A deflated mortgage refers to a home loan in which the lender and borrower agrees to reduce the principle amount owing but increase the interest rate being charged.
Depending on how this is being structured, a borrower might end up paying the same amount as the original loan if the new loan is held to it’s full term.
The main reason why such creativity can be entertained by a lender is that the borrower is an investor who wants to claim deductions from interest expenses.
If a cognovit clause is inserted into a loan contract, the borrower effectively gives up his right to challenge a lender’s legal actions (concerning the debt) against him.
It is basically a pre-agreed acceptance of judgment on the part of the mortgagor.
A mortgagee would be able to place a lien against the defaulting debtor’s property as long as there is justification for these actions.
In the world for credit and mortgages, lowballing refers to the ethically-questionable practice of loan originators in quoting low or generic prices which they have absolutely no intention of honoring.
Such marketing tactics are used to draw in prospects to apply for home loans. After which, every reason (such as unfavorable credit scores) is used to justify why the customer is not eligible for the low interest rates.
Thereby having to pay much higher interest.
A purchase money mortgage is a term used to describe mortgages issued by third parties excluding traditional lenders and financial institutions.
The main difference between purchase money loans and regular home loans is that in the former, the mortgage and title are conveyed in the transaction.
Basically, a buyer provides the seller with a note and down payment. It is then recorded with the public office for legal documentation.