The Ultimate Guide to Avoiding Foreclosure - Part 1: 25 Essential Foreclosure Terms and Definitions The Redstone Law Group hopes to educate homeowners who are facing foreclosure so they may have a strong opportunity at saving their home. This slideshow lists and defines 25 of some of the most common terms used in the foreclosure industry.

1. For Homeowners Facing Foreclosure
AVOIDING
FORECLOSURE
The ULTIMATE Guide To
PART 1
25 Essential Foreclosure Terms & Definitions
Authored By: Redstone Law Group, LLC
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2. PART 1
Glossary of 25 Essential
Foreclosure Terms &
Definitions
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3. Understanding Foreclosure Terminology: Before fighting home
foreclosure, it can be helpful to understand the commonly used terms.
“
Our greatest weakness lies in giving up. The
most certain way to succeed is always to try
just one more time.
- Thomas A. Edison
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4. Foreclosure
Terms & Definitions 1-5
1. Bankruptcy – Filing bankruptcy may be an option for avoiding foreclosure
whereby a homeowner may file Chapter 7 or Chapter 13 bankruptcy to stop
the foreclosure process. The foreclosure process may be stopped once the
automatic stay goes into effect, but it may not stop foreclosure indefinitely.
2. Deed in Lieu of Foreclosure – A deed in lieu of foreclosure (sometimes
referred to as a mortgage release) may be an option for avoiding foreclosure
whereby a homeowner negotiates with his or her mortgage lender to accept
the deed of the home in exchange for release from mortgage debt obligation.
3. Deed of Trust – A deed of trust usually refers to a kind of deed whereby
interest in a homeowner or borrower’s property is transferred to a trustee to
be held as security for a debt between a borrower and a lender.
4. Default – A default in finance is often the failure to fulfill a legal obligation to
repay a loan or debt.
5. Deficiency – A deficiency or deficiency balance is typically the remaining
amount that is owed and due to a lender after the collateral (real estate or
personal property) has been sold or transferred for less than the outstanding
balance on the loan.
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5. Foreclosure
Terms & Definitions 6-10
6. Deficiency Judgment – A deficiency judgment can be a court order making a
homeowner personally liable for the remaining debt when a home is sold or
transferred for less than the outstanding loan balance.
7. Dual Tracking – Dual tracking often refers to a prohibited practice wherein a
mortgage lender actively considers a homeowner for a loan modification
while simultaneously moving forward with the foreclosure process.
8. Foreclosure – Foreclosure is usually a legal procedure mortgage servicers
may initiate after one or more delinquent payments to recover a mortgaged
property.
9. Judicial Foreclosure – A judicial foreclosure is typically a type of foreclosure
whereby mortgage lenders are required to go to court in order to initiate the
foreclosure process.
10. Lis Pendens (LIS) – A lis pendens is often a written notification of a pending
lawsuit. In judicial states, the lis pendens is typically filed by a mortgage
servicer’s attorney or trustee to initiate the foreclosure process after a
homeowner defaults on monthly mortgage payments. The lis pendens is
usually filed during the PRE-foreclosure process.
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6. Foreclosure
Terms & Definitions 11-15
11. Loan Modification - A loan modification (sometimes referred to as a
mortgage modification) may be an option for avoiding foreclosure whereby
the original terms of a mortgage agreement may be permanently modified in
order to make the loan more affordable for a homeowner. A loan
modification may be able to reduce monthly mortgage payments, lower
principal and/or extend the life of the loan.
12. Mortgage Forbearance – Mortgage forbearance may be an option for
avoiding foreclosure for homeowners who may be experiencing a temporary
financial hardship. A mortgage forbearance typically works by negotiating
with mortgage lenders to temporarily suspend the foreclosure process while
the homeowner tries to bring the deficient loan current.
13. Mortgage Servicer – A mortgage servicer is usually a company (in many cases
a bank) which is responsible for processing loan payments, responding to
borrower inquiries, keeping track of principal and interest paid and may
initiate foreclosure in the event of a default. A mortgage servicer typically
handles the day-to-day tasks of managing a loan while a mortgage lender is
the financial institution which loaned the money.
14. National Mortgage Settlement – The National Mortgage Settlement was a
landmark joint state-federal settlement with five of the United States’ largest
mortgage servicers as a result of rampant robosigning and other mortgage
servicing violations. The settlement established improved servicing standards
(like the prohibition of dual tracking) and provided relief to distressed
borrowers.
15. Nonjudicial Foreclosure – A nonjudicial foreclosure often refers to a type of
foreclosure whereby mortgage lenders may initiate the foreclosure process
without going to court or filing a lawsuit.
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7. Foreclosure
Terms & Definitions 16-20
16. Notice of Default (NOD) – A notice of default is often one of the first
documents in a non-judicial foreclosure filed by the trustee to initiate the
foreclosure process. Trustees typically file the notice of default during the
PRE-foreclosure process.
17. Notice of Foreclosure Sale (NFS) – A notice of foreclosure sale is usually an
order signed by a judge directing a “Notice of Sale” to be published and the
trustee to sell the property at public auction. The Notice of Sale typically
outlines the location, time and date for the auction of a home in foreclosure.
18. Notice of Trustee’s Sale (NTS) – A notice of trustee’s sale is typically a written
document which may be mailed, advertised or posted outlining the date,
time and location of a Trustee’s sale with a description of the property to be
sold.
19. Postponement – A postponement (sometimes referred to as sale date
postponement) may be able to delay a foreclosure sale in order to provide
homeowners with some valuable extra time before the final foreclosure
auction. This may help distressed homeowners negotiate for a last-minute
loss mitigation option or prepare to leave the home.
20. Predatory Lending – Predatory lending may occur when a creditor or
mortgage lender attracts borrowers into a loan with high fees or interest
rates, a loan the borrower cannot afford or a loan which strips the borrower
of equity.
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8. Foreclosure
Terms & Definitions 21-25
21. Reinstatement Period – The reinstatement period is typically the time during
which a homeowner may try to bring the mortgage loan current by paying all
delinquent amounts, including the trustee’s fees and costs.
22. Short Sale – A short sale may be an option for avoiding foreclosure whereby
the homeowner negotiates with his or her mortgage lender to accept the
sale of the home for less than the remaining balance on the mortgage. This
may result in a deficiency judgment, but can be helpful for avoiding the
negative effects of foreclosure.
23. Robosigning – Robosigning was an illegal practice bank employees utilized to
sign thousands of documents and affidavits used to foreclose on
homeowners without verifying the information contained in the document or
affidavit.
24. Underwater Mortgage – An underwater mortgage may occur when the
outstanding balance on a mortgage loan is greater than the fair market value
for the home. Underwater mortgages can be problematic for homeowners
who cannot afford their homes, because mortgage lenders may not agree to
a sale of the home if the homeowner owes more than the home is worth.
25. Zombie Foreclosure – A zombie foreclosure may occur when a homeowner in
foreclosure chooses to leave his or her home prior to the foreclosure sale,
but the mortgage servicer does not follow through with the foreclosure sale.
As a result, homeowners may unknowingly become financially responsible for
unpaid property taxes, utility bills, maintenance costs and more.
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10. DISCLAIMER OF ADVERTISING
Redstone Law Group, LLC does not practice law in every state or
jurisdiction. All legal situations are unique, and all legal advice is fact-
specific and often time-sensitive. The foregoing is not, and is not
intended to constitute, any form of legal advice or recommendation.
The discussion and definitions herein are only general, for
information only, and not designed to reflect the law of any particular
legal jurisdiction or legal circumstance. There is no substitute for
personal consultation with appropriate counsel of one’s choice
admitted to practice law in one’s own jurisdiction.
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