Common Foreclosure Related Terms
Don't be confused by mortgage and legal terms used during the foreclosure process. Use our mortgage and foreclosure terms glossary below for a brief overview. If you do not understand a term found in any documents you are reviewing then you may want to seek advice from an attorney.
An option given to lenders through an "acceleration" clause in the mortgage or deed of trust requiring the borrower to pay the entire balance of the loan all at once if their loan is in default.
A sworn statement in writing usually given while under oath or in the presence of a notary.
The process in which a licensed or authorized person gives an estimate of property value.
The difference between the increased value of the property and the original value.
The transfer of property to be held in trust or to be used for the benefit of the creditors (lenders).
The past due balance on your real estate loan and includes the balance due on the loan, unpaid interest, late charges and statutory attorney fees and costs.
The transfer of real property to be held in trust or to be used for the benefit of the lender.
Auction: Usually the final phase in the foreclosure process in which your property is sold to the highest bidder.
A legal process that allows a debtor to discharge certain debts without paying the total amount due.
The offered amount for a property for sale at auction.
Certificate of Sale
A document given to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.
A title that is not burdened with defects.
A bid on behalf of the lender at a foreclosure sale. The bid amount must be less than or equal to the balance of the loan in default.
A judicial decision.
A signed document that transfers ownership of property from one party to another.
Deed-in-lieu of Foreclosure
An instance where borrowers voluntarily convey their rights in a property to the lender.
Deed of Trust
A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The three parties included in a deed of trust are the borrower, lender and trustee.
A mortgage or deed of trust is said to be in default when the borrower fails to make the payments as agreed to in the original promissory note.
A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
The present right to possession with the right to acquire legal title once a preceding condition has been met.
Fair Market Value
The price a property would sell for on the open market.
The forced sale of property pledged as security for a debt that is in default.
Free & Clear
Ownership of property free of all indebtedness.
A foreclosure that is processed by a court action.
A charge upon real or personal property for the satisfaction of a debt.
A formal description of real property sufficient to locate it by reference to government surveys or approved recorded maps.
A person who lends money for temporary use on condition of repayment with interest (i.e., the bank, mortgage company, etc.).
A recorded notice of pending lawsuit.
A written pledge of property that is used as security for the repayment of a loan.
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the 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 in the event of their default.
A public officer licensed by the state to attest to and certify the validity of signatures of others. A notary is often referred to as a notary public.
Notice of Sale
A notice giving specific information about the loan in default and the proceedings about to take place. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.
Notice of Default
A written document that is recorded, published, and posted giving notice of public record that a borrower has failed to perform his or her obligation under the terms of the promissory note. This document is recorded.
Notice of Trustee's Sale
A document that is recorded, published, posted and mailed and sets forth the date, time and location of the trustee's sale.
Property other than real property consisting of things temporary or movable.
To publish, announce or advertise by physically attaching a notice to an object.
Postponement means to put off to a later time. In the case of a foreclosure sale, this is generally done by announcement at the original sale or by posting notices establishing the new date and time the foreclosure sale will take place.
The period after default, but before an actual foreclosure sale.
Right of Redemption
A borrower's right to reacquire property lost due to a foreclosure.
Request for Notice
A recorded document requiring a trustee 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.
This is where your lender has agreed to accept less than the full balance owed to them on the loan when your property is sold.
The purchase of a property with an existing lien against the title without assuming any personal liability for the liens payment.
The instrument that is evidence of a person's right in real property (i.e., a deed).
The party who holds title to real property in trust for the benefit of another. The trustee's most common functions are to process a full (when loan is paid off) or partial (when a portion of the property is being released) reconveyance and to process a non-judical foreclosure and process a trustee's sale.
The borrower/owner at the time the deed of trust is created.
Trustee's Deed Upon Sale
A document signed and recorded by the trustee that transfers ownership of the real property to the purchaser at a trustee sale.
A public auction sale of a property described in a Notice of Trustee's Sale, which property was given as security for the repayment of an obligation.
A recorded bid placed after a foreclosure sale has ended that is higher than the highest bid received at the actual foreclosure sale.
An order or mandatory process in writing issued in the name of a court or judicial officer commanding the person to whom it is directed to perform or refrain from performing a specified act.