The home foreclosure process can be quite confusing. To help individuals facing foreclosure, we've compiled a list of legal terms that are commonly used during the foreclosure process.
- Accelerate: A home mortgage or deed of trust can have an acceleration clause that forces the borrowing party to pay the full amount of the home mortgage loan all at once. Acceleration only happens if the mortgage loan is in default status.
- Appreciation: This is the amount of money that the home's value has increased since purchased. Home values can also depreciate over time (depreciation).
- Assignment: Assignment is the transfer of the property to the lenders or to a trust for holding. Assignment allows the lenders to recoup some of the home's value so that they can recover part of their losses due to the unpaid mortgage loan.
- Certificate of Sale: This is a tangible document that is provided to a bidder at a home's foreclosure auction. The winning bidder's certificate of sale will provide written proof of his rights to the foreclosed home upon the completion of the borrower's redemption period.
- Credit Bid: A credit bid is the bid that the lender makes during a home's foreclosure auction. A credit bid must match the balance of the defaulted loan. Or, it can be less than the balance of the defaulted loan.
- Deed in lieu of foreclosure: In this situation, the borrowing party transfers his rights to the home to the lender of the mortgage. This is voluntary in nature and not forced by the court.
- Default: Default occurs when the borrowing party does not make the payments as scheduled in the mortgage's promissory note.
- Deficiency Judgment: Upon a foreclosed home's sale, a deficiency judgment can be issued against the borrowing party for the amount of money that remains on the mortgage loan.
- Fair Market Value: This term refers to the value of the foreclosed home if put up for sale on a traditional marketplace (as opposed to a foreclosure auction sale). It is an estimate of how much the home would sell for in an "open market."
- Judicial Foreclosure: This occurs when a home is foreclosed upon by way of a court of law's actions.
- Lien: When a debt isn't satisfied, a lien can be placed upon the debtor's property. It is a charge on the property that will remain until the initial debt is satisfied.
- Lis Pendens: The officially recorded notice of a lawsuit that is in a pending status.
- Non-judicial Foreclosure: This process of foreclosure occurs when the mortgage has a power of sale clause whereby the borrowing party has given permission to sell the property in the event of a default in order to pay the loan's remaining balance.
- Notice of Sale: This document provides detailed information about the defaulted home loan and the legal procedures that will ensue.
- Right of Redemption: When a property is foreclosed, the borrowing party that defaulted on the loan has the right to re-purchase the property.
- Request for Notice: A document that forces the trustee to transmit a copy of the Notice of Default / Sale pertaining to a foreclosure to the individual who originally filed the document.
- Title: The document that proves someone's right to a property.
- Trustee: An unbiased person who markets the foreclosed home and hosts an auction to find a buyer for the property.
