Dictionary
Accelerate: Via an “accleration” clause in the mortgage or deed of trust, gives the lender an option to require the borrower to pay the entire balance of the loan all at once if the loan is defaulted.
Affidavit: A sworn statement in writing given while under oath.
Appraisal: A licensed appraiser gives an estimate on a property value.
Appreciation: The difference between the increased value of the property vs the original purchase price.
Assumption: Permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable.
As-Is: Many REO properties are listed “as is”. Usually the seller has an addendum with a clause including “as is” in which the buyer must sign as part of the sales contract. The seller is not required to make any fixes with “as is” properties but the buyer may retract their offer if upon inspection the property is found to need more repairs than expected.
Bid: The amount offered during an auction.
Clear title: A title not burdened with defects
Deed: A signed document which transfers ownership of the property from one party to another.
Deed-in-Lieu: A Deed in Lieu of Foreclosure (DIL) is a disposition option in which a mortgagor (homeowner) voluntarily deeds the property in exchange for a release from all obligations under the mortgage. A Deed-in-Lieu of foreclosure may not be accepted from homeowners who can financially make their mortgage payments.
Deed of Trust: A 3 party security investment conveying the legal title to real property as security for the repayment of a loan. The three parties included in the deed of trust are the lender, trustee and borrower.
Default: A mortgage or deed of trust in default when borrower fails to make payments as agreed upon.
Deficiency Judgment: A personal judgment against the borrower for the remaining balance on the loan after a foreclosure.
Fair Market Value: Price of the property that would sell on the open market.
Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.
Foreclosure: Often called “bank-owned” or “REO” (which stands for “real estate owned”), this refers to a property that has been repossessed by a bank through foreclosure.
Free & Clear: Ownership of the property is free of all indebtedness.
Judicial Foreclosure: Process is one in which the lender must file a complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located before foreclosure proceedings can begin. Typically the foreclosure sale is advertised for 4 to 6 weeks and sold in a public auction to the highest bidder. Anyone may bid, including the lender. Within 30 days after the completion of the sale and executing of the deed to the purchaser, the officer must file a report of sale.
Lien: A charge upon real or personal property for the satisfaction of the debt.
Loan Modification: A written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.
Non-Judicial Foreclosure: A non-judicial foreclosure is used when a power of sale clause exists in a mortgage or deed of trust.
Power of Sale: A 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 upon default. In deeds of trusts or mortgages where the power of sale does exist, the power given to the lender to sell the property may be executed by the lender or their rep.
Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period, you have gradually paid back the amount of your mortgage that was delinquent.
Request for Notice: A recorded document requiring a trustee to send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.
Short Payoff: If you sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale.
Short Sale: A “short sale” is a sale of a property for less than the total amount owed on the mortgage(s).
Writ: A mandatory process in writing issued in the name of the judicial courts commandign the person to whom it is directed to perform or refrain from performing a specific act.
