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Foreclosure Definitions
Click on the first letter of the word from the list above to go to the appropriate section of the glossary.
– A –
Abandonment: When a homeowner leaves a house with no intention to return.
Acceleration Clause: Clause in a mortgage giving a lender the right to call all sums owing the lender to be immediately due and payable upon the happening of a certain event.
Alienation Clause: Also known as a due on sale clause. This states that upon sale or transfer of certain property, a loan is immediately due and payable.
As Is: When a property is sold as is, the seller does not warrant or guarantee that the property is free of defects. The buyer accepts the property in its present condition, without modification.
As Is, With Right to Inspect: A potential buyer has an opportunity to inspect a property and approve of it as a condition precedent to closing the transaction.
Assessed Valuation: A valuation placed upon property by the tax appraiser’s office as a basis for taxation.
Assignment of Rents: A procedure in which a borrower gives a lender the right to receive the rents collected from a tenant in a house owned by the borrower.
Appraisal: An estimate of a property’s value made by a licensed appraiser, who is usually presumed to be an expert.
Appraiser: One who is trained and educated in the methods of determining the value of property (appraised value).
Assumption of Mortgage: Occurs when a person takes title to property and assumes liability for the payment of an existing mortgage note. Depending upon the terms, the original borrower may or may not be released from any liability.
Auction: The process of selling property at a public sale to the highest bidder.
Automatic Stay: A bankruptcy court order. When bankruptcy is filed, the bankruptcy court will issue a court order that prevents any creditor from attempting to collect any debt from the person who declared bankruptcy. Creditors, even though they are owed money, may not pursue foreclosure, repossession, eviction or seizure, or even call or write the debtor demanding payment. Instead, if the debt or property they are seeking is exempt from discharge, they must come to the bankruptcy court and seek “relief from stay.”
– B –
Balance Owed on the Loan: The part of the original loan that remains unpaid by the borrower at a given point in time. This is not the same as the amount to pay off the loan, which would include back payments and late charges.
Bankruptcy: An action filed in a federal bankruptcy court that allows a creditor to reorganize or discharge credit obligations. A bankruptcy will temporarily stop the foreclosure sale.
Broker’s Price Opinion: An estimate of a property’s value made by a licensed real estate broker, who is usually presumed to be an expert.
– C –
Certificate of Sale: A document indicating that a property has been sold to a buyer at foreclosure. This document is filed promptly after a bidder wins the property at auction.
Certificate of Title: A document that is created by the clerk of the court ten days after a Certificate of Sale is filed.
Chapter 7: One of the chapters in the federal Bankruptcy Code. Chapter 7 is liquidation of a debtor’s nonexempt assets. All assets are gathered together and given up or sold for the benefit of creditors in order of the creditors’ priority. Florida has a constitutional homestead exemption which exempts a homeowner’s primary residence from all creditors except for taxes and assessments, obligations contracted for the purchase, improvement or repair of a primary residence, or obligations contracted for house, field or other labor performed on the realty.
Chapter 13: One of the bankruptcy chapters in the federal Bankruptcy Code. Under Chapter 13, a wage earner can reduce debt payments through a bankruptcy court order according to the terms of a plan approved by the bankruptcy court.
Clear Title: Ownership rights to a piece of real estate that are not encumbered by liens, leases or judgments. No other ownership claims exist.
Closing Date: The date upon which the buyer takes over the property and seller receives his funds. Also, as used in REMICS, the date in which all transfers into the trust must be effectuated.
Condominium: Land ownership in which one owns an individual unit and a percentage of common area.
Contract for Deed: A sales arrangement in which the seller holds title until the buyer finishes paying for the property. The terms of the sale and the payments are set in a written contract signed by the buyer and the seller. At the end of the payment period, the buyer gets title to the real estate by means of a deed. A contract for deed should be recorded.
Conveyance: The process of transferring title or some interest in real estate to a new owner.
Cloud on the Title: An outstanding claim or encumbrance that, if valid, would affect or impair the owner’s title. An Action to Quiet Title can clear clouds on title.
Cram-Down: A chapter 13 bankruptcy arrangement in which a plan to repay lenders and creditors, which was developed by the debtor or debtor’s attorney, is ordered into effect by the bankruptcy court. This plan can include altering the terms of an original agreement and is “crammed down” on creditors. A successful cram down must be paid in full by the end of the bankruptcy plan. This is most often used for car loans but can be used for real estate other than a person’s primary residence.
– D –
Deed: An instrument of conveyance. The legal document commonly used to transfer ownership of real estate from one owner to another.
Deed in Lieu of Foreclosure: The process in which a borrower agrees to convey the property to the lender and the lender agrees to forgo the foreclosure process.
Deed Restriction: A restriction imposed in a deed to limit the use of the land. A deed restriction may prevent certain types of usage or may prevent sub-division of the land.
Default: The inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.
Deficiency: The difference between the amount of money a borrower borrowed from the lender and the amount the lender received from the foreclosure auction.
Deficiency Judgment: A court judgment against a borrower in the amount of the deficiency defined above.
Delinquency: Failure of a borrower to make timely mortgage payments under a loan agreement.
Down Payment: The portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan.
Due on Sale: A clause in a mortgage that demands that the borrower pay off the loan in full if the house is ever sold. The lender can’t prevent the sale, but it can demand payment in full on the loan balance, which often has the same practical effect. In the absence of a due-on-sale clause, the loan is typically assumable without the lender’s consent.
– E –
Earnest Money: Money presented by a purchaser of real estate as evidence of good faith which can be applied toward the down payment.
Easement: A right that may be exercised by the public or individuals on, over, or through the property of others.
Encroachment: A building, part of a building, or obstruction that intrudes upon the property of another.
Encumbrance: Right to or interest in property interfering with its use or transfer, or subjecting it to an obligation. In connection with foreclosure property, the most likely encumbrances are mortgages and claims for unpaid taxes.
Equity: The excess of market value or sales price above the outstanding loan balance plus back payments, if any.
Equity Loan: A subordinate loan (junior to a first mortgage) based on a percentage of the equity.
Escrow Account: An account held by an attorney, real estate broker, or title agent used to hold and disburse funds during a real estate transaction. Also, an account held by the lender that is used for the borrower to prepay in installments and the lender to pay certain expenses or charges that are incidental to property ownership and that may protect the lender’s security.
Escrow Agent: A person or entity holding documents and funds in a transfer of real property, acting for both parties pursuant to instructions. Typically, the agent is a person (often an attorney), escrow company, or title company, depending on local practices.
Estoppel Certificate: An instrument executed by the mortgagor setting forth the status of and the balance due on the mortgage as of the date of the execution of the certificate.
Eviction: The legal procedure to have a tenant forcibly removed from a dwelling.
Extension Agreement: An agreement that extends the life of a mortgage.
– F –
Fair Market Value: The value that a willing and knowledgeable buyer would pay, and a willing and knowledgeable seller would accept, in an arm’s-length transaction for a property.
Fannie Mae: see Federal National Mortgage Association
FDIC: The Federal Deposit Insurance Corporation. The entity created by the federal government to insure deposits in banks and S&Ls.
Federal Home Loan Mortgage Corporation (Freddie Mac): A government-chartered but privately owned corporation that buys mortgages from S&Ls, banks and mortgage bankers; also called Freddie Mac. Freddie Mac was placed into conservatorship in September of 2008 and is now run by the Federal Housing Finance Agency.
Federal National Mortgage Association (Fannie Mae): A government-chartered but privately owned corporation that buys mortgages from mortgage companies. Fannie Mae was been placed into conservatorship in September of 2008 and is now run by the Federal Housing Finance Agency
FHA Mortgage Loan: Mortgage loan insured by the Federal Housing Administration.
First Lien: A debt recorded in first position against a property.
First Mortgage: Mortgage that has priority as a lien over all other mortgages. In cases of foreclosures, the first mortgage must be satisfied before other mortgages are paid off.
Forbearance: A lender voluntarily accepts payments that are lower than originally agreed in the loan documents for a limited period of time in order to allow the borrower to recover financially. The borrower must eventually repay the missing or reduced payments, as well as all the other remaining payments on the loan.
Foreclosure: The forced sale of real estate to repay a debt.
Freddie Mac: See Federal Home Loan Mortgage Corporation
– G –
Ginnie Mae – Government National Mortgage Association: An arm of the federal government that guarantees the timely payment of mortgage-backed securities.
Good Faith Estimate (GFE): An estimate of the settlement charges you are likely to incur; it also contains other information about the loan.
Grace Period: Additional time allowed to perform an act or make a payment before a default occurs.
Grant: A term used in deeds to indicate a transfer of ownership.
Grantee: The party to whom the title to real property is conveyed.
Grantor: The person who conveys real estate by deed; the seller.
– H –
Holder in Due Course: The holder of an instrument that (a) does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and (b) the holder took the instrument: 1) for value; 2) in good faith; 3) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series; 4) without notice that the instrument contains an unauthorized signature or has been altered; 5) without notice of any claim to the instrument described in s. 673.3061 ; and 6) without notice that any party has a defense or claim in recoupment described in s. 673.3051 (1) (fraud, duress, illegality, incapacity and other defenses).
Homestead: Special legal protection that Florida gives to a person’s principal residence. This includes two unique tax benefits as well as protection from creditors.
Housing and Urban Development: A department of the federal government that administers housing programs known as HUD.
– I –
Involuntary Lien: A lien imposed against property without consent of the owner, e.g., taxes, special assessments, homeowners’ association dues.
– J –
Joint Tenancy: Ownership of property by two or more persons, each of whom has an undivided interest with the right of survivorship.
Judgment: The final decision of a court.
Judicial Foreclosure: A foreclosure action that is executed by the court.
Junior Lienholder: A holder of a right to force the sale of property that is inferior and subordinate to another lienholder’s right to do the same. A junior lienholder who forces the sale of the real estate must take funds only after the senior lienholder is paid in full.
Junior Mortgage: A mortgage second or subsequent in lien to a previous mortgage.
– K –
k: Symbol for a loan constant, which is a method used in determining loan payments as a fraction of the entire mortgage balance.
– L –
Late Payments: Payments that are made past their due dates according to the loan documents.
Lien: The right to force the sale of property to pay a debt.
Lienholder: A person or institution that controls a lien.
Liquidation Appraisal: An estimate of the value of property when it is sold quickly in a forced sale. Usually, this figure is lower than fair market value for a regularly conducted sale.
Lis Pendens: A recorded notice that tells the world that a lawsuit is in progress, the outcome of which could affect the title to a particular piece of land.
Loan Modification: A procedure in which a loan’s terms, such as the interest rate, monthly payment or term, are altered with the approval of a lender.
Loan to Value (LTV) Ratio: A percentage calculated by dividing the amount to be borrowed by the price or appraised value of the home to be purchased (whichever is less). The loan to value ratio is used to qualify borrowers for a mortgage, and the higher the LTV, the tighter the qualification guidelines for certain mortgage programs become. Low loan to value ratios are considered below 80%, and carry lower rates since the loan presents lower risk to the lender.
– M –
Mechanics Lien: A lien created to secure the money owed for labor and furnished for uncompensated improvement made to a property.
Metes and Bounds: Terms used in describing land by setting forth all the boundary lines.
Mortgage: The transfer of an interest in property to a lender as a security for a debt.
Mortgage Lien: The right of a mortgage lender to force a sale of the mortgaged property if the borrower fails to repay the loan as agreed.
Mortgagee: The lender.
Mortgagor: The borrower.
Motion to Lift Stay: A formal request to a bankruptcy court to dissolve an automatic stay that prevents a lender from foreclosing. Once the motion is granted, the lender may proceed to foreclose unless the borrower can keep up the payments.
– N –
Negative Equity: A position in which a borrower owes more on property than the property is worth.
Notary Public: A person authorized to take acknowledgment for certain classes of documents, such as deeds, contracts, mortgages, and before whom affidavits may be sworn.
Note: The legal document that memorializes a specific promise, made by one party, to repay money being lent by another party. The note contains terms like how long the loan is for, the interest rate, where payments should be sent, and what happens if the borrower doesn’t pay on time. By law, anyone who signs a note could be liable for the payment according to the terms therein, so for this reason, notes are neither witnessed nor notarized.
Notice of Default: Letter sent to a defaulting party as a reminder of the default. It may state a grace period and the penalties for failing to cure the default.
– O –
Origination Fee: A fee charged to the borrower by the loan originator for making a mortgage loan.
Origination Services: Any service involved in the creation of a mortgage loan, including but not limited to the taking of the loan application, loan processing, and the underwriting and funding of the loan, and the processing and administrative services required to perform these functions.
– P –
Parcel Identification Number: A number assigned by the county tax appraiser to identify a parcel of real property.
Payment Shock: A scenario in which monthly mortgage payments on an adjustable-rate mortgage (ARM) rise so high that the borrower may not be able to afford the payments.
Partial Payments: Payments that are less than the full payment the borrower owes on a loan.
PITI: Principal, Interest, Taxes and Insurance: The four elements of a monthly mortgage payment; payments of principal and interest go directly toward repaying the loan while the portion that covers taxes and insurance goes into an escrow account to cover the fees when they are due.
Point(s): Commonly referred to as a “discount point.” It is a form of pre-paid interest. One point equals 1 percent of the loan amount. Borrowers can offer to pay a lender points as a method to reduce the interest rate on the loan. Each point purchased reduces the loan rate by 1/8 percent or 0.125 percent.
Posting: The act of placing a legal notice, such as a notice specifying the date, time and place of a foreclosure sale, on public display in the proper place for such notices.
Power Of Attorney: A written document that authorizes an agent to act on behalf of the principal.
Prepayment Clause: A clause in a mortgage that gives a mortgagor the ability of paying the mortgage indebtedness before it becomes due.
Private Mortgage Insurance (PMI): Insurance that protects your lender if you default on your loan. With conventional loans, mortgage insurance is usually required if you do not make a down payment of at least 20 percent of your home’s appraised value. Your lender may require payment of your first year’s mortgage insurance premium or a lump sum premium that covers the life of the loan in advance at settlement. The same insurance protection on an FHA loan is called Mortgage Insurance Premium (MIP).
– Q –
Quitclaim Deed: A deed that conveys simply the grantor’s rights or interest in real estate; generally considered inadequate except when interests are being passed from one spouse to the other.
– R –
Real Estate Owned (REO): Property acquired by a lender through foreclosure and held in inventory.
Recasting: Restructuring a loan with a new interest rate and term. It may be the same loan from the same lender, but the terms change. FHA has a formal procedure to recast loans to assist homebuyers to stay in their houses.
Recording: The act of writing or entering in a book of public record instruments affecting the title to real property.
Redemption: The right of a mortgagor to redeem property by paying a debt before sale at foreclosure.
Repayment Plan: A plan for repaying missed payments over time.
Right of Survivorship: Right of the surviving joint owner to succeed to the interests of the deceased joint owner. This right is a distinguishing feature of a joint tenancy or tenancy by the entirety.
– S –
Scire Facias: A court command to a borrower to show up at a hearing and show cause why a foreclosure should not be authorized.
Second Mortgage: A mortgage made by a homebuyer in addition to an existing first mortgage.
Servicing: The process of administering a mortgage loan, including collecting payments, maintaining insurance and undertaking special measures such as workouts and foreclosures when they prove necessary.
Short Sale: A workout procedure in which the lender accepts less than the full balance due on the loan as part of a deal in which the borrower cooperates with the lender to obtain a quick sale. The lender skips foreclosure, which would take time, cost money and expose the house to vandalism, further declines in market value, and marketing costs for resale.
Special Assessment: An assessment made against a property to pay for improvements to a property.
Standing: Ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that party’s participation in the case.
Subject To Clause: A clause in a deed that transfers title from a seller to a buyer in an assumption transaction, or in other paperwork for the assumption transaction, in which the borrower refuses to accept legal liability to make payments, although the buyer expects to do so. The lender’s remedy for nonpayment is limited to foreclosure, and neither the lender nor the seller can sue the defaulting buyer for missed payments on the loan balance.
Summary Judgment: A legal procedure in which one side wins a lawsuit without a trial by showing that the case involves no “genuine issues of material fact” and that as a matter of law the judge can rule without further delay.
Survey: Measurement of a parcel of land showing boundaries, easements, dwellings and improvements of any type.
Surplus: Under section 45.032, Florida Statutes, “‘Surplus funds’ or ‘surplus’ means the funds remaining after payment of all disbursements required by the final judgment of foreclosure and shown on the certificate of disbursements.”
– T –
Tax Sale: Sale of property after a period of nonpayment of taxes.
Temporary Injunction: A court order that freezes the status quo for an extended time period, typically until a full court trial on the merits of a case can be held. It often requires posting a bond.
Temporary Restraining Order: A court command that freezes the status quo for a short period of time until other legal relief is awarded or a settlement between the litigants can be reached.
Tenancy At Will: A license to use or occupy lands and tenements at the will of the owner.
Tenancy In Common: An ownership of realty by two or more persons, each of whom has an undivided interest without the right of survivorship.
Title: Evidence of the ownership of land.
Title Defect: Unresolved claim against the ownership of property that prevents presentation of a marketable title. Such claims may arise from failure of the owner’s spouse, or former part owner, to sign a deed, current liens against the property, or an interruption in the title’s records of a property.
Title Insurance: A policy of insurance that protects the holder from any loss caused by defects in the title. Title insurance policy can take exception to certain items which will not be covered.
Title Report: Document indicating the current state of the title, such as easements, covenants, liens, and any other defects. The title report does not describe the chain of title.
Title Search: An examination of the public records to determine the ownership and encumbrances affecting real property.
– U –
Under Water Home: A house that is worth less than what is owed on the mortgage.
Undivided Interest: Ownership of real estate by joint tenants or tenants in common under the same title.
Upside Down Home: A house that is worth less than what is owed on the mortgage.
– V –
There are no terms for the letter V in this glossary.
– W –
Wage Earner Plan: A name for Chapter 13 bankruptcy.
Warranty Deed: A conveyance of land in which the grantor guarantees the title to the grantee.
Without Recourse: Words used in endorsing a note or bill to denote that the future holder is not to look to the endorser in case of nonpayment.
Wraparound Loan: A new junior loan encompassing any existing loans. The wraparound loan is responsible for making the payments for the underlying loans.
Writ of Execution: A court order authorizing the holder to seize and sell a debtor’s property to pay off a judgment.
Writ of Possession: A court document that authorizes an officer of the law to break down a person’s door and remove the inhabitant and their belongings out of the house or apartment.
Wrongful Foreclosure: A foreclosure that was legally improper and that caused a borrower to suffer damages.
– X –
There are no terms for the letter X in this glossary.
– Y –
There are no terms for the letter Y in this glossary.
– Z –
Zombie Titles: A right to ownership and possession of a home that remains with a person who believes he or she has lost the property as a result of foreclosure. A zombie title is a title to real property that happens when a lender initiates foreclosure proceedings by issuing a notice of foreclosure and then unexpectedly dismisses the foreclosure.
If the person is unaware of the foreclosure dismissal, he or she will be left holding a zombie title. A lender may decide to dismiss the foreclosure for a variety of reasons, including a surplus of inventory, if the costs associated with a foreclosure cannot justify its costs or if the lender does not want to take possession of the home.
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To find out more about foreclosures or to inquire about how our Florida foreclosure defense attorneys can help, contact us today for a consultation at 754-400-5150 or by filling out our online form. Our country’s history is filled with examples of people who have struggled financially but then have gone on to become famously wealthy. They all reclaimed their part of the American Dream and we want to help you reclaim yours! Let the lawyers and staff of the Law Offices of Evan M. Rosen serve you!