Department of Real Estate.

The primary responsibility of the Department of Real Estate is to the public as a consumer protection agency. As government is not able to guarantee a risk-free marketplace, the Department acts in concert with other governmental agencies, education providers, and community organizations to enhance its enforcement and consumer awareness efforts to lessen the risk of loss to consumers in real estate transactions.

Deed in lieu of foreclosure.

A deed by which a borrower conveys fee-simple title to a lender in satisfaction of a mortgage debt and as a substitute for foreclosure.

Deed of trust.

A deed conveying title to real property to a trustee as security until the grantor repays a loan.

Deficiency.

The amount still owed when the property secured by a mortgage is sold at a foreclosure sale for less than the outstanding debt; esp., the shortfall between the proceeds from a foreclosure sale and an amount consisting of the principal debt plus interest plus the foreclosure costs.

Deficiency suit.

An action to recover the difference between a mortgage debt and the amount realized on foreclosure.

Equitable Rescission.

Rescission may be ordered by the courts when a mortgage contract was entered into due to mistake, undue influence, fraud, or illegality.

Federal Deposit Insurance Corporation.

An independent governmental agency that insures bank deposits up to a statutory amount per depositor at each participating bank.

Federal Home Loan Mortgage Corporation (Freddie Mac).

A corporation that purchases both conventional and federally insured first mortgages from members of the Federal Reserve System and other approved banks.

Federal Housing Administration.

The HUD division that encourages mortgage lending by insuring mortgage loans on home meeting the agency’s standards.

Federal National Mortgage Association (Fannie Mae).

A corporation that is chartered by the U.S. government that provides a secondary mortgage market for the purchase and sale of mortgages guaranteed by the Veterans Administration and those insured under the Federal Housing Administration.

Foreclosure.

A legal proceeding to terminate a mortgagor’s interest in property, instituted by the lender (the mortgagee) either to gain title or to force a sale in order to satisfy the unpaid debt secured by the property.

Form 1003.

Also known as the Uniform Residential Loan Application. The lender uses this form to record relevant financial information about an applicant who applies for a conventional one- to four-family mortgage. Such information includes monthly income and expenses, assets and liabilities, details of the transaction, and other declarations.

Fully-amortized Mortgage.

A mortgage in which the mortgagor pays the interest as well as a portion of the principal in the periodic payment. At loan maturity, the periodic payments will have completely repaid the loan.

HUD-1.

Form used to give borrower a statement of actual settlement costs. Section 4 (a) of RESPA mandates that HUD develop and prescribe this standard form to be used at the time of loan settlement to provide full disclosure of all charges imposed upon the borrower and the seller.

Interest-only mortgage.

A balloon payment mortgage on which the borrower must at first make only interest payments, but must make a lump-sum payment of the full principal at maturity.

IRS Form 4506T.

Form used to request tax return information; can also be used to designate a third party recipient of the information.

Judicial foreclosure.

A costly and time-consuming foreclosure method by which the mortgaged property is sold through a court proceeding requiring many standard legal steps such as the filing of a complaint, service of process, notice, and a hearing.

Mortgagee.

One to whom property is mortgaged; the mortgage creditor, or lender.

Mortgagor.

One who mortgages property; the mortgage-debtor, or borrower.

Notice of Default.

Typically when a borrower misses three consecutive monthly payments, the lender records this notice; In California, this notice must inform the borrower of the total amount owed and the means by which the default can be cured in order to avoid a foreclosure sale.

Notice of Trustee Sale.

After a borrower has received the Notice of Default and has failed to cure the default, the lender may publish and record the Notice of Trustee Sale; In California, the trustee sale may be scheduled as few as 21 days from the date of this notice.

Power-of-sale foreclosure.

A foreclosure process by which, according to the mortgage instrument and state statute, the mortgage property is sold at a non-judicial public sale by a public official, the mortgagee, or a trustee, without the stringent notice requirements, procedural burdens, or delays of a judicial foreclosure.

RESPA.

Known as the Real Estate Settlement and Procedures Act. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help mortgage borrowers when seeking settlement services, and is enforced by HUD.

Truth in Lending Act.

A federal statute that safeguards the consumer in connection with the use of credit by requiring full disclosure of the terms of the loan agreement, including finance charges.

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