Glossary of foreclosure terms: A
"A" paper: Lender's term for loans made to well-qualified borrowers, which they believe are most likely to be paid off in full and on time. See also prime.
abandoned: Property that's no longer maintained, occupied, or claimed by its former owner.
acceleration clause: Part of a loan that allows the lender to demand payment of all amounts owed if certain events occur.
actual notice: Delivery of information to a specific party. See also constructive notice.
adjustable-rate loan: Loan where the interest rate can vary over the life of the loan according to terms given in the agreement. For example, a "5/1 adjustable-rate loan" means the interest rate remains the same for five years and can then change annually. Other terms include the maximum the rate can change per year, and the highest ("ceiling") and lowest ("floor") it can go.
adjustable-rate mortgage (ARM): Adjustable-rate loan secured by real property.
alienation clause: Part of a loan contract that says the borrower must pay back the full amount when the property is sold or otherwise transferred ("alienated").
Alt-A: Lender's term for loans given to borrowers who have credit scores and other qualities good enough to qualify as prime, but who aren't able to document their earnings.
amortization: The process of paying off a loan. From the Latin root mort, meaning "death", as amortization slowly puts a loan to death.
amortization schedule: Table showing how much of every loan payment goes toward paying off, or amortizing, the loan.
amortization table: See amortization schedule.
amortizing loan: Loan in which the principal is eventually paid. An amortizing loan with equal payments throughout its life is known as a fully amortizing loan.
annual percentage rate (APR): Interest rate expressed as a yearly percentage, ignoring other costs such as fees. See also effective APR.
anti-assumption clause: See alienation clause.
appraisal: Opinion on a property's value from a licensed expert. See also Broker's Price Opinion (BPO).
asset: Item owned or controlled. Those assets that can readily be converted into cash are liquid assets.
assumable loan: Loan that can be taken on, or assumed, by another party without any changes in its terms.
assumption clause: Part of a loan that details conditions allowing its transfer to a new borrower.
automated valuation model (AVM): Computer-based system that estimates the value of a piece of property based on recent nearby sales and such publicly known characteristics as square footage and last sale price.
automatic stay: Legal condition that prevents creditors such as a mortgage lender from pursuing foreclosure or certain other collection actions. The automatic stay begins when the borrower files for bankruptcy and ends on a judge's decision, which could happen as soon as 15 days later.
