Real Estate Glossary

Debt:

An amount of money owed to another. See installment loan and revolving liability.



Debt-to-income ratio:

The percentage of gross monthly income that goes toward paying all long term debts, such as mortgage loans, car loans, student loans, credit cards, etc. If monthly gross income is $4,500 and the total of debt payments is $1,620, the debt-to-income ratio is 36 percent ($1,620 divided by $4,500).



Deed:

Document indicating the legal transfer of title to real property. There are many versions of deeds based on how title is warranted and special deeds – such as sheriff’s deeds or trustee deeds – that are issued to certain successful purchasers at foreclosure sales.



Deed in lieu of foreclosure:

A process typically used in a judicial foreclosure jurisdiction in which the underlying defaulted borrower directly transfers title of the mortgaged property to the lender to avoid the foreclosure process and to satisfy the underlying loan obligation.



Deed of trust:

In a title theory state, the document that transfers legal title to the property to the lender pending full repayment of the loan obligation. The document gives a lender the right to foreclose on the property if the borrower defaults on the loan. 



Deed to secure debt:

A reference variation to a mortgage in a lien theory state in which foreclosure occurs through judicial foreclosure.



Deed under power of sale:

A reference variation to a deed of trust in a title theory state in which foreclosure occurs through power of sale.



Default:

Failure to make required mortgage payments on a timely basis or to comply with other non-monetary requirements of a mortgage such as maintaining insurance.



Defendant:

Legal reference to a party in a civil action against whom the action is brought. There are typically two parties to every legal action – the plaintiff, who brings the action, and the defendant against whom the action is brought. In a foreclosure action, the borrower in default is named as a defendant in the foreclosure complaint.



Defense:

A legal theory or factual matter that refutes or provides a defense to a legal claim. In a foreclosure action, evidence of a current payment schedule is a defense to a claim of default. Usury is a legal defense to non-payment of a note for which the interest rate exceeds the amount permitted by law.



Deficiency judgment:

Imposition of personal liability on a borrower for the unpaid balance of mortgage debt after a foreclosure has failed to yield the full amount of the debt that was due and owing at the time of foreclosure.



Deficiency:

Imposition of personal liability on a borrower for the unpaid balance of mortgage debt after a foreclosure has failed to yield the full amount of the debt that was due and owing at the time of the foreclosure. The shortfall is called the deficiency.



Department of Veterans Affairs (VA):

Government agency that provides loan guarantees to current and former military members. See VA.



Deposit:

Money given to bind the sale of real estate or assure payment or an advance of funds in the processing of a loan transaction. See earnest money deposit.



Depreciation:

A decline in the value of property because of use and wear and tear; the opposite of appreciation.



Discount points:

Up front fees charged to originate a loan. See points.



District court:

An equivalent court to Circuit Court, Superior Court or Court of Common Pleas in which foreclosure actions are filed and adjudicated.



Document preparation fees:

Fees charged by a lender or closing agent to prepare the closing and loan documents associated with providing a mortgage loan.



Down payment:

That part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.



Due-on-sale provision:

A provision in a mortgage that permits the lender to demand repayment in full if the borrower sells the property that serves as security for the underlying mortgage.



Due-on-transfer provision:

This terminology is usually used for second mortgages. Requires payment in full upon the transfer of an ownership interest that hold title to the mortgaged property. See due-on-sale provision.


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