As if going through a foreclosure weren't hard enough, figuring out the banks jargon can be even tougher. We are providing this foreclosure glossary to help take the mystery of losing your home to foreclosure and to help understand certain terms when buying a foreclosure.
AUTHORIZATION TO SIGN AS AGENT AGREEMENT: written document given by a beneficiary authorizing an agent to sign a document on their behalf (such as a notice of default).
BANKRUPTCY: a legal process that allows a debtor to discharge certain debts or obligations without paying the full amount or reorganize his financial affairs so he can fully repay his debts. (A bankruptcy does not discharge obligations secured by a deed of trust.) A bankruptcy can delay the process of a foreclosure until the bankruptcy proceedings are completed or the court in charge of the bankruptcy allows the lender to continue with the foreclosure.
BENEFICIARY: the lender or their successor in interest for whose benefit a trust is created and to whom the debt is owed.
BID AUTHORIZATION LETTER: your written authorization instructing the trustee to make the initial opening bid at the trustee's sale on the lender's behalf. This form will also advise our office of any additional amounts to be included in the opening bid, (total Debt), such as funds advanced by you to pay delinquent real estate taxes, etc.
BREACH: the failure without legal excuse to perform any promise made in a contract. A breach is stated in the notice of default.
DECLARATION OF DEFAULT: a written document that instructs the trustee to prepare and record a notice of default and if necessary, to sell the secured property in order to satisfy the unpaid obligation. This document does not require the acknowledgment of a notary public or recording and is merely retained by the trustee in their foreclosure file.
DEED OF TRUST: a written document that transfers and assigns the beneficial interest in a note and deed of trust from one to a third party such as a trustee until the loan is paid in full.
ENDORSEMENT/DATEDOWN: A continuation of the trustee's sale guarantee that reports any changes in the status of the property being foreclosed. Such "date downs" are requested from the title company prior to preparation of the notice of trustee's sale and prior to the trustee's sale.
EVICTION: a legal action to remove someone who has unjustly retained possession of real property after one's right to possess has terminated.
EXTENSION AGREEMENT: an agreement (normally written) giving additional time to pay an obligation.
FEDERAL TAX LIEN: an obligation to the United States government as a result of nonpayment of federal income taxes.
FORECLOSURE: A process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. A term used to describe the procedure followed in enforcing a creditor's rights when a debt secured by any lien on property is in default; also known as a "Trustee's Sale Proceeding."
FORECLOSURE SALE: The public sale of a property to recover a debt owed by the owner of the property. The sale can be officiated by a trustee, an attorney or a local government official, depending on state law.
IMPORTANT NOTICE: A written document to be a part of the recorded Notice of Default. It sets forth the reinstatement amount as of a specific date and contains certain language directed to the borrower and emphasizes the fact that a foreclosure proceeding has been initiated.
INVALID: not legally sufficient; no binding force.
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. If the owner does not pay off the loan or debt that is owed, the lien holder can take steps to sell or repossess the property to recover the debt owed (foreclosure). A Junior Lien is a legal claim upon real property recorded subsequent (or recorded prior but has subordinated) to another legal claim upon the same real property.
LIMITED POWER OF ATTORNEY: a recorded document which authorizes someone to act as attorney-in-fact in a specific manner for someone else
LIS PENDENS: Latin for "lawsuit pending," a publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. A recorded notice of pending legal action, which notifies prospective purchases and encumbrances that any interest acquired by them in a property litigation is subject to the decision of the court.
MODIFICATION AGREEMENT: a written document, signed by the beneficiary and the borrower that alters the terms of either the note of deed of trust.
MORTGAGE: A document that dictates the terms of a loan used to buy a property and gives the lender some claim to the property (either ownership or a lien) until the loan has been paid in full.
NONMILITARY AFFIDAVITS: a sworn statement, in writing from the beneficiary or his agent which declares that the property owner is not entitled to any rights under the Soldier's and Sailors Civil Relief Act of 1940.Also known as SOLDIER'S AND SAILOR'S RELIEF ACT.
NOTE: a written document, (promise to pay), that sets forth the amount of the obligation and the terms of repayment.
NOTICE OF DEFAULT: A publicly recorded notice that a property owner has missed scheduled loan payments for a loan secured by a property. This document gives constructive notice of a trustor's failure to perform his obligation under a deed of trust. This document does not require the acknowledgment of a notary public and must be recorded.
NOTICE OF SALE OR NOTICE OF TRUSTEE’S SALE: Prepared by the trustee, this document announces the public sale of a property to recover a debt owed by the owner of the property. The notice is mailed to parties affected by the sale of a property, advertised in local publications and recorded in public records. This document sets forth the day, date and time of the trustee's sale, describes the property to be sold and gives an estimate of the unpaid debt as of the first publication debt.
POSTPONEMENT: A verbal announcement usually made at the time and place of the originally scheduled foreclosure sale -- that establishes a new date and time for the sale.
PRELIMINARY INJUNCTION: When there is a dispute between the owner of a property and the beneficiary this judicial order may granted by a judge of the Superior Court, which prohibits the trustee from proceeding with any further action on a specific foreclosure file until a trial is held or settlement reached.
PRE-PUBLICATION PERIOD: the three month period following the recording of the notice of default. Prior to 1986 this period was called the reinstatement period.
PRESENT OWNER, CURRENT OWNER, NEW OWNER: the successor to the trustor named in the deed of trust and now the owner of the property.
PROMISSORY NOTE: a written document, promising to follow what is set forth in the amount of the obligation and the terms of repayment.
PUBLICATION LETTER: this letter is sent to the lender by the trustee. When completed and returned, it authorizes the trustee to proceed with the scheduling of the trustee's sale and preparation of the notice of trustee's sale.
PUBLICATION PERIOD: this is the interval beginning the day after the pre-publication period expires and ending with the conducting of the trustee's sale. During the publication period, the notice of trustee's sale is published, posted, recorded, and copies are mailed to all entitled parties. The publication period is normally 30 to 40 days.
RECONVEYANCE: a recorded document which gives notice that the loan secured by the identified deed of trust has been paid in full.
RESCISSION: See "Notice of Rescission."
REINSTATEMENT: The stoppage of foreclosure proceedings by curing of a default and restoration of the loan to current status through payment of past-due amounts together with the fee and expenses of the trustee. The borrower's chance to reinstate ends before the public foreclosure sale in most states.
REINSTATEMENT PERIOD: this is the interval from the date the notice of default is recorded until five business days prior to the date of sale during which time a default may be reinstated/cured.
REO: Real estate owned by the lender, this status indicates the property is now owned by the lender or bank as a result of a foreclosure.
REQUEST FOR NOTICE: a recorded document which requests a copy of any notice of default and any notice of sale to be sent to the requester at the address shown.
REQUEST TO PREPARE NOTICE OF DEFAULT: Referred to as a TS138 or Transmital Form this is the "Request to Prepare Notice of Default" transmittal form which is completed by the lender and forwarded to T.D. Service Company together with the note, deed of trust, assignments and other necessary loan documents. This form sets forth all pertinent information to enable us to prepare the default documents.
SOLDIER'S AND SAILOR'S RELIEF ACT: an act passed by Congress in 1940, for the financial protection of those persons serving in the military service. This act is the reason for the completion of the nonmilitary affidavit forms. Also known as a Nonmilitary Affidavit.
STATEMENT/INVOICE: an itemization of the trustee's fee and expenses incurred at the conclusion of the foreclosure proceeding (cancellation, reinstatement, payoff or completed sale).
SUBSTITUTION OF TRUSTEE: a written document that appoints a successor trustee to the trustee named in the deed of trust, (or present trustee). This document must be acknowledged by a notary public and recorded with the county recorder in the county in which the property is located.
TEMPORARY RESTRAINING ORDER (TRO): A judicial order which is granted by a judge of the Superior Court. This order temporarily prohibits the trustee from proceeding with any further action under a specific foreclosure file until a trial is held or settlement reached. A TRO is effective, generally, for a 21 day time period or until a hearing is held and the judge decides whether a preliminary injunction will be granted or denied.
TOLL: temporarily stops foreclosure during bankruptcy of any further action.
TRANSMITTAL FORM: Referred to as a TS138 this is the "Request to Prepare Notice of Default" transmittal form which is completed by the lender and forwarded to T.D. Service Company together with the note, deed of trust, assignments and other necessary loan documents. This form sets forth all pertinent information to enable us to prepare the default documents.
TRUSTEE'S DEED UPON SALE: a written document which is prepared and signed by the trustee when the secured property is sold at a trustee's sale. This document transfers ownership to the successful bidder at the sale; must be recorded with the county recorder in the county in which the property is located.
TRUSTEE'S SALE: the public auction of the real property, described in the deed of trust, to satisfy the unpaid obligation.
TRUSTEE'S SALE GUARANTEE : A Title report given to the present trustee when a trustee's sale proceeding has been initiated. This report provides the names of the current owner, all liens and encumbrances recorded and other information pertinent to the foreclosure process. The information is insured to be correct by the title company.
TRUSTEE'S SALE PROCEEDING (foreclosure): the term used to describe the non-judicial procedure followed by the trustee in enforcing a creditor's rights when a debt secured on real property is in default.
TRUSTOR: the borrower (or property owner) at the time the deed of trust was created. Trustor is often used to refer to the current owner.
UNLAWFUL DETAINER ACTION (eviction): a legal action to remove someone who has unjustly
retained possession of real property after one's right to possess has terminated.
VALID: a condition that is legally sufficient; that will be upheld by the courts.
VOID: having no legal force or binding effect. Incurable.
VOIDABLE: a condition capable of being made void, although not necessarily void in itself.
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