Allonge -document that transfers a mortgage note to a new lender
Amortization – principal and interest payments on a mortgage over a period of time
After Repair Value – how much property will be worth once it is renovated
Arrearage – past due borrower payments
Asset Management – managing a promissory note
Assignment of Mortgage – document that transfers a mortgage from one lender to another
Balloon Payment – one time large principal payment at the end of a loan
Bankruptcy – legal protection from creditors for a person or entity
Broker Price Opinion (BPO) – realtor/real estate agent provides a preliminary value on a property
Brokering – middle man who brings note sellers and buyers together for a fee
Cash for Keys – instead of foreclosure a lender will pay a borrower to surrender a property
Collateral – asset or property used to secure a loan
Contract for Deed – borrower receives title after loan is fully paid
Deed – document that transfers ownership of property
Deed in Lieu – instead of foreclosure borrower surrenders deed to lender
Deed of Trust – another name for mortgage; property is used collateral to a lender
Default – borrower is at least 3 months behind on mortgage payments
Due Diligence – researching a mortgage note prior to purchase
Escrow – set aside account for property tax and homeowner’s insurance collected by a note servicer
First Position – senior or primary loan that takes priority over junior liens
Foreclosure – lender takes a property/collateral back during default
Goodbye Letter – letter that informs a borrower that their old lender no longer has their mortgage note
Hello Letter – letter that informs a borrower that a new lender has their mortgage note
Home Equity Line of Credit (HELOC) – second mortgage that allows borrower to use equity from home
Hypothecation – the process of securing a mortgage loan with a promissory note as collateral
Investment to Value (ITV) – amount of money invested in a deal vs the value of the property
Joint Venture – partnership formed to complete a deal
Land Trust – trust created to hold property or assets
Lien – when a lender or creditor has legal claim against a property
Lien Position – based on recording date which lien takes priority
Loan Sale Agreement/Purchase Sale Agreement – document that a note buyer signs to agree to buy a note
Loan to Value (LTV) – amount of money owned to lender vs the value of the property
Modification – lender changes the terms of the promissory note
Mortgage – document gives lender ability to foreclosure if borrower does not honor a promissory note
Non-Performing Note – note in which a borrower is not making payments
Note Servicer – third party company that manages the note for a lender
Notice of Default – written notice to a borrower from a lender that foreclosure may be pending due to lack of payment
Origination – process of creating a new mortgage loan
Performing Note – note in which a borrower is paying on time and as agreed per the promissory note
Points – 1% of the loan amount, considered a closing cost
Principal – initial amount of money a lender gives to a borrower not including interest
Promissory Note – borrower signs a pledge to a lender to pay a loan back as agreed
Real Estate Owned (REO) – real estate a lender owns after a foreclosure has taken place
Self Directed IRA (SDIRA) – retirement account which offers more control over where one can invest beyond a typical IRA custodian
Seller Financing/Carry Back – owner of a property finances the sale of a property instead of a bank
Short Sale – sale in which a lender has agreed to accept less than what is owed on a property
Title Insurance – insurance that will pay a lender if there is an inaccurate property title report
Title Report – document that shows chain of ownership and possible liens, taxes, and judgements against a property
Unpaid Principal Balance (UPB) – balance owned on the mortgage
Yield – amount of profit a lender makes on an annual basis
