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Mortgage foreclosure

Foreclosure

Mortgage and home loan foreclosures can be a minefield for investors and homeowner alike, this is partly a result of the complicated legal language used in foreclosure proceedings. Here is quick A-Z of some the tricky terms.

Bankruptcy - action filed in federal bankruptcy court that allows a debtor to escape credit obligations due to insolvency, including foreclosure.

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Deed - legal document transferring ownership of real estate.

Deed in Lieu of Foreclosure - passing of the deed on a property to the lender as an alternative to foreclosure.

Deficiency - an additional debt for a borrower when foreclosure fails to raise sufficient revenue to cover the outstanding debt on a home loan.

Distressed property - a property at risk of foreclosure due to non-payment of a home loan by the current occupant.

Equity - the market value of a property over the outstanding balance of a home loan.

FHA - Federal Housing Administration, a subdivision of the HUD that oversees insurance of home loans for low income families.

Forbearance - temporary change in loan repayments to allow a borrower to bring their account up to date.

Foreclosure - the legal process by which a lender can force the sold of a property to recover outstanding debts owed by the owner of the property.

Housing counseling - legal advice covering property law and foreclosure

HUD - US Department of Housing and Urban Development, the government body which administers FHA-insured loans.

Lien - a legal claim against a property which allows sale of the property to repay an outstanding debt

Lis Pendens - notice that at a legal suit has been filed in court. Depending on the state, this may also be know as a 'notice of default'.

Loss mitigation - steps arranged between a lender and borrower to ensure repayment of a home loan and stop foreclosure.

Mortgage Modification - refinancing of a debt or extension of the repayment period for a mortgage to recover an outstanding debt and stop foreclosure.

Non-judicial Foreclosure - foreclosure on a mortgage without use of a court order (only applicable in certain states or when a borrower has signed a document permitting sale of the property to recover debt.

Notice of default - notice that a lawsuit has been filed against a homeowner for non-payment of debts. Depending on the state, this may also be know as a 'Lis Pendens'.

Partial Claim - a one-off payment to pay off an outstanding debt on an FHA-insured loan from the FHA Insurance Fund to prevent foreclosure.

Pre-foreclosure - the time period before a foreclosure auction, when homeowners and investors can arrive a private sale.

REO (Real-Estate Owned) - real estate that becomes the property of a lender due to failure of a foreclosure auction to raise sufficient funds to cover the outstanding debt on a loan.

Repayment Plan - a plan for the repayment of missed loan payments over a set period of time.

Right of Redemption - the right of foreclosed homeowners to buy back their property after a foreclosure auction for the price of the winning bid (only applicable in some state).

Timeshare - a property co-owned by a group of people, each of whom can use it for a set period of time every year.

VA - Department of Veterans Affairs, the government body which provides insured home loans to veterans.