A l B l C l D l E l F l G l H l I l J l K l L l M l N l O l P l Q l R l S l T l U l V l W l X l Y l Z l

A

Adversary proceeding
A lawsuit filed in the bankruptcy court which is related to the debtor's bankruptcy case. Examples are complaints to determine the dischargeability of a debt and complaints to determine the extent and validity of liens.

Amortization
The reduction of a debt over time by making periodic payments, usually monthly, a portion of which is interest and a portion of which reduces the outstanding amount of debt. The monthly mortgage payments remain the same over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan period the principal repayment is very small and interest repayment is very high. At the end of the loan that relationship is reversed.
Appraisal
An estimate of the value of property, made by a qualified professional called an "appraiser".
Appraiser
Someone who practices appraisal. Appraisers' work involves appraising, review (the process of critically studying a report prepared by another), or consulting (the process of providing information, analysis or real estate data and recommendations on diversified problems in real estate, other than estimating value).

APR - Annual Percentage Rate
The actual interest rate taking into account the points and other prepaid fees expressed in annual percentage terms. Not to be confused with initial interest rate, a teaser rate lenders use to get you into a loan.

ARM - Adjustable Rate Mortgage
A loan that allows the interest rate to change periodically up or down. The interest rate on an ARM is determined by adding a margin or spread to a specified financial index. Financial indexes include: Treasury, Certificate of Deposit, and Cost of Funds. The margin is the difference between the index rate and the ARM rate. Adjustment interval is how often the interest rate is adjusted. A loan that adjusts its interest rate after six months is called a six-month ARM. Rate caps limit how much your interest rate can move up or down. Periodic caps limit the change per adjustment period and a lifetime cap governs the maximum amount the interest rate can increase or decrease over the life of the loan.

Assessment
A local tax levied against a property for a specific purpose, such as a sewer or streetlights.

Assessor
One appointed to assess property for taxation.
Assets Assets are every form of property that the debtor owns. They include such intangible things as business goodwill; the right to sue someone; or stock options. The debtor must disclose all of his assets in the bankruptcy schedules; exemptions remove the exempt assets from property of the estate.

Assignment
A transfer or making over to another the whole of any property, real or personal, or of any estate or right therein. To assign is to transfer.

Assumption
The agreement between the buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing costs and new, probably higher, interest rates will apply.

Automatic stay
The injunction issued automatically upon the filing of a bankruptcy case which prohibits collection actions against the debtor, the debtor's property or the property of the estate. See Relief from Stay on terminating the injunction.

Avoidance
The Bankruptcy Code permits the debtor to eliminate (avoid) some kinds of liens that interfere with (or impair) an exemption claimed in the bankruptcy. Most judgment liens that have attached to the debtor's home can be avoided if the total of the liens (mortgages, judgment liens and statutory liens) is greater than the value of the property in which the exemption is claimed. This is sometimes called "lien stripping."

Avoidance powers
Rights given to the bankruptcy trustee (or the debtor in possession in a Chapter 11) to recover certain transfers of property such as preferences or fraudulent transfers or to void liens created before the commencement of a bankruptcy case.

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B

Balloon Mortgage
A mortgage for a fixed term shorter than necessary to fully repay the debt. As a result, the remaining amount of principal is due at the maturity of the loan.

Bankruptcy Code
Title 11 of the United States Code governs bankruptcy proceedings. Bankruptcy is a matter of federal law and is, with the exception of exemptions, the same in every state. When federal bankruptcy law conflicts with state law, federal law controls. Bankruptcy Code incorporating changes effective 10/17/05.

Bankruptcy estate
The estate is all of the legal and equitable interests of the debtor as of the commencement of the case. From the estate, an individual debtor can claim certain property exempt; the balance of the estate is liquidated in a Chapter 7 to pay the administrative costs of the proceeding and the claims of creditors according to their priority.

Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.

Bond
An insurance agreement by which on party is insured against loss or default by a third party. In the construction business a performance bond ensures the interested party that the contractor will complete the project.

Breach
Violation of an obligation in a contract

Bridge Loan
A loan, usually short term, that finances the portion of the purchase price not provided by the mortgage loan and the down payment. A bridge loan is commonly used when a purchaser has not sold his existing home before he closes on his purchase of a new home. The bridge loan is paid off when the old home is sold, out of the proceeds of that sale.

Broker
A real estate professional who has acquired a higher level of training and experience than a sales agent. A minimum number of classes must be taken along with passing a state exam to acquire a brokers license. Generally they are a legal representative or a proprietor of the office. Brokers usually charge a fee or receive a commission for their services.

Building Code
A set of stringent laws that control the construction of buildings, design, materials and other similar factors.

Building Line or Setback
Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes or by zoning ordinances.

Buy-down
When the lender and/or the homebuilder subsidized the mortgage by lowering the interest rate during the first years of the loan. While the payments are initially low, they will increase when the subsidy expires.

Buyers Market
A market condition that occurs in real estate where more homes are for sale than there are interested buyers.

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C

Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, insurance, maintenance, utilities, etc.)

Capital Gain
Income that results from sale of a capital (tangible) asset.

Capitalization
An appraising term used in determining value by considering net operating income and a percentage of reasonable return on investment.

Certificate of Eligibility
The document given to qualified veterans, which entitles them to VA, guaranteed loans for homes, business and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility).

Chain of Title
A history of conveyances and encumbrances affecting the title as far back as records are available.

Chapter 7
The most common form of bankruptcy, a Chapter 7 case is a liquidation proceeding, available to individuals, married couples, partnerships and corporations.

Chapter 11
A reorganization proceeding in which the debtor may continue in business or in possession of its property as a fiduciary. A confirmed Chapter 11 plan provides for the manner in which the claims of creditors will be paid in whole or in part by the debtor.

Chapter 12
A simplified reorganization plan for family farmers whose debts fall within certain limits.

Chapter 13
A repayment plan for individuals with debts falling below statutory levels which provides for repayment of some or all of the debts out of future income over 3 to 5 years.

Charged Off
This is an accounting term that means the creditor does not expect to collect on the debt. It relates to the creditor's taxes. It starts time periods under the Fair Credit Reporting Act. It does not mean that the debt is no longer legally enforceable.

Closing
The end of the transaction when the seller hands over the title to the buyer in exchange for payment. Also called settlement.

Closing Costs
Costs the buyer must pay at the time of the closing in addition to the down payment which may include points, title charges, credit report fee, document preparation fee, mortgage insurance premium, inspections, appraisals, prepayments for property taxes, deed recording fee and homeowners insurance. Closing costs can vary considerably from one financial institution to another.

Cloud (On Title)
An outstanding claim or encumbrance, which adversely affects the marketability of title.

Collateral
The property which is subject to a lien. A creditor with rights in collateral is a secured creditor and has additional protections in the Bankruptcy Code for the claim secured by collateral. The measure of the secured claim is the value of the collateral available to secure the claim: it is possible to have a lien on property that is subject to a senior lien or liens such that the security available to pay the claim is really without value to the junior creditor. The general rule with respect to liens is "First in time, first in right."

Confirmation
The court order which makes the terms of the plan for repayment of debts in a Chapter 11, 12 or 13 binding. The terms of the confirmed plan replace the prepetition rights of the debtor and creditor.

Confirmed
A plan of reorganization in Chapter 11, 12 or 13 approved by the court and binding on the parties is said to be confirmed.

Commission
Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price - 6% on houses, 10% on land.

Condemnation
A declaration by governing powers that a structure is unfit for use.

Conditional Sales Contract
A contract for the sale of property where the buyer has possession and use, but the seller retains title until the conditions of the contract have been fulfilled. Also known as a land contract.

Condominium or Condo
A condominium is a home in a shared building or development. The buyer gets title to the space inside the unit, shares the common areas with other unit owners and pays a maintenance fee to the condominium association to pay for needed maintenance, repairs and improvements to the property.

Construction Loan
A short-term interim loan to pay for the construction of building or homes. These are usually designed to provide periodic disbursements to the builder as he progresses.

Consumer Debt
Debts incurred by an individual for personal, family or household purposes. Taxes are not consumer debts; neither are business loans. The means test only applies to those with primarily consumer debt.

Contingent
Used to describe debts that are not fixed in right at the time, but are dependent on some other event happening to fix the liability.

Contingency
A condition that must be met before a contract is binding. Contingencies include: the property must appraise for sales price or buyers approving of various inspections.

Contract Sale or Deed
A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

Conventional Loan
A fixed rate and fixed term loan that is made without government insurance.

Conversion
Cases under the Code may be converted from one chapter to another chapter; for example, a Chapter 7 case may be converted to a case under Chapter 13 if the debtor is eligible for Chapter 13. Even though the chapter of the Code which governs it changes, it remains the same case as originally filed.

Convertible Loan
Some ARM Color loans include a provision that allows it to convert to a fixed rate mortgage at specific times, usually from the end of the first through the fifth years. There is usually an additional fee, $300 - $500, to convert it.

Conveyance
The transfer of the title to land from one to another.

Co-operative of Co-op
In a residential co-operative, the buyer purchases shares in the co-op corporation, which is made up of the residents in the co-op property. The buyer owns the shares rather than owning real property. In exchange he has the right to lease and occupy a co-op unit.

Covenants
Agreements written into deeds and other instruments stating performance or non-performance of certain acts or noting certain uses or non-uses of property.

Creditor
The person or organization to whom the debtor owes money or has some other form of legal obligation.

Credit Report/History
Lenders will investigate your credit record, which is a history of your debts. They get a report from a credit-reporting agency (Experian, Equifax, TransUnion), which shows if you pay your debts on time and with whom you have the current debts with.

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D

Debtor
The debtor is the entity (person, partnership or corporation) who is liable for debts, and who is the subject of a bankruptcy case.

Debtor in Possession
In a Chapter 11 case, the debtor usually remains in possession of its assets and assumes the duties of a trustee.  The debtor in possession is a fiduciary for the creditors of the estate, and owes them the highest duty of care and loyalty.

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income.

Deed
A legal document by which property title is transferred from one owner to another.

Default
Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

Deficiency
Additional tax liability that the IRS deems to be owed by a taxpayer.

Deficiency Judgment
A court order against a borrower under a mortgage to pay to the lender an amount sufficient to make up for the difference between what the borrower owes under the mortgage and the amount the lender sold the property for under a mortgage remedy action.

Denial of discharge
Penalty for debtor misconduct with respect to the bankruptcy case or creditors as a whole.  The grounds on which the debtor's discharge may be denied are found in 11 U.S.C. 727.  When the debtor's discharge is denied, the debts that could have been discharged in that case cannot be discharged in any subsequent bankruptcy.  The administration of the case, the liquidation of assets and the recovery of avoidable transfers, continues for the benefit of creditors.

Depreciation
Decline in value of a house due to wear and tear, adverse changes in the neighborhood, or any other reason.

Devisee
A person who receives real estate from another by will.

Discharge
The legal elimination of debt through a bankruptcy case. When a debt is discharged, it is no longer legally enforceable against the debtor, though any lien which secures the debt may survive the bankruptcy case.

Dischargeable
Debts that can be eliminated in bankruptcy.  Certain debts  are not dischargeable;  that it, they may not be discharged through bankruptcy or may only be discharged through Chapter 13. Family support and criminal restitution are examples of debts which cannot be discharged. Debts incurred by fraud can only be discharged in Chapter 13.  More on which debts can be discharged.

Dismissal
The termination of the case without either the entry of a discharge or a denial of discharge; after a case is dismissed, the debtor and the creditors have the same rights as they had before the bankruptcy case was commenced. Dismissal is the penalty for many essentially minor infractions of bankruptcy procedures under the 2005 amendments.

Domestic Support Obligation
Debts for alimony, maintenance or support owed to child, spouse or governmental entity that paid for the support of the child or spouse. A new term introduced by the bankruptcy amendments of 2005.

Down Payment
The down payment is the percentage of the purchase price that the buyer must pay in cash and may not borrow form the lender.  The down payment amount in addition to the mortgage equals the purchase price of a property.  They can vary from 0% to over 50%.  The less your down payment, the better your credit has to be.  Lower down payments generally result in higher interest rates.

Dual Agency
Representing both parties in a transaction.  In virtually all states it is unethical and illegal for a broker to represent buyer and seller in a real estate transaction without written consent of both.

Due-on-Sale Clause
A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

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E

Earnest Money
The deposit money given to the seller by the potential buyer as evidence of good faith in purchasing real estate.  The broker places the money in an escrow or trust account until closing, when it becomes part of the down payment.

Easement Rights
A right-of-way granted to a person or company authorizing access to or over the owner's land.  An electric company obtaining a right-of-way across private property is a common example.

Economic Obsolescence
Loss of useful life and desirability of a property through economic forces, such as change in zoning, changes in traffic flow, etc.; rather than deterioration.

Encroachment
An obstruction, building or part of a building that intrudes beyond a legal boundary onto neighboring private or public land or a building extending beyond the building line.

Encumbrance
A legal right or interest in land that affects a good or clear title and diminishes the lands value.

Equal Credit Opportunity Act (ECOA)
Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color or religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity
The value of the property less the amount of unpaid mortgages and any outstanding liens.

Escalation Clause
A clause in a lease providing for an increased rent at a future time due to increased costs to leaser, as in cost of living index, tax increases, etc.

Escheat
The reverting of property to the state in the absence of heirs.

Escrow
Money or other valuables given to a third party with directions to deliver them to another party upon the fulfillment of a specific act or condition.

Escrow Instructions
This discloses when the escrow should be closing and when possession should take place, proration of property taxes, transfer taxes, release of funds and the basics of satisfying the escrow demands.

Estate
The ownership interest of a person in real property.  Also refers to a deceased person's property.

Exclusive Agency Listing
A written agreement giving the broker the right to market an owner's property for a certain period of time but also allowing the owner to sell the property during that period without paying a commission.

Exclusive Right to Sell
A written agreement between the agent and the owner whereby the owner promises to pay a fee or commission to the broker if his property is sold during the listing period, regardless of whether the broker is responsible for the sale.

Exempt
Property that is exempt is removed from the bankruptcy estate and is not available to pay the claims of creditors.  The debtor selects the property to be exempted from the statutory lists of exemptions available under the law of his state.  The debtor gets to keep exempt property for use in making a fresh start after bankruptcy.

Exemptions
Exemptions are the lists of the kinds and values of property that is legally beyond the reach of creditors or the bankruptcy trustee.  The debtor in bankruptcy keeps the exempt property. What property may be exempted is determined by state and federal statutes, and varies from state to state.

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F

Fair Market Value
That price a property will bring given that both buyer and seller are fully aware of market conditions and comparable properties.

Fannie Mae - FNMA
Nickname for the Federal National Mortgage Association.  FNMA is a public corporation originally established by the federal government.  Fannie Mae purchases mortgage loans from lenders and results in a major source of funds for mortgage companies.

Fee Simple
Ownership of title to property without any limitation, which can be sold, left at will, or inherited.

FHA - Federal Housing Administration
Part of the US Department of Housing and Urban Development (HUD).  It was established in 1934 to encourage improvement in housing standards and communities.  The FHA insures mortgage loans.

FHA Mortgage
A mortgage loan insured by the Federal Housing Administration.

FHA Mortgage Insurance
Requires a fee paid at closing to insure the loan with FHA.  In addition, FHA mortgage insurance requires an annual fee of up to 0.5% of the current loan amount, paid in monthly installments.  The lower the down payment, the more years the fee must be paid.

Fiduciary
one who is entrusted with duties on behalf of another.  The law requires the highest level of good faith,  loyalty and diligence of a fiduciary, higher than the common duty of care that we all owe one another.  The debtor in possession in a Chapter 11 is a fiduciary for the creditors, owing loyalty to the creditors and not the shareholders of the debtor.

Foreclosure
A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage.  Also known as a repossession of property. Foreclosure is often mistermed as "forclosure" or "forclosures."

Freddie Mac - FHLMC
Nickname for Federal Home Loan Mortgage Corporation.  It is a quasi-governmental agency that purchases conventional mortgages from insured depository institutions and HUD - approved mortgage bankers.

Functional Obsolescence
Loss in value due to out-of-date or poorly designed equipment while newer equipment and structures have been invented since its construction.

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G

General, unsecured claim
Creditor's claim without a priority for payment for which the creditor holds no security (or collateral). If the available funds in the estate extend to payment of unsecured claims, the claims are paid in proportion to the size of the claim relative to the total of claims in the class of unsecured claims.

Ginnie Mae - GNMA
Government National Mortgage Association.

Graduated Payment Mortgage - GPM
A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off.  This type of mortgage has negative amortization built into it.

Grantee
That party in the deed who is the buyer or recipient.

Grantor
That party in the deed who is the seller or giver.

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H

Hard Money Loan
A loan (usually from a private lender) based upon the condition and value of the property as the primary criteria for approval.  Owner occupancy, debt ratios and other issues are seldom a factor.  Appraisals rather than purchase prices are used to determine value.  Cash out purchases are often allowed and are another key benefit.  These loans are usually approved within days and are often funded in two weeks or under with times as short as two or three days not uncommon.  The cost for the benefits of speed of funding, lax underwriting and other advantages is typically a moderately high level of interest and points.

Home or Property Inspection
A detailed inspection of the physical structure, the plumbing, electrical and heating systems and the overall condition of the home.  Typically the cost is $150 - $300 and the results are detailed in a multiple page report.

Homeowners Insurance
Insurance that protects the homeowners from casualty losses or damage to the home or personal property and from liability damages to other people or property.  Homeowners insurance is required by the lender and may be included in the monthly mortgage payment.

Home Owners Association
An association of homeowners within a community formed to improve and maintain the quality of the community.  An association formed by the developer of condominiums or planned developments.

Housing Expense to Income Ratio
The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his or her gross monthly income.

HUD - The US Department of Housing and Urban Development
Department of Housing and Urban Development, a government agency created to make the American Dream of home ownership a real possibility for everyone.  HUD has many programs involving homeownership assistance for low and moderate-income families, community planning and development, fair housing and equal opportunity and home improvement loans.  The Housing and Urban Development home page is a rich resource of information.

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I

Impound
That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due.  Also known as reserves.

Indemnify
To guarantee against any loss which another might suffer. In bankruptcy, it is used to describe the undertaking of one spouse in a divorce to assume certain debts of the marriage and to see that the other spouse is not forced to pay.

Index
A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one-three and five-year U.S. Treasury security yields, the monthly average interest rate on loans closed by savings and loan institutions and the monthly average costs-of-funds incurred by savings and loans), which is used to adjust the interest rate on an adjustable mortgage.

Initial Interest Rate
The initial rate quoted usually is a lower introductory rate, sometimes called a teaser or discount rate.  This lower rate lasts only until the first adjustment, after which you will be charged the fully indexed rate.

Interest
A charge paid for borrowing money.

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J

Joint Tenancy
Joint ownership by two or more persons with right of survivorship.  Upon the death of a joint tenant, his interest does not go to his heirs, but to the remaining joint tenants.

Jumbo Loan
A loan that is larger than the limits set by the FNMA and FHLMC (more than $322,700 as of 1/18/03).  Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

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K

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L

Lease
A contract between the owner of real property, called the leaser and another person referred to as the lessee, covering all conditions by which the lessee may occupy and use the property.

Lease with Option to Purchase
A lease where the lessee has the option to purchase the leased property.  The terms of the purchase option must be set forth in the lease.

Legal Description
The geographical identification of a parcel of land.

Lien
An interest in real or personal property which secures a debt; the lien may be voluntary, such as a mortgage in real property, or involuntary, such as a judgment lien or tax lien.

Lien Holder
One who benefits from or holds a lien.

Lien, Junior
A lien that will be paid after other, more senior liens, have been satisfied.

Life Time Cap
Lifetime cap governs the maximum amount the interest rate increases or decreases over the life of the loan.

Lis Pendens
Latin for suit pending.  Recorded notice of the filing of suit, the outcome of which may affect title to a certain piece of property.

Listing Contract
An agreement between a homeowner and a licensed real estate broker that authorizes the broker to market the property for sale during a given time period.

Liquidated
A debt that is for a known number of dollars is liquidated.  An unliquidated debt is one where the debtor has liability, but the exact monetary measure of that liability is unknown.  Tort claims are usually unliquidated until a trial fixes the amount of the liability of the tort feasor.

Loan Modification
A loan modification is a process by which a lender will modify or change the terms of the loan. Most often a lender will agree to add arrearage to the original principle balance. Often the lender will also agree to lower the interest rate of the loan, this aspect of a loan modification is particularly helpful for adjustable rate mortgages (ARMs). Loan modifications are also known as: remodifications, renegotiations, loan remodifications, loan renegotiations, modifications, "on the back of the loan," "on the back of the note," loan negotiations, and loan mods.

Loan Origination Fee
A fee charged by the lender for evaluating, preparing and submitting a proposed mortgage loan.

Loan-to-Value Ratio
The ratio of a mortgage loan principal to the property's appraised value or its sales price, whichever is lower.  Loan-to-value ratios vary depending upon the individual lender's policy.

Lock-in Rate
A commitment made by a lender to make a mortgage loan at a specified rate, pending loan approval on or prior to a specified date.

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M

Market Value
The highest price a buyer will pay for a property and the lowest price the seller will accept in a typical market.

Margin
The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.

Means Test
Added to the Code in 2005, the means test is intented to screen out those filing Chapter 7 who are supposedly able to repay some part of their debts. The test is found in Official Form B22a. Debtors who fail the means test may convert their case to another chapter of bankruptcy.

Mechanic's Lien
A lien created by statute on a specific property for labor or materials contributed to an improvement on that property.

Meeting of creditors
The debtor must appear at a meeting with the trustee to be examined under oath about assets and liabilities.  Creditors are invited but seldom attend.  The meeting is sometimes called the 341 meeting, after the section of the Bankruptcy Code that requires it.

Mortgage
A lien on real estate given by the buyer to secure money borrowed to purchase the real estate.

Mortgage Broker
An individual or company that obtains mortgages for others by finding lending institutions, insurance companies or private sources to lend the money.  The mortgage broker may also handle collections and disbursements.

Mortgage Insurance
A policy that provides protection for the lender in case of default and or which guarantees repayment of the loan if the borrower becomes disabled or dies.

Mortgage Insurance Premium - MIP
Insurance from FHA to the lender against incurring a loss on account of the borrower's default.
 
Multiple Listing
A listing taken by a member of an organization of brokers, whereby all members have an opportunity to find a buyer.

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N

Negative Amortization
Occurs when your monthly payments are not large enough to pay all the interest due on the loan.  This unpaid interest is added to the unpaid balance of the loan.  The danger of negative amortization is that the homebuyer ends up owing more than the original loan amount of the loan.

Non Assumption Clause
A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender.

Non dischargeable
A debt that cannot be eliminated in bankruptcy.  Non dischargeable debts remain legally enforceable despite the bankruptcy discharge.  The Code's list of non dischargeable debts is found at 11 U.S.C. 523. The scope of the discharge in Chapter 13 differs from the discharge in Chapter 7.

Notary Public
One who is authorized by federal or local government to attest authentic signatures and administer oaths.

Note
A written instrument acknowledging a debt and promising payment.

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O

Offer
A proposal to purchase real estate at a particular price, subject to other specified terms and conditions.  Acceptance of the offer by the seller creates a purchase contract.  A counteroffer is a different offer made in response to the initial offer.

Origination Fee
Application fee(s) for processing a proposed mortgage.

Option
A right given, for consideration, to purchase or lease property upon stipulated terms within a specific period of time.

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P

Perfection
When a secured creditor has taken the required steps to perfect his lien, the lien is senior to any liens that arise after perfection.  A mortgage is perfected by recording it with the county recorder; a lien in personal property is perfected by filing a financing statement with the secretary of state.  An unperfected lien is valid between the debtor and the secured creditor, but may be behind liens created later in time, but perfected earlier than the lien in question.  An unperfected lien can be avoided by the trustee.

Periodic Caps
Periodic caps limit the change per adjustment period of a loan.

Personal property
Assets, such as cars, stock, furniture, etc., that is not real estate or affixed to real property.

Petition
The document that initiates a bankruptcy case. The filing of the petition constitutes an order for relief and institutes the automatic stay.   Events are frequently described as "prepetition", happening before the bankruptcy petition was filed, and "post petition", after the bankruptcy was initiated.

PITI Payment
A loan payment that combines Principal, Interest, Taxes and Insurance.

Plat
A map or chart for a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land and easements.

PMI - Private Mortgage Insurance
Insurance issued to a lender to protect it against loss on a defaulted mortgage loan.  Its use is usually limited to loans with high loan-to-value ratios, generally in excess of 80%.  The borrower pays the premium.

Point
An amount equal to one percent of the loan amount paid to a lender for making the loan.  A lender may charge the borrower several points in order to provide the loan.

Power of Attorney
A legal document authorizing one person to act on behalf of another.

Preference
A transfer to a creditor in payment of an existing debt made within certain time periods before the commencement of the case. Preferences may be recovered by the trustee for the benefit of all creditors of the estate.

Pre-payment
A privilege in a mortgage permitting the borrower to make payments in advance of their due date.

Pre-payment Penalty
Money charged for an early repayment of debt.  Prepayment penalties are allowed in some form, but are not necessarily imposed in many states.

Pre-petition
Claims or events arising before the commencement of the bankruptcy case, that is, before the filing of the bankruptcy petition.  Generally only pre petition debts may be discharged in a bankruptcy proceeding.

Pre-qualification
Getting pre-qualified for a loan is a free process and normally takes between 15 minutes to and hour on the phone.  The lender will ask you some basic questions about your household income, time on the job, credit history, down payment and personal savings.  You should get pre-qualified before looking for properties so you and your real estate agent know in what price range to start looking.

Primary Mortgage
Market Lenders making mortgage loans directly to borrowers such as savings and loan associations, commercial banks and mortgage companies.  These lenders sometimes sell their mortgages into the secondary market such as FNMA or GNMA.

Principal
One of the parties to a transaction.  For example, the buyer and seller are principals in the purchase of real property.  Also the amount of debt, not counting interest, left on a loan.

Priority
The Bankruptcy Code establishes the order in which claims are paid from the bankruptcy estate.  All claims in a higher priority must be paid in full before claims with a lower priority receive anything.  All claims with the same priority share pro rata.  Claims are paid in this order:  1) costs of administration  2) priority claims and 3) general unsecured claims.  Secured claims are paid from the proceeds of liquidating the collateral which secured the claim.

Priority claims
Certain debts, such as unpaid wages, spousal or child support, and taxes are elevated in the payment hierarchy under the Code. Priority claims must be paid in full before general unsecured claims are paid.

Proof of claim
The form filed with the court establishing the creditor's claim against the debtor.

Property of the estate
The property that is not exempt and belongs to the bankruptcy estate.  Property of the estate is usually sold by the trustee and the claims of creditors paid from the proceeds.

Purchase Agreement
An agreement between buyer and seller denoting price and terms of the sale.

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R

Rate Caps
Rate caps limit how much the interest rate can move up or down.

Reaffirm
The debtor can chose to waive the discharge as to a debt that is reaffirmed. Generally, the parties to the reaffirmed debt have the same rights and liabilities that each had prior to the bankruptcy filing: the debtor is obligated to pay and the creditor can sue or repossess if the debtor doesn't pay.

Real Estate Agent
A licensed person who works under the direction of a broker selling and renting real estate.

Real Estate Broker
A middleman or agent who buys and sells real estate for a company, firm or individual on a commission basis.  The broker does not have title to the property but generally represents the owner.

Rescission
The cancellation of a contract.  With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract income cases once it is signed if the transaction uses equity in the home as security.

Redemption Period
Period of time during which a property owner can pay all defaulted payments and charges and redeem a defaulted mortgage or land contract.  The time period varies as established by state statute.

Refinance
Obtaining a new mortgage loan on a property already owned.  Often to replace existing loans on the property.

Relief from stay
A creditor can ask the judge to lift the automatic stay and permit some action against the debtor or the property of the estate.  If the motion is granted, the moving party (but no one else) is free to take whatever action the court permits.  Relief can be absolute, for example, permitting the creditor to foreclose on property, or limited, as for example, allowing the recordation of a notice of default.

RESPA
Short for Real Estate Settlement Procedures Act.  RESPA is a federal law that allows consumers to review information on known or estimated settlement costs once after application and once prior to or at settlement.  The law requires lenders to furnish the information after application only.

Restrictive Covenants
Private restrictions limiting the use of real property.  Restrictive covenants are created by deed and may "run with land," binding all subsequent purchasers of the land or may be "personal" and binding only between the original seller and buyer.

Reverse Annuity Mortgage - RAM
A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as Satisfaction of Mortgage: the document issued by the mortgagee when the mortgage loan is paid in full.

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Schedules
The debtor must file the required lists of assets and liabilities to commence a bankruptcy case, collectively called the schedules.

Second Mortgage
A mortgage made subsequent to another mortgage and subordinate to the first one.

Secondary Mortgage Market
The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans.  It provides liquidity for the lenders.

Secured debt
A claim secured by a lien in the debtor's property by reason of  the debtor's agreement  or an involuntary lien such as a judgment or tax lien. The creditor's claim may be divided into a secured claim, to the extent of the value of the collateral, and an unsecured claim equal to the remainder of the total debt. Generally a secured claim must be perfected under applicable state law to be treated as a secured claim in the bankruptcy.

Seller's Market
More buyers than sellers.

Shared Appreciation Mortgage - SAM
A mortgage in which a borrower receives a below-market interest rate in return for which the lender or investor receives a portion of the future appreciation in the value of the property.  May also apply to mortgage where the borrowers share the monthly principal and interest payments with another party in exchange for part of the appreciation.

Short Sale
A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes. See also deed in lieu (or foreclosure).

Special Assessment
A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.

Survey
A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries and its relationship to surrounding tracts of land.

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Title
Ownership of real property.  Title is transferred from one party to another through a document called a deed.

Title Insurance
Protection for lenders and homeowners against financial loss resulting from legal defects in or other claims against the property's title.  The cost of the policy is usually a function of the value of the property and is often borne by the purchaser and/or the seller.

Title Search
An examination of municipal records to determine the legal ownership of property.  Usually is performed by a title company.

Trust
A property interest held by one person for the benefit of another.

Trustee
The court appoints a trustee in every Chapter 7 and Chapter 13 case to review the debtor's schedules and represent the interests of the creditors in the bankruptcy case.  The role of the trustee is different under the different chapters.

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Unsecured
A claim or debt is unsecured if there is no collateral that is security for the debt.  Most consumer debts are unsecured.

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