Promissory Note (Note) — the legal instrument signed by the homeowner detailing the terms of the loan, such as loan amount, interest rate, maturity date, and monthly payment.
Mortgage or Deed of Trust — provides the security interest of the lender (or Note Holder) in the property. Mortgage instruments are typically used in judicial foreclosure states, and Deed of Trust instruments are typically used in non-judicial foreclosure states.
Judicial Foreclosure — foreclosure is processed through the courts.
Non-Judicial Foreclosure — foreclosure is processed through a trustee sale, and used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default.
Non-Performing Note / Defaulted Note / Defaulted Mortgage — homeowner is not current on their mortgage payments.
Workout Agreement — document created by Palomar Note Buyers workout Specialist, that details the loan modification. If a homeowner defaults on the Workout Agreement, then the original terms of the Note and Mortgage/Deed of Trust are enforced.
Re-Performing Note — a Note is considered re-performing when the homeowner is making payments per the terms of the Workout Agreement. To get a Note Re-Performing is the #1 strategy employed by Palomar Note Buyers.
Collateral Documents — include the promissory note, mortgage/deed of trust, assignments, and allonges.
Assignment — legal document showing transfer of the mortgage from seller to Newco . Assignments are recorded by the local counties.
Allonge — is a funny word used to describe a legal document that provides the endorsement of the Note from seller to the Note Buyer. This is the legal transfer of the rights form one Note owner to another.