When facing foreclosure, one of the very first things you want to do is talk to your lender. You need to set up a meeting with and go to that bank, then discuss the options that are available to you. In order to do this or to get help from any financial organization, it would be nice for you to know some key foreclosure terms. Even if you’re looking for foreclosure real estate property, knowing the language, can help you better communicate with your real estate agent and people in the business.
Foreclosure has its own language with many obscure words originating in government housing legislation and real estate law. So don’t be hard on yourself it you don’t know many of them, many people who aren’t in the business won’t. I will try and list some of the more common foreclosure terms.
Abandonment-The property owner has given up ownership rights without coercion. The owner does not want to retrieve those rights or pass them to somebody else. Just because a property is vacant does not mean it has been abandoned.
Acceleration Clause-This is something that is written into some mortgages, it gives the lender the right to demand full re-payment immediately, rather than at the end of the contracted term. The clause muse also detail why the lender demands this such as, there was a default on regular payments or sale of the property. For this clause to go in effect the debtor must be given reasonable notice and a chance to reverse the occurrence.
Chattel-This is the homeowners personal property, including all household items.
Deed in Lieu Of Foreclosure-The property owner may deed their property to the lender if foreclosure is imminent.
Default-Once the home owner has missed three mortgage payments, the loan is considered to be in “Default”. In most states, this signifies the beginning of the foreclosure process.
Equity Right of Redemption-The right of the borrower to remove all encumbrances related to the mortgage, to avoid foreclosure.
Federal Housing Administration or FHA- This part of the Housing and urban Development agency or HUD department. FHA is responsible for determining industry standards for mortgage loans by private lenders. They also insure mortgages by private lenders.
Federal National Mortgage Association or FNMA or Fannie Mae-This agency oversees conventional residential mortgages and will buy out loans that follow its rules.
HUD1-As it relates to foreclosure, this is a form mandated by the Department of HUD that specifies the costs of acquiring a foreclosed home.
Loan-To-Value (LTV) Ratio-A comparison of the total loan amount and the lesser of the property’s sale price or appraised value.
Notice of Recession-A notice from the lender notifying the borrower that he or she is again in good standing with the loan and payment deficiencies have been corrected.
Short Sale-A property sale priced at or below market value and lower than the amount on the mortgage. Used by the homeowner to try and sell the house quickly to avoid foreclosure.
Truth in Lending Act-A law requiring the lender to provide the borrower with a full written explanation of the mortgage terms.
Hopefully some of these terms will help you understand the foreclosure process better and open up lines of communication with people in the business. Learning these terms and others will help you fight foreclosure and give you new ideas on how to stop foreclosure. Whenever you come across a term you don’t know or understand, you should immediately go the our website or blog to search for the answer!
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