FORECLOSURE TERMS
1. Foreclosure: The legal process by which a lender or creditor takes control of a property, evicts the homeowner, and sells the home after the homeowner fails to make full principal and interest payments on his/her mortgage, as stipulated in the mortgage contract.
2. Acceleration Clause: A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.
3. Judicial Foreclosure: A foreclosure that is processed through a court with formal legal proceedings.
4. Non-Judicial Foreclosure: A foreclosure process that is conducted outside of the court system based on a "power of sale" clause in the mortgage agreement.
5. Lis Pendens: A recorded document that provides public notice that the property is being foreclosed upon.
6. Short Sale: A sale of a property where the proceeds fall short of what the owner still owes on the mortgage.
7. Deed in Lieu of Foreclosure: An option where a borrower voluntarily conveys all interest in a property to the lender to satisfy a loan that is in default and avoid foreclosure proceedings.
8. Deficiency Judgment: A court order to pay the remaining amount owed on a mortgage after the foreclosure sale of the property.
9. Bankruptcy Stay: A legal provision that automatically stops lawsuits, foreclosure, garnishments, and most collection activities against the debtor the moment a bankruptcy petition is filed.
10. Chain of Title: The chronological order of conveyance of a parcel of land, from the original owner to the current owner.
11. Deed of Trust: An alternative to a mortgage where property is held in trust by a third party as security for the loan.
12. Equitable Right of Redemption: The right of a borrower to redeem his/her property after default but before foreclosure sale.
13. Foreclosure Auction: A public auction where foreclosed properties are sold, typically by a county official.
14. Homestead Exemption: A legal provision protecting homeowners from losing their homes to creditors and reducing property tax liabilities.
15. Junior Mortgage: A secondary mortgage on a property, typically subordinate to a first mortgage.
16. Lien: A legal claim or attachment against property as security for payment of an obligation.
17. Loan Servicing: The administration aspect of a loan from the time the proceeds are dispersed until the loan is paid off.
18. Mortgage Insurance: Insurance that protects lenders from losses due to the default of a mortgage loan.
19. Negative Amortization: A situation in which the loan principal increases because the payments do not cover the full amount of interest due.
20. Origination Fee: A charge by the lender for processing a new loan application, expressed as a percentage of the loan amount.
21. Power of Sale: A clause in a deed of trust or mortgage giving the lender the power to sell the property in the event of default.
22. Reconveyance: The transfer of property back to its owner when a mortgage is fully repaid.
23. Right of Redemption: The right of a borrower to reclaim foreclosed property by making full repayment of the debt owed.
24. Servicer: A company that manages the day-to-day administrative tasks of a mortgage loan.
25. Short Refinance: A negotiation with the lender to reduce the balance of a mortgage, often as an alternative to foreclosure.
26. Strategic Default: A decision by a borrower to stop making payments on a mortgage despite having the financial ability to make the payments.
27. Subprime Mortgage: A type of mortgage loan that is offered to borrowers with poor credit histories and is typically associated with higher interest rates.
28. Truth in Lending Act (TILA): A federal law intended to promote the informed use of consumer credit by requiring disclosures about its terms and cost.
29. Underwater Mortgage: A mortgage in which the homeowner owes more than the home is worth.
30. Voluntary Foreclosure: An alternative to traditional foreclosure where the homeowner voluntarily transfers the property to the lender.
31. Workout Agreement: An arrangement where the lender and borrower agree on a modified repayment plan for a mortgage.