Home Foreclosure Glossary | Home Foreclosure Prevention

Home Foreclosure Glossary

Bankruptcy: A legal alternative that allows the borrower to clear any debt obligations by restructuring the payment terms. In most cases, bankruptcy lawyers stop the foreclosure process until the bankruptcy is discharged or completed.

Deed in Lieu: Voluntary conveyance of title in exchange for a discharge of mortgage.  The house must be free of other liens and must have clear title. 

Forbearance: Under a forbearance agreement, the mortgage lender agrees to stop the foreclosure process and determines payment terms that, at a certain time, will bring the borrower current.

Foreclosure: A process in which a mortgage lender attempts to recover the amount owed on a defaulted loan. The home loan lender has the option of selling the home or taking over the property. The beginning of a foreclosure process starts after a borrower defaults on mortgage payments and the home loan lender files a Notice of Default or Lis Pendens.

Lien: A legal claim on a property by the mortgage lender or other entity against the homeowner that owes money.

Lis Pendens: A publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. This process is required in a few states to begin the foreclosure process if a borrower is in default.

Loan Modification: A process in which a mortgage lender agrees to modify the the terms of the mortgage with a home loan modification featuring a lower payment from a decreased interest rate or an extended term.

Notice of Default (NOD): A publicly recorded notice stating that a property owner is behind scheduled loan payments for a mortgage secured by a property. This process is required in most states to start the foreclosure process if a borrower is late on their mortgage loan for 90 days or more.

REO (Real Estate Owned): A class of property owned by a mortgage lender, typically a bank, after an unsuccessful sale at a foreclosure auction.

Reinstatement: Occurs when the homeowner gets caught up on the outstanding balance past due to bring the mortgage payments current in order to stop the foreclosure process and return to the original terms of a home mortgage.

Short Sale: A process in which a mortgage lender accepts a reduced amount of the outstanding mortgage balance in exchange for the sale of the property to a 3rd party.