The maximum amount of interest that can be charged on an adjustable rate loan. See Interest.
Lending restrictions (refusal to make a loan or making a loan on more onerous terms than comparable loans to other borrowers) based on the location of the residence of the prospective borrower or the location of the real property which would serve as collateral for the loan. Red-lining by institutional lenders (literally or figuratively drawing a red line around certain geographical areas) is restricted or prohibited by federal and state law because of its disparate impact on racial minorities. Nonetheless, some red-lining practices of institutional lenders persist.
Elimination of a lien by payment of the entire amount of the debt (including interest, costs, and penalties) secured by the lien. See, e.g., UCC 9-506. Compare Equity of Redemption. If a debtor has filed bankrutpcy, 11 U.S.C. 722 provides that a debtor may keep a asset by paying the creditor the amount of the allowed secured claim or the value of the collateral, whichever is less.
Sanction effect (of the security first rule)
California common law rule, grounded in Cal. Code Civ. Pro. 726 (the security first rule), which precludes a creditor who has obtained a money judgment against a debtor on an obligation secured by real property to foreclose on the real property after obtaining the judgment. Compare Affirmative defense aspect (of the security first rule). The sanction does not preclude the creditor from executing on the real property to enforce the money judgment, but execution may be less satisfactory, or unsatisfactory, because of a homestead exemption, an intervening lien, or conveyance of the property to another prior to execution.
A market in which packages of real property secured loans are bought and sold. Such loans are initially packaged and sold by the originator of the loan, typically an institutional lender such as a bank or savings and loan association. By selling packages of real property secured loans to others, lenders generate proceeds to fund new loans, generating additional income through loan origination fees (points) and rising rates of interest. Loans are packaged and often sold in this market to federally chartered corporations which are themselves capitalized by the issuance of securities: the Federal National Mortgage Association (FNMA, commonly known as Fannie Mae); the Federal Home Loan Mortgage Corporation (FLHLMC, commonly known as Freddie Mac); the Government National Mortgage Associaion (GNMA, commonly known as Ginnie Mae), a corporation wholly owned by the government and operating within the Department of Housing and Urban Development. Do not confuse secondary mortgage market with "second mortgages."
An agreement in which a debtor grants to a creditor a lien on personal property or fixtures.
The seller of property extends credit to the buyer by agreeing to take a portion or all of the purchase price of the property in deferred installment payments or in a balloon payment. Typically the term is used in connection with the sale of real property in which the buyer's obligation is represented by a promissory note and the note is secured by a deed of trust or mortgage on the real property being sold. The seller is said to "carry back" the note. Compare the phrases "purchase money," "purchase money security interest," or "purchase money mortgage or deed of trust," which describe concepts that subsume but are broader than "seller financing."
The act of a creditor, often a bank or other financial institution with which a debtor has an account, of paying a debt owed by a debtor to the creditor by extinguishing the same amount of debt which the creditor owes the debtor. For example: Debtor has a checking account with Bank with a balance of $5,000. The $5,000 balance represents an obligation of Bank to pay $5,000 to the debtor or to anyone whom the debtor, through use of a check, orders Bank to pay. Debtor owes Bank $7,500 on an unsecured loan which is in default. Bank sets off the $5,000 which it owes debtor (reducing the balance in the checking account to $0) against the debtor's $7,500 obligation to Bank, leaving a balance owing from Debtor to Bank on the unsecured loan of $2,500.
A lien on property of the debtor granted a creditor by operation of statute, without the consent of the debtor (compare consenusal lien) or without the use of enforcement of judgment procedures of the judicial process (compare judicial lien). There are an enormous number and variety of statutory liens. Prominent examples are liens afforded the Internal Revenue Service or state taxing authority in the event of non-payment of taxes, and liens on real property and improvements on real property in favor of contractors and suppliers of material.
An temporary low introductory interest rate, typically for an adjustable rate mortgage, intended to attract borrowers.
A prepayment of interest (often by a developer of real property) to a lender which induces the lender to temporarily reduce the interest rate on a loan, thus enabling the buyer to more readily qualify for the loan. The "3-2-1 plan" is a common example: 3 percent reduction of interest in the first year, 2 percent reduction in the second year, and 1 percent reduction in the third year.
Traditional commerical letter of credit
A creditor is undersecured when the amount of the debt owed it exceeds the value of any collateral securing the debt.
A debt is said to be unliquidated when its amount is neither known nor readily ascertainable by an undisputed method of calculation.
Interest which exceeds the lawful rate. The lawful rate, which varies widely among states, is sometimes specified by statute and sometimes specified by constitution. Often, different rates apply to different kinds of creditors, and many creditors are exempt. See, e.g., Cal. Constitution art XV, Section 1.