Foreclosure Terms

Foreclosure Terms

Forclosure Terms

It’s truly sad how frequently the majority of American homeowners are using foreclosure talk and acronyms in their daily discussions with family, friends and neighbors.

NOD, REO and HAMP shouldn’t be required to be in your vocabulary, but when they banks call and harass you or even send harassing letters, it's good to know what they are talking about.

With that in mind and in order to help you feel more comfortable and confident, here are a list of a few terms that will help enhance your ability to communicate with banks, attorneys and real estate agents:

BENEFICIARY – The beneficiary in a foreclosure context is generally the mortgage lender. Frequently referred to as the “Benny”.

CREDIT COUNSELING – Under the new bankruptcy law which took effect in October of 2005, those wishing to file bankruptcy must complete an approved credit counseling course within the six (6) months prior to filing.

DEED IN LIEU OF FORECLOSURE – The voluntary surrender of property by an owner/borrower to a lien holder that eliminates the need to continue foreclosure action by the lien holder. The lien holder can refuse to accept the Deed in Lieu and file a Notice of Non Acceptance with the County Recorder.

DISCOUNTED PAYOFF – The payoff of a mortgage loan where the lender accepts an amount less that the actual amount owed to payoff the loan.

EQUITY DEFICIENT- A property is Equity Deficient when, if sold, sale proceeds would not fully pay off existing mortgage debt.

FORBEARANCE AGREEMENT – An agreement between a mortgage holder and a borrower that lays out a specific loan payment plan and often puts a stop on the foreclosure action so long as the borrower meets the terms of the agreement. The payment plan includes provisions for repayment to the mortgage holder of all delinquent interest and fees and could include extending the life of the mortgage beyond the original terms. A Forbearance Agreement is a tool that allows the borrower to keep the property.

HAMP - Home Affordable Modification Program – Launched by the Obama administration in 2009 to set a standard set of guidelines for lenders to follow when negotiating new payment terms on a borrower facing imminent default.

JUDICIAL FORECLOSURE – A foreclosure action conducted through the courts instead of through a foreclosure trustee. Should a lender elect to pursue a deficiency judgment, it would be through a Judicial Foreclosure.

JUNIOR LIENS – A lien, usually a mortgage loan, that is subordinate to a Senior Lien, usually a first mortgage. Lien priority is generally established by recordation. NOTE: if you refinance a 1st mortgage on a property with a 2nd mortgage already in place the new 1st mortgage holder will require a subordination agreement from the Junior Lien holders to legally establish the new mortgage holder as 1st or Senior Lien holder.

LIBOR (London Interbank Offered Rate) – The interest rate charged among banks for short-term Eurodollars loans – LIBOR is a very common index for adjustable rate mortgages (ARM).

LOAN MODIFICATION – An adjustment to the terms of a mortgage, usually to assist a homeowner who has gone delinquent on the mortgage, or one for whom mortgage difficulty appears unavoidable. Among the most common modifications are adjustment to payment terms, adjustment to the interest rate or shifting of delinquent amounts for repayment later in the loan term.

LOSS MITIGATION – Home mortgage lenders look to limit losses on delinquent mortgages by working out solutions with borrowers through their Loss Mitigation Department.

NOD – Short for Notice of Default

NOTICE OF TRUSTEE SALE – An official notice that is posted, mailed, published/advertised and recorded by Trustee at the direction of lender indicating lender’s intention to sell the property at public auction. The notice typically includes a specific date, time and location.

POSTPONEMENT – Trustee Sales may be postponed by the Trustee at the direction of the lien holder. Notice may be given in advance or at the time and location specified for the intended sale.

PRIVATE MORTGAGE INSURANCE (PMI) – A policy of insurance paid for by the borrower to protect the lender in the event the borrower defaults on the mortgage. Typically PMI is required by the mortgage holder when the down payment is less than 20% of the purchase price.

REO – Short for Real Estate Owned. When a mortgage lender acquires a property, typically through foreclosure, it becomes real estate owned or REO.

SHORT SALE - The sale of a home which is completed through negotiation with the existing lender(s) in which the lender(s) agrees to accept less than the full amount owed to satisfy the debt allowing the debt to be “paid off” short.

TRUSTEE (Foreclosure Trustee) - A Foreclosure Trustee is appointed by the mortgage company when a mortgage reaches default status for the purpose of processing the foreclosure.

TRUSTEES DEED – The deed given to the highest bidder at auction or to the foreclosing lender upon completion of the foreclosure.

TRUSTEE SALE – Conducted by the Trustee. The property is sold at auction to the highest bidder or taken back by a foreclosing lender.

There are easier ways to deal with your housing issues other than memorizing all of this information. Contact Us today and let us give you a few fresh, fast, and free ideas!