Mortgage Terms
Confused with terms in your loan contract? Want to know what all the jargon means?
Acceleration
Acceleration is the right of the mortgagee (lender) to demand the immediate
repayment (within 30 days) of the mortgage loan balance upon the default of
the mortgagor. (borrower) Acceleration is most
frequently triggered by the sale of a property without the
underlying mortgage being paid off. This "Due-on-Sale
Clause" found in standard deeds of trust is the language that
triggers acceleration. Acceleration almost always
results in foreclosure.
Adjustable Rate Mortgage (ARM)
This is a mortgage in which the interest rate is adjusted
periodically based on a pre-selected index. The most common
indexes are the one year treasury bill (T-Bill), the one year
moving average of 1 year treasury bills (MTA), the Cost of
Funds Index used by some savings and loans (COFI) and the one year
London Interbank Offered Rate. (
LIBOR) Generally there is a mark-up called a margin over the
index. The margins are generally 2.5% to 2.875%. FHA
offers ARM's with a 2.0% margin and most Subprime loans carry
margins as high as 6 to 8%. There is also a time period
between the introductory or start rate and the first
adjustment period. For a 3/1 ARM the start rate is fixed
for 3 years and then the mortgage rate is adjusted annually
thereafter. For an Option ARM, the start rate is only
one to three months. (however, the payment is fixed for one
year) ARM's are also
sometimes known as the re-negotiable rate mortgages or
variable rate mortgages.
These four rates differ in their volatility. That is
some of them move up or down more rapidly that others.
This feature is important if a borrower is expecting
interest rates to move up or down. The most volatile rate is
the LIBOR followed by the 1 year T-Bill . The least
volatile rates are the MTA and the COFI. Generally, but
not always, the COFI is the slowest moving of the rates.
Adjustment Period (for ARM's)
On an adjustable rate mortgage, the time (interval) between changes in
the interest rate and/or monthly payments is called the
adjustment period. This period is typically one, three
or five years.
ARM,
Option
Please refer to
Option ARM listed
alphabetically in this glossary.
Amortization
Amortization is the length of time to pay off a mortgage.
Amortizations are typically 30,20, or 15 years.
Amortization schedules may call for equal periodic (monthly)
payments of principal plus interest (a decreasing total
payment schedule) or they most commonly call for equal periodic payments
of principal and interest. (level payments for term of the loan)
Annual percentage rate (A.P.R.)
APR is an interest rate reflecting the cost of a mortgage as a
yearly rate. This rate is likely to be higher than the stated
note rate or advertised rate on the mortgage, because it takes
into account point and other credit cost. The APR allows home
buyers to compare different types of mortgages based on the
annual cost for each loan.
Appraisal
Appraisal is an estimate of the value of property, made by a qualified
professional called an "appraiser". In most
states appraisers are licensed.
Assessment
A local tax levied against a property for a specific purpose,
such as improvements for water, sewer or street lights.
Assumption
The agreement between 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
cost and new, probably higher, market-rate interest charges
will apply.
Conventional loans are not assumable. FHA and
VA loans are assumable but only if the buyer is qualified.
Assumptions
are most common when the existing market interest rate is
above the assumable note rate.
B, C, AND D Mortgages
Please refer to Subprime
Loans later in this Glossary.
Banker as in Mortgage Banker
Please refer to Mortgage Banker in this Glossary.
Balloon (payment) mortgage
Usually a short-term fixed-rate loan which involves small
payments for a certain period of time (generally 5 or 7
years) and one large (balloon) payment
for the remaining amount of the principal at a time specified
in the contract.
Balloons loans have lost
popularity because then must be paid off or refinanced at the
balloon date. Balloon loans have been mostly replaced by 5/1 and 7/1 ARMS.
Blanket Mortgage
A mortgage covering two or more pieces of real estate as
security for the same mortgage.
Borrower (Mortgagor)
One who applies for and receives a loan in the form of a mortgage
(i.e. secured by real estate with a deed of trust)
with the intention of repaying the loan in full.
Broker
An individual in the business of assisting in arranging funding
or negotiating contracts for a client buy who does not loan
the money himself. Brokers usually charge a fee or receive
a commission for their services. Brokers close the loans in
the name of their lenders. They do not provide their own
funds at closing.
Buy-down
When the lender and/or the home builder subsidized the mortgage
by lowering the interest rate during the first few years of
the loan. While the payments are initially low, they will
increase when the subsidy expires.
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, maintenance, utilities, etc).
Caps (interest)
Consumer safeguards which limit the amount the interest rate
on an adjustable rate mortgage may change per year and/or
the life of the loan.
Caps (payment)
Consumer safeguards which limit the amount monthly payments
on an adjustable rate mortgage may change.
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)
Certain eligible mortgage brokers and mortgage bankers can
obtain this form on-line.
Certificate of Reasonable Value
(CRV)
An appraisal issued by the Veterans Administration showing
the property's current market value
Certificate of Veteran Status
The document given to veterans or reservists who have served
90 days of continuous active duty (including training time)
It may be obtained by sending DD 214 to the local VA office
with form 26-8261a (request for certificate of veteran status).
This document enables veterans to obtain lower down payments
on certain FHA insured loans.
Closing and Closing Costs
The meeting between the buyer, seller and lender or their
agents where the title to the property and funds legally change hands.
This transaction is also called settlement. Closing costs usually include an origination
fee, discount points, appraisal fee, title search and insurance,
survey, taxes, recording fees, credit report charge and
other costs assessed at settlement. The cost of closing usually
are about 3 percent to 6 percent of the mortgage amount.
Commitment
A promise by a lender to make a loan on specific terms or
conditions to a borrower or builder. A promise by an investor
to purchase mortgages from a lender with specific terms or
conditions. An agreement, often in writing, between a lender
and a borrower to loan money at a future date subject to the
completion of paper work or compliance with stated conditions.
Construction loan
A short term interim loan to pay for the construction of buildings
or homes. These are usually designed to provide periodic disbursements
to the builder as he progresses.
Contract sale for 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 loan that meets the underwriting standards set by Fannie
Mae and Freddie Mac. These mortgages not insured by FHA or guaranteed by the VA.
Credit Report
A report documenting the credit history and current status
of a borrower's credit standing.
Debt-to-Income Ratio (DTI)
The DTI ratio is a qualifying ratio used by underwriting
systems (whether human or computerized) to prove that
borrowers have sufficient income to service their mortgage
payments. This ratio is expressed as a percentage, and
is calculated by dividing the borrower's monthly payment obligations
by his or her gross monthly income.
Deed of Trust
The document that is used in conjunction with the promissory
note to denote that a borrower has pledged certain real estate
as collateral to secure the repayment of a loan which was used
to purchase or refinance said real estate. The deed of
trust is the document that identifies the real estate as
collateral. The deed of trust is filed with the County
Clerk and Recorder in the county in which the real estate is
located.
Default
Default is the failure to meet legal obligations in a
contract or promissory note. Default provisions are
generally found in the language of the promissory note.
Some common default provisions in a real estate promissory
note are:
1) Material misrepresentation of the facts surrounding the
application.
2) Failure to make scheduled principal or interest payments on
time.
3) Using the property for illegal purposes.
4) Selling the property or making a transfer of beneficial
interest in the property.
5) Failure to maintain insurance or to pay property taxes.
This is not a complete list of default provisions, there are
other default provisions depending on the type of loan and the
lenders requirements.
Deferred Interest
When a mortgage is written with a monthly payment that is
less than required to satisfy the note rate, the unpaid interest
is deferred by adding it to the loan balance. Please see
Negative Amortization.
Delinquency
Failure to make payments on time. Generally, with
conventional and FHA loans, becoming 90 days past due on loan
payments triggers the beginning of the foreclosure process.
Department of Veterans Affairs
(VA)
An independent agency of the federal government which guarantees
long-term, low-or no-down payment mortgages to eligible veterans.
Discount Point
See Points.
Down Payment
Money paid to make up the difference between the purchase
price and the mortgage loan amount. Down payment funds
creates equity in the property being purchased.
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 or transfers a
beneficial interest in the home. If the due-on-sale
provision is violated and the loan is not paid within the time
period prescribed by the lender, then the lender has the legal
right to commence foreclosure proceeding.
Earnest Money
Money given by a buyer to a seller as part of the purchase
price to bind a transaction or assure payment.
Entitlement
The VA home loan benefit is called entitlement. Entitlement
for a VA guaranteed home loan is also known as eligibility.
Equal Credit Opportunity Act (ECOA)
ECOA is a federal law that requires lenders and other creditors
to make credit equally available without discrimination based
on race, color, religion, national origin, age, sex, marital
status or receipt of income from public assistance programs.
Equity
This is the difference between the fair market value
(established by an appraisal) and current indebtedness.
Escrow
An account held by the lender into which the home buyer pays
money for tax or insurance payments. Another meaning of
Escrow is earnest money deposits
held by the listing Realtor or a title company prior to
closing of the real estate transaction.
Fannie Mae
See
Federal National Mortgage Association.
Farmers Home Administration (FmHA)
Provides financing to farmers and other qualified borrowers
who are unable to obtain loans elsewhere.
Federal Home Loan Bank Board (FHLBB)
The former name for the regulatory and supervisory agency for federally
chartered savings institutions. Agency is now called the Office
of Thrift Supervision.
Federal Home Loan
Mortgage Corp.
(FHLMC)
aka "Freddie
Mac"
Is a quasi-governmental agency that purchases conventional
mortgage from insured depository institutions and HUD-approved
mortgage bankers.
Federal Housing Administration
(FHA)
FHA is a division of the Department of Housing and Urban Development.
Its main activity is the insuring of residential mortgage
loans made by private lenders. FHA sets standards for
underwriting mortgages.
Federal National Mortgage Association
(FNMA)
aka "Fannie
Mae"
A tax-paying corporation created by Congress that purchases
and sells conventional residential mortgages as well as those
insured by FHA or guaranteed by VA. This institution, which
provides funds for one in seven mortgages, makes mortgage
money available and affordable.
FHA Loan
A loan insured by the Federal Housing Administration open to
all qualified home purchasers. FHA maintains "mortgage
limits" based upon local community housing costs. These
limits are published on the FHA web site. The mortgage limits
are generous enough to handle moderately priced homes almost
anywhere in the country and FHA provides increased limits in high
cost housing areas.
FHA Mortgage Insurance (MIP)
Requires a fee (up to 1.5 percent of the loan amount) paid
at closing to insure the loan with FHA. In addition, FHA mortgage
insurance requires an annual fee of up to 0.5 percent of the
current loan amount, paid in monthly installments. The lower
the down payment, the more years the fee must be paid.
Fixed Rate Mortgage
Fixed rate mortgage is a loan where the interest rate will remain the same
throughout the term of the mortgage.
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.
Freddie Mac
See Federal Home Loan Mortgage Corporation.
Graduated Payment Mortgage (GPM)
A type of flexible-payment mortgage where the payments may
increase for a specified period of time and then level off.
This type of mortgage can create negative amortization.
Guaranty
A promise by one party (guarantor) to pay a debt or perform an obligation
contracted by another if the original party fails to pay or
perform according to a contract. Guaranties generally cannot
be enforced until the first party defaults on the obligation.
Also, guaranties generally are not report on the guarantor's
credit report.
Hard Money Loans
These are loans that are made based solely on the
value of the real property. Usually borrowers in
foreclosure will attempted to refinance with hard money loans.
A more detailed explanation can be found in the
Loan Application Guide in this site accessed via the middle
right side button on the home page. Or link to
h. Hard Money
Loans.
Hazard Insurance
A form of insurance in which the insurance company protects
the insured from specified losses, such as fire, windstorm and
the like. Hazard Insurance is frequently confused with Homeowners
Insurance. Homeowners Insurance is Hazard Insurance with the added protection
of personal liability insurance.
Impound
That portion of a borrower's monthly payments held by the
lender to pay for taxes, hazard insurance, mortgage
insurance, and other items as they become
due. Impounds are also known as reserves.
Index
A published interest rate against which lenders use to
establish the current interest rate on an adjustable rate
mortgage. The most common indexes are the one-year U.S.
Treasury Note, the one-year LIBOR (London inter-bank overnight
rate), and the monthly average costs-of-funds index (COFI)
computed from savings and loans deposits.
Interest Only Loans
This loan is also referred to as an Interest First
loan. A published
article accessed on the home page of this web site has a
section devoted to
e. Interest Only Loans.
Interim Financing
A construction loan made during completion of a building or
a project. A permanent loan usually replaces this loan after
completion.
Investor
Investor is the money source for a lender.
Frequently investor and lender are used synonymously.
Jumbo Loan
A loan which is larger (more than $417,000 as of 1/1/2006) than
the limits set by Fannie Mae and Freddie Mac. Because jumbo
loans cannot be funded by these two agencies, they usually
carry a higher interest rate.
Lien
A legal and recorded claim upon real estate for the payment or satisfaction
of a debt or obligation.
Loan-to-Value Ratio
Loan-to Value is the relationship between the amount of the mortgage loan and
the purchase price or the appraised value of the property.
Loan-to-Value is expressed as a percent.
Margin
The amount a lender adds to the index on an adjustable rate
mortgage to establish the current adjusted interest rate.
Market Value
Market Value assumes an arms length transaction and is the
highest price that a buyer would pay and the lowest price a
seller would accept on a property. Market value, sales
price, and appraised value are not always the same on a given
property.
MIP (Mortgage Insurance Premium)
MIP is a one-time up-front payment and an additional monthly
payment collected by the lender and paid to FHA. MIP
insurance protects the lender against loss in the event the
borrower defaults.
MI is money collected by the lender and paid to the investor
to protect the investor in the event the borrower defaults. MI
is only collected when the borrowers down payment is
less than 20 percent. Also see private mortgage insurance
and FHA
mortgage insurance.
Mortgage Banker
A
mortgage banker is an individual or company that arranges or
brokers loans between the borrower and the final lender or
investor. The mortgage banker utilizes a
warehouse line of credit to facilitate the closing of loans.
A mortgage banker borrowers the funds necessary to close a
clients loan and the mortgage banker closes in his own name.
The mortgage banker then sells the loan to the final lender
(investor). However, a mortgage broker closes the loan in the name of the
ultimate or final lender. Generally a mortgage banker
enjoys a price advantage of about 1/8th percent in interest rate over
the mortgage broker.
Mortgagee
The lender.
Mortgagor
The borrower or homeowner.
Negative Amortization
Negative Amortization occurs when your monthly payments are
not sufficient to
pay all the interest due on the loan. Negative amortization
occurs when a mortgage prescribes a fixed monthly payment but
a adjustable interest rate. Rates increase for the borrower
but the monthly payment remains fixed or does not increase as
rapidly as the payment. Unpaid interest is added to the
outstanding balance of the loan. The danger of negative
amortization is that the home owner, after a few years, can
owe
more than the original amount of the loan. Also, borrowers
who have negative amortization loans find it almost impossible
to obtain 2nd mortgages.
Net Effective Income
The borrower's gross income minus federal income tax.
Non Assumption Clause
A statement in a mortgage contract forbidding the assumption
of the mortgage without the prior approval of the lender.
Office of Thrift Supervision (OTS)
The regulatory and supervisory agency for federally chartered
savings institutions. Formally known as Federal Home Loan
Bank Board.
This relative new product is a hybrid of the
traditional one year adjustable rate mortgage. The
Option ARM comes with three or more payment options and
generally allows for negative amortization.
Origination Fee
The fee charged by a mortgage broker or mortgage banker to
arrange and underwrite a loan. The origination fee is most
typically 1 percent of the loan amount.
Permanent Loan
A long term mortgage, usually ten years or more. Also called
an "end loan."
PITI and PITIMI
PITI and PITIMI are abbreviations for Principal, Interest,
Taxes and Insurance and Mortgage Insurance.
Pledged Account Mortgage (PAM):
Money is placed in a pledged savings account and this fund
plus earned interest is gradually used to reduce mortgage
payments.
Points (loan discount points)
Points represents prepaid interest assessed at closing by the lender. Each point
is equal to 1 percent of the loan amount (e.g., two points
on a $100,000 mortgage would cost $2,000). Discount points
are generally paid by the borrower to buy down the interest
rate on the loan. One discount point will normally lower
the interest rate by 1/4th percent.
Power of Attorney
A legal document authorizing one person to act on behalf of
another.
Prepaid Expenses
Prepaids are necessary to create an escrow account or to adjust the seller's
existing escrow account. Prepaids include taxes, hazard insurance,
mortgage insurance and special assessments.
Prepayment
A privilege in a mortgage permitting the borrower to make
payments in advance of their due date. When this privilege
is not permitted, the loan calls for a pre-payment penalty.
Prepayment Penalty
Money charged for an early repayment of debt. Prepayment penalties
are allowed in some form (but not necessarily imposed) in
many states. Conventional, FHA and VA loans do not
have pre-payment penalties. Most subprime and portfolio
loans have pre-payment penalties.
Principal Balance
The principal balance is the amount of unpaid debt, not counting interest, left on a loan.
Private Mortgage Insurance (PMI)
Please refer to Mortgage
Insurance (MI)
Realtor
A real estate broker or an associate holding active membership
in a local real estate board affiliated with the National
Association of Realtors.
Recording Fees
Money paid to the lender for recording a home sale with the
local authorities, thereby making it part of the public records.
Refinance
Obtaining a new mortgage loan on a property already owned.
Often to replace existing loans on the property.
Renegotiable Rate Mortgage
A loan in which the interest rate is adjusted periodically.
See Adjustable Rate Mortgage.
Rescission or Recision
Rescission is the cancellation of a contract. With respect
to mortgage refinancing, the law gives the homeowner three days to cancel a contract
once it is signed if the transaction uses equity
in the home as security. Mortgages to purchase homes or
mortgages secured by investment properties do not have
rescission periods. Refinance transactions contain the
standard rescission clause. The rescission clause covers
three complete business days. Legal holidays and Sundays
are not rescission days.
RESPA
(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 (called a Good Faith Estimate) and once prior to
or at closing. (called a HUD-1)
Reverse Mortgage (RM)
RM is a form of mortgage in which the lender makes periodic
payments to the borrower using the borrower's equity in the
home. The borrower typically must be a certain age (say 62 and
older) and has 10 to 20 years to draw the full loan amount and
the mortgage does not have to be repaid until the borrower
moves, sells the home or dies. The amount the homeowner
may borrow depends on the borrowers age, the equity in the
home and the interest rate.
Second Mortgage
Second Mortgage is a mortgage made subsequent to another mortgage
It becomes subordinate to the first mortgage. The
priority of mortgages is determined by their filing order with
the local county where the property is located.
Secondary Mortgage Market
The place where mortgage investors sell the mortgages they make in
order to obtain more funds to originate additional loans. The
secondary market provides valuable liquidity for the investors.
Investors also buy and sell loans among themselves. Fannie Mae,
Freddie Mac and Wall Street offers the primary secondary market for
investors.
Servicing
Servicing involves the steps and operations a lender
performs to maintain a loan. Some of these functions are:
the collection of PITI payments and distribution to the
ultimate investors, the payment of taxes and insurance
to the proper counties and insurance companies, and providing
the massive computer system to provide loan accounting and
customer service.
Settlement and Settlement Costs
Please see Closing and Closing Costs.
Shared Appreciation Mortgage (SAM)
A mortgage in which a borrower receives a below-market interest
rate in return for which the lender (or another investor such
as a family member or other partner) receives a portion of
the future appreciation in the value of the property. May
also apply to mortgage where the borrowers shares the monthly
principal and interest payments with another party in exchange
for part of the appreciation. Shared Appreciation Mortgages
are very rare in the mortgage industry.
Simple Interest
Interest which is computed only on the unpaid principle balance.
Subprime Loans (also called B, C, and D Loans)
Mortgage applications are often graded like students in school
are graded. A conventional loan would be considered an A
or A+ loan. Borrowers whose credit scores are below
average are then classified as B or C or D loans. The grades
are primarily based upon the borrowers credit (or FICO) score.
There is an active lender market for Subprime loans but the
mortgage banker/broker must be very experienced or the
borrower ends up with a very expensive loan or a loan that
does not meet the borrower's needs.
Survey
A measurement of land, prepared by a registered land surveyor,
showing the location of the land with reference to know points,
its dimensions, and the location and dimensions of any buildings.
Sweat Equity
Equity created by a purchaser performing work on a property
being purchased is referred to as sweat equity. Sweat
equity is not used in the conventional market except in one
narrow sense. In certain limited circumstances, sweat
equity can be used with lease purchase options.
Title
A document that gives evidence of ownership in a property.
Title Insurance
A policy, usually issued by a title insurance company, which
insures a home buyer against errors in the title search. The
cost of the policy is generally borne by the seller.
Policies are also issued to protect the lender's interests.
After an offer is made for a real estate purchase, the seller
provides a title "commitment" showing the seller is in title
to the property and authorized to sell it. After the
sale is consummated, the title company makes sure all
necessary documents are recorded and then issues a final title
policy insuring title to the property.
Title Search
An examination of municipal records to determine the legal
ownership of property. Usually is performed by a title company.
Truth-In-Lending
(TIL)
A federal law requiring disclosure of the Annual Percentage
Rate to home buyers within three days after they apply for the loan.
The TIL is also known as Regulation Z.
Two-Step Mortgage
A mortgage in which the borrower receives a below-market interest
rate for a specified number of years (most often seven or
10), and then receives a new interest rate adjusted (within
certain limits) to market conditions at that time. The lender
sometimes has the option to call the loan due with 30 days
notice at the end of seven or 10 years. Also called "Super
Seven" or "Premier" mortgage. These mortgage
are rarely used.
Underwriting
Underwriting is the process and the actual decision whether
to make a loan to a potential home buyer or borrower. Underwriting takes
into account the borrower's qualifying ratios, credit history,
equity, and other factors and then matching an analysis of
this risk to an appropriate rate and term.
USURY
Interest charged in excess of the legal rate established by
law.
VA Loan
A long-term, low-or no-down payment loan guaranteed by the
Department of Veterans Affairs. This loan is restricted to individuals
qualified by military service or other entitlements.
VA Funding Fee
VA assesses a Funding Fee on the purchase of a property.
The first time a veteran uses a VA loan the funding fee is
2.0% of the loan amount and this is added to the loan balance.
Subsequent VA loans have a 3.0% funding fee. A VA
streamline refinance carries a .5% funding fee. The
Funding Fee is assessed in lieu of mortgage insurance because
VA finances 100% of the purchase price of the home being
bought.
Variable Rate Mortgage (VRM)
Verification of Deposit (VOD)
The VOD is a document signed by the borrower's financial institution
(bank, savings & loan or stock brokerage) verifying the status
and balance of borrower's financial accounts.
Verification of Employment (VOE)
The VOE is a document signed by the borrower's employer verifying his/her
position and salary.
Warehouse Fee
Many mortgage firms (see Mortgage
Banker) borrow funds on a short term basis in order to
originate loans closed in their name which are to be sold
later in the secondary mortgage market (or to investors). Such
a use of the mortgage bankers warehouse line of credit may cause an
additional expense. This warehouse fee is typically
passed on to the
borrower. The reason mortgage companies use a warehouse line
of credit is to obtain more favorable interest rates from
investors which then makes the mortgage company more
competitive in the marketplace.
Wraparound Mortgage
The Wraparound or just Wrap mortgage results when an existing assumable loan is
not paid off but included (combined) with a new larger loan,
resulting in an interest rate somewhere between the existing
note rate and the current market rate. Payments are made to
the second lender (who could be the previous homeowner), who then
forwards the payments to the first lender after taking the
additional amount off the top. The Wrap mortgage may
also be executed over or around an existing non-assumable
loan. In that case, if the original or underlying lender
discovers this new Wrap mortgage, the lender may declare their
existing loan in default via the due-on-sale provisions in
their note and/or deed of trust. Generally such a
declaration of default then triggers the acceleration clause
in the note/deed of trust which then triggers a foreclosure.
It is not advisable to Wrap a mortgage around an non-assumable
loan.