7 Words You Need To Know For Stopping Foreclosure

If you are looking to stop or avoid foreclosure, you need to know 7 words because that are the words used in the foreclosure process.

Bankruptcy:

Bankruptcy is the legal process of discharging certain unsecured debts so that you will not have to pay them. Secured debts, such as home loans, have to be paid or the lender can seek possession of the property to apply it to the debt that is owed to the lender. There are two types of bankruptcy that apply to most homeowners - Chapter 7 and Chapter 13. Bankruptcy may give a person trying to stop or avoid foreclosure time to pay the mortgage lender.

Deed In Lieu Of Foreclosure:

Deed in lieu of foreclosure is where a homeowner facing foreclosure conveys his/her house to the mortgage lender instead of going through the complete foreclosure process. In most cases, this action will stop foreclosure because the house satisfies the debt and no more money is owed.

Deed Of Trust:

Deed of Trust is the legal document that gives a mortgage lender the right to a house in certain states. Some states use a "title" legal theory and other states use a "lien" legal theory. A Deed of Trust is used in "title" legal theory states.

Deficiency:

Deficiency is a term used to describe the dollar difference between the value of a foreclosed property, such as a house, and the debt amount owed to the mortgage lender. For example, a house may be worth $100,000 or sold for a $100,000, but the actual debt is $125,000. The deficiency would be $25,000. In some cases, a mortgage lender will seek to recover the deficiency amount in addition to obtaining ownership of the foreclosed property.

Loss Mitigation:

Loss mitigation refers to a mortgage lender's efforts to reduce its' losses relating to a possible foreclosure. Mitigate means reduce. A number of mortgage lenders have named their pre- foreclosure departments "loss mitigation" because they are trying to reduce the mortgage lender's potential loss by helping people keep their mortgage loans.

Mortgage:

Mortgage is the legal document that gives a mortgage lender the right to a house in certain states. Some states use a "lien" legal theory and other states use a "title" legal theory. A mortgage is used in "lien" legal theory states.

Short Sale:

Short sale refers to cases where the mortgage lender will accept less than the amount owned on a home loan debt so that the borrower can sell the property subject to the mortgage. For example, a mortgage borrower may have a sale of his/her property (house) for $95,000. The mortgage lender may accept $95,000 to release its' mortgage lien even though the debt amount due is $100,000.

Conclusion

It is important to remember that the above definitions are very general in nature and that they involve a lot of details that cannot be covered here. If you have any questions of any nature concerning these words, their definition, or their applicability, talk with a lawyer licensed in your state.

Stop! Don't blindly chase any option to stop foreclosure. See stop foreclosure options to learn what options you have in your situation. Remember, what works in one person's situation, may or may not work in your situation to stop, avoid, and prevent foreclosure. For more general information, see Stop Foreclosure - Five Options You Need To Know.

You may republish this article as long as the wording is not changed and all links remain active.