Foreclosures and short sales are often confused but they are two very different processes . This Short Sale & Foreclosure Glossary will, hopefully, help with some of the confusion
Pre-foreclosure: The period beginning with initial mortgage default up to when the distressed property is sold
Notice Of Default(NOD) -A lien, usually a mortgage loan, that is subordinate to a Senior Lien, usually a first mortgage. Lien priority is generally established by order of 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 Junior Lien holders to legally establish the new mortgage holder as 1st or Senior Position.
Reinstatement Period: The time frame stipulated in the NOD that the borrower has to reinstate the loan by making payments and bringing account back to good standing.
Publication Period: begins once the redemption period has expired and must be at least 21 Days prior to trustee Sale. A notice is published once a week for three weeks in the local newspaper.
Notice of Trustee Sale (NTS): Recorded document explaining when and where the foreclose sale will be held.
Trustee Sale: if after the reinstatement period has expired the loan is still in default the lender can then sell the property as soon as 21 days after the Notice of Trustee Sale is recorded.
Redemption Period: The time period that the distressed borrower has to redeem the loan after the NOD is recorded. In California, that time period is 90 days. (not to be confused with statutory right of redemption)
Statutory Redemption – The right of the borrower to recover a property after foreclosure sale.
Foreclosure – is a legal process by which a defaulted Borrower is deprived of his/her interest in a mortgaged property.
Short Sale – The sale of a home which is completed through negotiation in which the lender agrees to accept less than the full amount owed allowing the debt to be ‘paid off’, (short).
The Property is “upside down”: This phrase is commonly used to describe a situation where the amount due on the existing loan is higher than what the property is appraised for or will sell for.
Forbearance Agreement – an agreement between a mortgage holder and a borrower that lays out a specific loan payment plan and stops the foreclosure action so long as the borrower meets the terms of the agreement. A Forbearance Agreement is a way for the borrower to keep the property and.
Junior Lien – A lien, usually a mortgage loan, that is subordinate to a Senior Lien, usually a first mortgage. Lien priority is generally established by order of recordation .
Real Estate Owned (REO) – Short for Real Estate Owned. When a mortgage lender acquires a property.
Statutory Redemption – The right of the borrower to recover a property after foreclosure sale.
A Deed In Lieu Of Foreclosure – is when you deed your property to the lender in exchange for forgiveness of the entire amount of the mortgage.
Deed For Lease (D4L) – The Deed for Lease program lets homeowners transfer the deed back to their lender and then sign a lease to remain in the home.
Important Links
Home Steps – Freddie Mac Homes