Important Definitions

Browse the terms used by banks in dealing with residential mortgage loans can be confusing and complex. Here are some basic definitions of some of these terms:

Allonge — A separate document used to demonstrate transfer of ownership of promissory notes, usually by endorsement. In Missouri, the allonge is supposed to be affixed to the promissory note. Generally, an allonge is only supposed to be used if there is no longer room on the promissory note for additional signatures.
Arrears — The amount claimed to be past due on a mortgage loan.
Deed of Trust — The most common type of mortgage loan in Missouri. This document is frequently referred to as the mortgage and represents the collateral, or lien, against your home. This is a complicated and important document that determines how an entity may lawfully foreclose on a home.
Escrow — A separate account for payment of taxes, usually included in your monthly mortgage payment.
Fees — Fees may be charged to borrowers for being late in payment or for other items related to foreclosure such as determining the current value of a home. Excessive or improper fees may not, however, be lawfully charged to homeowners. There have been many instances where inappropriate fees have been charged to borrowers in foreclosure, or on the verge of foreclosure.
Holder — The entity entitled to receive payments under a promissory note.
Payment History — Mortgage servicers keep records of how payments have been applied to mortgage loans. This record is called a payment history. This document can be complex and confusing. Most homeowners will need an experienced lawyer to interpret the charges and payment applications.
Promissory Note — This is the document that contains a description of the amount borrowed by a homeowner and the terms under which the borrower has agreed to pay back a lender. The Deed of Trust “secures” the promissory note, meaning that if a homeowner fails to pay according to the terms of the promissory note, the note owner may foreclose.
Servicer — This is the company that sends your mortgage bills and collects payments, often a bank or financial institution.
Suspense Account — Mortgage loan servicers maintain suspense accounts related to mortgage loans where payments that are not promptly applied to loan principal, interest, or fees are kept. Suspense account information may show how fees have been charged to homeowners, among other important items.

Missouri Attorney General Chris Koster

Important Definitions