Facing a foreclosure can make you feel powerless. The best way to start getting back in control is to learn more about the foreclosure process and the options that you have for avoiding foreclosure. As you research foreclosure you'll be seeing a lot of unfamiliar terms. Let us help you learn what some of these words and phrases mean with our glossary of mortgage foreclosure terms.
Foreclosure Definitions
Acceleration Clause
Allows a lender to demand the complete loan balance amount at one time should the borrower default on monthly payments.
Appraisal
An estimate of a property's value, given by a licensed professional.
Balloon Payment
A large payment that pays off the remaining loan balance at the end of a mortgage's term.
Deed (Title)
A document that shows ownership of real property. It may be transferred to a new owner to transfer ownership of the property.
Deed-in-Lieu of Foreclosure
An agreement between borrower and lender that allows the borrower to return ownership of a home to the lender as an alternative to the official foreclosure process.
Default
Failure to make the payment installments required by a loan agreement.
Deficiency Judgment
Legal judgment requiring the borrower to pay the difference between the mortgage balance and the amount received for the home at a foreclosure auction sale.
Equity
A home or real estate property's value, after subtracting outstanding amounts owed on the property.
Fair Market Value
The price at which a home or property would sell under actual real estate market conditions.
FHA
The Federal Housing Administration of the United States, which operates under the U.S. Department of Housing and Urban Development. Offers programs, such as FHASecure, to assist homeowners facing foreclosure.
Foreclosure
The sale of property enforced by a lender when the borrower has not met the payment requirements stipulated by the mortgage agreement.
Grace Period
Time period between the date a loan payment is due and the date on which it becomes overdue and fees for late payment are applied.
HUD
The U.S. Department of Housing and Urban Development. Offers programs to assist homeowners facing foreclosure.
Judicial Foreclosure
A foreclosure initiated and processed by court action. Judicial foreclosure is required by law in some states
Lien
A legal claim placed on title to a property as security for the borrower's debt to the creditor.
Lender
An individual or institution who provides money to a borrower on condition of repayment with interest.
Lis Pendens
Notice of a pending lawsuit.
Non-judicial Foreclosure
A foreclosure in which court action is not required. This may occur when the borrower has agreed to a "power of sale" clause in the mortgage authorizing the sale of the mortgaged property to repay the loan balance in case of default.
Notice of Sale
Makes public information about a loan in default and consequent foreclosure proceedings. The notice must be officially recorded and posted in accordance with state law or the loan agreement.
Personal Property
Possessions that are temporary or moveable, unlike real property such as a home.
Postponement
Setting a later date for a foreclosure sale, usually by announcement or by advertising the new date with a public notice.
Refinancing
Paying off a mortgage by obtaining a new loan.
Reinstatement
Returning to compliance with the original loan agreement by paying all delinquent payments, fees, and interest.
Right of Redemption
Provides foreclosed homeowners the right to buy back their homes during a specified period of time after a foreclosure auction. Reclaiming the property requires payment of the entire balance of the defaulted loan plus all applicable fees.
Short Sale
The sale of a home prior to foreclosure for a price lower than the total amount owed on the mortgage. In the case of a short sale, the lender agrees to accept less than the loan balance in order to avoid the official foreclosure process.