Terminology for ForeclosuresPosted Thursday, July 31, 2014
A foreclosure is when the homeowners fall behind on their mortgage payments, and the lender recovers the amount owed on a defaulted loan by selling or repossessing the property.
Below are some foreclosure terms you should be aware of if you are considering purchasing foreclosures or if your home is going into foreclosure:
- Bankruptcy – A bankruptcy stalls the foreclosure process, keeping a lender from proceeding with the foreclosure until the bankruptcy proceedings are completed or the court in charge of the bankruptcy allows the lender to continue with the foreclosure.
- Broker Price Opinion (BPO) – The estimated value of a property as determined by a real estate broker or other qualified individual or firm. A broker price opinion is based on the characteristics of the property being considered
- Foreclosure sale – A public sale of a property to recover the debt owed by the owner of the property.
- Lien – A legal claim on a property by a lender or other entity that is owed money by the owner of the property. The entity that files the legal claim is called the lien holder.
- Lis Pendens – This is a publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. Some states require this to be filed to begin the foreclosure process.
- Notice of Default – A notice that is sent out by the lender when a mortgage payment is late.
- Notice of Sale – The notice of an impending foreclosure sale required by the state. It provides the legal description of the property being foreclosed upon and gives the time, date and place of the pending sale.
- Real Estate Owned (REO): Property acquired back by the lender after an unsuccessful foreclosure auction.
- Reinstatement – The stoppage of foreclosure proceedings and return to the original terms of a loan. This occurs when a borrower pays off the amount in default on the loan to bring the loan payments current.
All of the above are terms you will see in ads, court proceedings and public notices about foreclosures.
If you’re interested in purchasing foreclosures, I can help. Give me a call or email me today.