Common Foreclosure Terms and Definitions

Common Foreclosure TermsTalking about foreclosure real estate can be hard enough without even entering the market. That’s because foreclosures tend to have a language of their own, employing many obscure words originating in government housing legislation and real estate law. Without a background in these areas, prospective investors and buyers will not be able to decipher even the simplest foreclosure contract. This article lists some of the more common foreclosure terms as a reference for people interested in this lucrative market.

Abandonment: Wherein a property owner has given up ownership rights without coercion, and does not want to retrieve those rights, or pass them to somebody else. A situation involving an unused property does not guarantee abandonment.

Acceleration Clause: A clause commonly written in a mortgage enabling the lender to demand full re-payment immediately, rather than at the end of the contracted term. The clause must also detail an occurrence that would put it into effect, such as a default on regular payments, sale of the property, or re-assignment of property rights. In most cases the debtor must be given reasonable notice, and a chance to reverse the occurrence. The debtor is also immune from acceleration if there is no such clause written into the agreement.

Chattel: Personal property, including household items.

Closing Costs: Expenses not related to the marketing and selling of the property, such as loan fees and paperwork fees. Foreclosures might also involve extra legal and escrow fees.

Deed in Lieu of Foreclosure: Property owners may deed their property to the lender if foreclosure is imminent, rather than go through the entire process. For the deeding to be official, the lender must give approval.

Default: Failure of the borrower to make payments as required by the lender. “Default” may refer to a missed payment without any further repercussion, or a series of missed payments resulting in a failed mortgage.

Equity Right of Redemption: The right of the borrower to remove all encumbrances related to the mortgage, in order to avoid foreclosure.

Federal Housing Administration (FHA): A part of the Housing and Urban Development Federal agency responsible for determining industry standards for mortage loans by private lenders. FHA also insures mortgages by private lenders. Forclosure investors must occasionally deal with this agency.

Federal National Mortgage Association: Also known as FNMA, or Fannie Mae, this federal agency oversees conventional residential mortgages, and will buy out loans that follow its rules. Some foreclosure investments require direct communication with this agency.

HUD1 Statement: A form mandated by the US Department of Housing and Urban Development that specifies the costs of acquiring a foreclosed home.

Loan-To-Value Ratio: A comparison of the total loan amount and the lesser of the property’s sale price or appraised value.

Truth-in-Lending Act: A law requiring the lender to provide the borrower with a full written explanation of the mortgage’s terms.

These are just a few of the foreclosure terms that a potential buyer may come across during the foreclosure transaction. This is definitely not the full list, and it is recommended that if you have questions about a term or part of the foreclosure transaction process, that you consult with your real estate agent and/or attorney for clarification.

If you are in the market for a foreclosure, and you enjoy the outdoors, foreclosures in Mammoth Lakes present a unique opportunity for folks to purchase vacation homes or investment properties in the Eastern Sierra. There are some really good bargains on these properties, and a chance to own a home in the best ski resort destination in California.

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About Deanna

Deanna is an experienced "LOCAL" REO Listing Agent providing foreclosure services in primarily the resort areas of Mammoth Lakes, Crowley Lake, June Lake, Bishop, and Big Pine, CA. Successfully closing over $40 million in REO Real Estate transactions and sales since 2005, Deanna provides professional and prompt REO Real Estate services. Click here to view my Featured Properties.

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