Bankruptcy

A legal proceeding that allows the borrower to wipe off debt obligations or restructure debt obligations through the adoption of a payment plan. Bankruptcy can be used to stop a foreclosure action until the bankruptcy is completed or until the bankruptcy court allows the lender to resume the foreclosure action.

Deed-in-lieu of foreclosure

A deed by which a borrower conveys title to a lender in satisfaction of a mortgage debt and as a substitute for foreclosure. One condition that bank requires is that it has to be free of other liens and must have clear title. This deed is often referred to simply as “deed-in-lieu”.

Default

The failure to pay a debt when due according to the loan terms.

Deficiency Judgment

The term refers to a mortgage lender’s judgment against the borrower for the difference between the outstanding balance of the mortgage, plus costs and attorneys fees, and the value of the property foreclosed on the date of the foreclosure sale. Read more about Deficiency Judgment on our articles.

Forbearance Agreement

The lender agrees to stop the foreclosure process and arranges a payment plan that will bring the borrower current.

Foreclosure

Foreclosure is the legal mechanism by which a mortgage lender sells or repossesses (takes away) real estate, usually due to missed mortgage payments. Because foreclosure is a legal process, there are certain procedures the mortgage lender must follow before they can legally dispose of or take title to the real estate.

Lien

A legal right or interest that a lender or any other creditor claims against a property.

Lis Pendens

Is the latin translation of pending lawsuit which in the State of Florida is a public record and is required to begin a foreclosure action.

Loan Modification

An agreement through which a borrower and a mortgage lender agree to modify any or some of the terms of the mortgage. In a loan modification, an existing promissory note is modified but not cancelled. An example of a loan modification is an extension of maturity. Another example of a loan modification is a reduction of interest rate.

Real Estate Owned (REO)

Usually referred to a property that is owned by the mortgage lender or bank as a result of a foreclosure action.

Service of Process

The formal delivery of a lawsuit. In the State of Florida the defendant normally has 20 or 30 calendar days to respond to the Complaint delivered by the service of process.

Short Sale

A sale transaction that allows a homeowner to sell a property for an amount that is less than the amount that is owed to the mortgage lender in exchange for the sale of the property to a third party.

Summary Judgment

This proceeding allows the speedy disposition of a controversy without the need for trial.