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REAL
ESTATE FORECLOSURE TERMINOLOGY
ACCELERATION CLAUSE - A clause in trust deed or
mortgage giving the lender the right to call all sums owing
him to be immediately due and payable upon the happening of
a certain stated event.
DEED IN LIEU OF FORECLOSURE - When a home owner
cannot make their mortgage payments, they offer the deed to
the mortgage company to avoid going through foreclosure.
FORBEARANCE - A lender's postponement of foreclosure
in order to give the borrower time an opportunity to make up
for overdue payments.
FORECLOSURE - The legal process by which an owner's
right to a property is terminated, usually due to default.
Typically involves a forced sale of the property at public
auction, with the proceeds being applied to the mortgage
debt.
JUDICIAL FORECLOSURE - A foreclosure which results
from a court action rather than from the power of sale given
to a trustee. Judicial foreclosures occur when a trust deed
or mortgage deed does not have a power of sale clause, thus
compelling the lender to take the borrower to court. This is
in contrast to a non-judicial foreclosure, in which a
foreclosure can be completed outside the court system.
MARKET VALUE - The highest price in terms of money
which a property will bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably and assuming
the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as a specified date and the passing of title from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated.
2. Both parties are well informed or well advised, and each acting in what he considers his own best interest.
3. A reasonable time is allowed for exposure in the open market.
4. Payment is made in cash or its equivalent.
5. Financing, if any, is on terms generally available in the community at the specified date and typical for the property type in its locale.
6. The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.
REAL ESTATE - This refers to the physical land and appurtenances, including structures affixed thereto. In some states, by statute, this term is synonymous with real property.
REAL PROPERTY - This refers to the interest, benefits, and rights inherent in the ownership of the physical real estate. It is the bundle of rights with which the ownership of real estate is endowed. In some states, this term, as defined by statute, is synonymous with real estate. Does not include personal property.
RIGHT OF REDEMPTION - The right of a property owner
to redeem his/her real estate from foreclosure or tax sale
either by paying off the amount owed.
REO - REAL ESTATE OWNED - An acronym for "Real
Estate Owned", most often used in the context of bank owned
properties after a mortgage foreclosure..
SHORT SALE - The process of selling a property with the
lender accepting less than they are owed, as payment in full
for the loan.
TRUSTEE SALE - A sale at auction by a trustee under a
deed of trust, pursuant to foreclosure proceedings.
TRUSTOR
- The borrower of money secured by a trust
deed. One who transfers his bare legal title to a trustee to
be held as security until he has performed his obligation to
a lender under terms of a note secured by a deed of trust.
TRUST DEED - An instrument which transfers (conveys)
the bare legal title of a property to a trustee to be held
pending fulfillment of an obligation, usually the repayment
of a loan to a beneficiary.
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