Understanding The Foreclosure Language: Words and Definitions Homeowners and Investors Need To Know
When a homeowner is facing foreclosure, they are bound to hear lots of words that are quite difficult to comprehend. A big reason for this is that foreclosure real estate has its own language thanks in part to legislation and law. With no background in this area, real estate investors are unable to get through the easiest foreclosure contracts. If you want to be a real estate investor, it’s necessary to learn the foreclosure-related terms.
14 Foreclosure-Related Words and Their Definitions That Explain The Foreclosure Process
Abandonment – A homeowner (property owner) who has decided to give up rights to the property without any coercion and fails to retrieve the rights or pass those rights to someone else. A situation where a property is unused is not considered abandon.
Acceleration Clause – This is a clause that is often seen in mortgage contracts that allows the lender the option to demand full reimbursement right away instead of at the end of contracted term. It must be stated when this will happen including default on regular payments, the sale of property or property rights re-assignment. Debtors are usually told within a reasonable amount of time with a chance to reverse this. A contract without this clause means the debtor is immune from any acceleration.
Chattel: This is personal property that includes household items.
Closing Costs – Closing costs are expenses unrelated to marketing and selling of property; these costs are seen in loan and paperwork fees. Foreclosures tend to involve fees for legal and escrow.
Deed In Lieu Of Foreclosure – When foreclosure is imminent, property owners have the option to hand their deed over to the lender instead of going through the process. In order for the deeding to be certified, the lender needs to be approved.
Default – This is when the borrower fails to make payments to the lender; this could mean missing a payment without further problems or too many payments that result in a unsuccessful mortgage.
Equity Rights Of Redemption – The borrower’s rights to eliminate all burdens that are related to the mortgage, in an attempt to circumvent foreclosure.
Federal Housing Administration – The FHA is a part of the Housing and Urban Development; this federal agency is in charge for setting trade standards for all mortgage loans given by private lenders. The FHA will also insure all mortgages; foreclosure investors will often deal with the FHA.
Federal National Mortgage Association – commonly named Fannie Mae; this is the federal agency that oversees the conventional housing mortgages and will often purchase loans that follow its government rules. Several foreclosure investments will require investors to have direct communication with the agency.
HUD1 Statement – This is a form required by the US Department of Housing and Urban Development that specifies what the costs are for obtaining a foreclosed home.
Loan TO Value Ratio – This is a comparison between the actual loan amount and the sale price/appraised value.
Notice of Rescission: Lenders will use this notice to let the borrowers know that they are in good standing and any payment deficiencies are corrected.
Short Sale: Property that has been priced below or at the market value and generally lower than the actual mortgage.
Truth In Lending Act – This law mandates the lender must give the borrower a full-written explanation of the mortgage terms.
Popularity: 2% [?]
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
