Security Instruments

Deed in Lieu of Foreclosure

A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.

lis pendens

A pending notice of a lawsuit giving notice of a possible claim to the property

deficiency judgment

A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

first Mortgage

A security instrument with a first lien position

subordination agreement

A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.

junior mortgage

Any mortgage with a lower lien position than another.

Equitable Right of Redemption

The right of a debtor to save (redeem) property from foreclosure proceedings prior to confirmation of sale.

lien theory

The security instrument is a mortgage which only creates a lien against the property, which must be repaid by the debtor

Senior Mortgage

any mortgage in a higher lien position; generally the first mortgage

a _____ clause is used to place a superior lien in a junior lien position. a. foreclosure b. superior c. subordination d. priority

c. subordination

foreclosure action

court determines whether the lender is rightfully owed the money and whether the debtor is in default. ; and if found in favor judge issues an order of execution

Lien position

establishes the order in which liens are paid off out of the proceeds of a foreclosure sale.

Non-Judicial Foreclosure

foreclosure that does not require court proceedings or a judgment of foreclosure - the result of the power of sale clause in a deed of trust; however action cannot be taken until after the trustee has notified the borrower of the default and given the borrower the opportunity to cure.

Trust Deeds

instruments placing a specific financial interest in the title to real property into the hands of a disinterested third party as security for the payment of a note. with a trust deed: - borrower is called the trustor - lender is the beneficiary who retains both the note and the deed of trust - trustee holds legal title to the security property described in the deed of trust, subject to the terms of the trust for the benefit of the lender

Security Instrument

requires a debtor, typically without giving up possession of it; serves as a protection for the creditor, and motivation for the debtor, to make sure theat the terms of the note are fulfulled and the note is repaid as agreed. - when debt is repaid, note and security instrument cancelled - two main types of of security instruments in real estate are trust deeds and mortgages

title theory

security instrument gives actual title to the property to the lender while the debt is outstanding, with the borrower retaining only equitable title and possession of the land.

second mortgage

security instrument in a second lien position

default on a loan

the lender accelerates the due date of the debt to the present and gives the debtor notice of default, demanding the fullloan balance to be paid at once.

Mortgage

type of security instrument where the borrower (the mortgagor) conveys an interest in property to the lender (the mortgagee) as collateral for the debt, creating a voluntary lien on the property.