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Mortgages

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Question
Answer
adjustable-rate mortgage   ARM - a type of flexible-rate mortgage (479)  
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annual cap   limits the amount of increase or decrease a rate could adjust in any one adjustment period - usually 2 percent (480)  
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annual percentage rate   APR - as defined by the Truth in lending Act, the percentage that the total finance charge calculated on an annual basis bears to the amount of the loan or credit (488)  
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assumption   a contract between a grantor/mortgagor and a grantee in which the grantee agrees to undertake responsibility for the mortgage debt (491)  
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construction mortgage   mortgage given to secure funds advanced to construct or improve a building (483)  
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deed in lieu of foreclosure   a deed in which a mortgagor conveys mortgaged real estate to the mortgagee, who promises in return not to foreclose on the mortgage debt, which is in default (477)  
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deed of trust   a legal instrument in which a borrower transfers real property to a trustee as security for a debt - the lender is the beneficiary of the trust (467)  
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default   nonperformance of a duty or obligation as part of the mortgage transaction (473)  
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due-on-sale clause   a provision found in some mortgages requiring the the mortgagor pay off the mortgage debt if he or she sells the property (491)  
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Equal Credit Opportunity Act   federal statute prohibiting discrimination in an applicant's credit transaction (489)  
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equity of redemption   the right of a mortgagor or another person with an interest in real estate to reclaim it after default but before foreclosure (475)  
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judicial foreclosure   a foreclosure ordered by a court (475)  
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lien theory   lien theory states that the mortgagee is is primarily interested in being able to sell the property and apply proceeds to debt if the mortgagor violates some mortgage provision - in reality the mortgage is a lien, a device used to secure a debt (466)  
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lifetime cap   the maximum a rate can adjust up or down over the life of a loan - usually 5-6 percent (480)  
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mortgage   a document that uses real property to secure payment of a debt (465)  
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nonjudicial foreclosure   also known as the power-of-sale foreclosure - Foreclosure based on terms in a mortgage giving a mortgagee or third party the power to sell the security if the borrower defaults (476)  
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note   the borrower's written promise to repay a loan according to its terms (466)  
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novation   agreement in which a creditor agrees to discharge an existing debt and to substitute a new obligation and a new debtor in its place (492)  
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open-end mortgage   mortgage that permits the mortgagor to borrow additional funds, usually up to the original amount of the debt (484)  
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package mortgage   a mortgage debt secured by both personal and real property (485)  
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purchase money mortgage   a mortgage given to a lender to secure part of the purchase price of real property, delivered contemporaneously with the transfer of title to the buyer (481)  
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secured debt   a loan that is secured by property - an automobile, real east or some other kind of valuable asset (465)  
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strict foreclosure   a judicial procedure that terminates the mortgagor's equity of redemption and establishes the mortgagee's absolute title to mortgaged real property (477)  
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title theory   theory that the mortgage conveys title to the mortgagee - the mortgagee does not get possession unless the mortgagor defaults (466)  
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Truth-in-Lending   federal statute that requires that lenders disclose the cost of consumer credit (487)  
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usury   the practice of charging interest on a loan in excess of a rate allowed by law (486)  
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satisfaction of mortgage   also known as release of mortgage - a written statement by the mortgagee that the debt secured by the mortgage has been paid (468)  
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