the entire process of administration of estates of dead persons, including those without wills, with court supervision. The means of "avoiding" probate exist, including creating trusts in which all possessions are handled by a trustee, making lifetime gifts or putting all substantial property in joint tenancy with an automatic right of survivorship in the joint owner. Even if there is a will, probate may not be necessary if the estate is small with no real estate title to be transferred or all of the estate is either jointly owned or community property. Reasons for avoiding probate are the fees set by statute and/or the court (depending on state laws) for attorneys, executors and administrators, the need to publish notices, court hearings, paperwork, the public nature of the proceedings and delays while waiting for creditors to file claims even when the deceased owed no one. 3) to prove a will in court and proceed with administration of a deceased's estate under court supervision.

Pro se(proh say) prep. Latin for "for himself." A party to a lawsuit who represents himself (acting in propria persona) is appearing in the case "pro se."

Promissory NoteA written promise to repay a specified amount over a specified period of time

Proof of ClaimIn Bankruptcy, a document filed by the creditor indicating the amount it is owed by the debtor

Public AuctionA meeting in an announced public location to sell property to repay a mortgage that is in default

PublicationA newspaper, magazine or book. The act of making something known to the public; the act of publishing. The printing of a legal notice in a newspaper of general circulation

Purchase Money TransactionThe acquisition of property through the payment of money or its equivalent

- Q -

QuashTo suppress, to put aside; to vacate. Thus a motion to quash indictment is a motion that asks the court to suppress an indictment that is defective.

Quiet title action a lawsuit to establish a party's title to real property against anyone and everyone, and thus "quiet" any challenges or claims to the title. Such a suit usually arises when there is some question about clear title, there exists some recorded problem (such as an old lease or failure to clear title after payment of a mortgage), an error in description which casts doubt on the amount of property owned, or an easement used for years without a recorded description.

Quit Claim DeedA deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made

- R -

Real Property

All land, structures, firmly attached and integrated equipment (such as light fixtures or a well pump), anything growing on the land, and all "interests" in the property, which may include the right to future ownership (remainder), right to occupy for a period of time (tenancy or life estate), the right to drill for oil, the right to get the property back (a reversion) if it is no longer used for its current purpose (such as use for a hospital, school or city hall), use of airspace (condominium) or an easement across another's property. Real property should be thought of as a group of rights like a bundle of sticks which can be divided. It is distinguished from personal property which is made up of movable items.

Real Estate Owned (REO)“Real Estate Owned” is the term used by lenders to indicate that the lender now has title to the foreclosure property and is in a position to sell it to a third party in an attempt to recoup the monies leant to the borrower.

RecordA copy of a document or instrument filed or deposited with a public officer

RecorderThe noting in the registrar’s office of the details of a property executed legal document, such as a deed, a mortgage, a satisfaction of mortgage or an extension of mortgage, thereby making it part of the public record.

RedeemTo buy back, to payoff. To recover something that has been pledged or to recover legal title

RedemptionThe recovery of pledge property by payment of what is due.With respect to a foreclosure, the act of redeeming, buying back property by paying off a loan, interest and any costs of foreclosure. When judgment is entered, a redemption expiration date is set and included in the judgment documents.

Redemption PeriodThe period of time during which the mortgagor or lienor may redeem property sold at a judicial sale

ReinstatementThe act of restoring a person or thing to a position or condition from which he or it has been removed. This occurs when a borrower cures a mortgage default. A mortgage is reinstated if it is brought up to date by paying all charges and fees/costs that had become overdue.

Release to give up a right as releasing one from his/her obligation to perform under a contract, or to relinquish a right to an interest in real property. A release of Mortgage is a written document

which discharges the obligation of a mortgage upon payment and which is given by a mortgagee to a mortgagor and recorded in the county recorder’s office.

Reformationthe correction or change of an existing document by court order upon petition of one of the parties to the document. Reformation will be ordered if there is proof that the parties did not intend the language as written or there was an omission due to mistake or misunderstanding.

RescissionThe cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed

Right of SurvivorshipIn joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant

- S -Summonsa document issued by the court at the time a lawsuit is filed, stating the name of both plaintiff and defendant, the title and file number of the case, the court and its address, the name and address of the plaintiff's attorney, and instructions as to the need to file a response to the complaint within a certain time (such as 30 days after service), usually with a form on the back on which information of service of summons and complaint is to be filled out and signed by the process server. A copy of the summons must be served on each defendant at the same time as the complaint to start the time running for the defendant to answer. After service to the defendants, the original summons, along with the "return of service" proving the summons and complaint were served, is filed with the court to show that each defendant was served. A summons differs from a subpoena, which is an order to a witness to appear.

Service of process the delivery of copies of legal documents such as summons, complaint, subpoena, order to show cause (order to appear and argue against a proposed order), and certain other documents, usually by personal delivery to the defendant or other person to whom the documents are directed.

Personal servicedelivering a summons, complaint, notice to quit tenancy or other legal document which must be served by handing it directly to the person named in the document.

Substitute service

accomplishing service (delivery) of legal documents required to be served personally by leaving the documents with an adult resident of the home of the person to be served, with an employee with management duties at the office of an individual, or with such an employee at corporate headquarters, with a designated "agent for acceptance of service" (often with name and address filed with the state's Secretary of State).

Service by publicationserving a summons or other legal document in a lawsuit on a defendant by publishing the document in an advertisement in a newspaper of general circulation. Service by publication is used to give "constructive notice" to a defendant who is intentionally absent, in hiding, unknown (as a possible descendant of a former landowner), and only when allowed by a judge's order based on a sworn declaration of the inability to find the defendant after "due diligence" (trying hard).

Senior lienthe first security interest (lien or claim) placed upon property at a time before other liens, which are called "junior" liens

Subordination agreementa written contract in which a lender who has secured a loan by a mortgage or deed of trust agrees with the property owner to subordinate the first loan to a new loan (thus giving the new loan priority in any foreclosure or payoff). The agreement must be acknowledged by a notary so it can be recorded in the official county records.

Surplusthe amount of proceeds over and above the plaintiff’s final bid at a foreclosure sale.

- T -

Tax salean auction sale of a taxpayer's property conducted by the local government to collect unpaid real estate taxes.

TestateThis is where a person dies with a will

Third party bidderthe successful purchaser at a foreclosure sale, but who is not the plaintiff in the case.

Title searchthe examination of county records for the property's title history by a title company, an abstractor, attorney or escrow officer to determine the "chain of title" and the current status of title, including owner, legal description, easements, property taxes due, encumbrances

(mortgages or deeds of trust), long-term leases, judgments or other liens. Sometimes the title search will turn up some "cloud on the title" which reveals something is wrong, such as a break in the chain of title, inaccurate property description in a previous deed or some old secured loan which has not been released. Such clouds can be a reason to cancel a contract for purchase of the real property.Titleownership of real property or personal property, which stands against the right of anyone else to claim the property. In real property, title is evidenced by a deed, judgment of distribution from an estate or other appropriate document recorded in the public records of the county.

Title insurancea policy issued by an insurance company guaranteeing that the title to a parcel of real property is clear and properly in the name of the title owner and that the owner has the right to deed the property (convey or sell) to another. Should a problem later arise with the title (such as an inaccurate description), the insurance company will pay the damages to the new title holder or secured lender or take steps to correct the problem.

Warranty deeda deed to real property which guarantees that the seller owns clear title which can be transferred (conveyed). There are certain warranties that are given which are set forth by statue, hence the Warranty deed. Compare to a Quit Claim deed where no warranties or received. .