The automatic stay is a provision in U.S. bankruptcy law that halts all collection activities, including litigation, repossessions, and foreclosures, immediately upon filing a bankruptcy petition.
A deed in lieu of foreclosure is a legal process where a borrower voluntarily transfers the ownership of property to a lender to satisfy a loan that is in default and avoid foreclosure proceedings.
A distress sale occurs when assets, such as property, stocks, bonds, mutual funds, or futures positions, are sold urgently, often at a loss, due to immediate financial pressure.
Distressed property refers to real estate that is under foreclosure or impending foreclosure due to insufficient income production. Such properties often require unique strategies for recovery, including potential workouts.
The Equity of Redemption is a legal right of mortgagors to reclaim their property after defaulting, by settling the entire mortgage debt including costs and interest before foreclosure occurs.
A first lien is a legal right or claim against a property that is recorded before other liens or claims. It takes precedence over any subsequent liens in the event of foreclosure.
A first mortgage is a primary loan that has priority as a lien over all other mortgages. In cases of foreclosure, the first mortgage will be satisfied before other mortgages.
The term 'Fleet Factors' refers to a landmark 1990 court decision in the United States regarding a lender's potential exposure to liability for environmental cleanup if the lender acquires the property by foreclosure.
Forbearance is a situation where a lender decides not to exercise its legal right to foreclose on a property when a borrower defaults. Instead, the lender opts to renegotiate the terms of the loan to offer temporary relief to the borrower.
A forced sale is an urgent sale of assets, typically conducted under significant pressure or compulsion, where the seller has limited opportunity to obtain a fair market value. Examples include sales conducted through foreclosure, bankruptcy, or instances of duress.
An overview of the legal process where a lender seeks to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the property used as collateral for the loan.
A hardship distribution is a withdrawal from a Section 401(k) plan made due to the distributee's immediate and heavy financial needs, not exceeding the amount necessary to satisfy such needs. Examples include medical expenses, post-secondary education fees, and preventing eviction or foreclosure of a principal residence.
A junior mortgage, also known as a second mortgage or subordinate mortgage, is a mortgage loan that is subordinate to another loan against the same property. In the event of default and foreclosure, the holder of the junior mortgage is only repaid after the senior mortgage and any other prior liens have been settled.
Lien-theory states are states in which the laws give a lien on property to secure debt, as opposed to title-theory states where the lender becomes the title owner of the property.
Mortgage servicing involves the administration of a mortgage loan, including regular collection of payments, managing escrow accounts, tracking principal and interest payments, and administrating foreclosure procedures if necessary.
A nondisturbance clause is a contractual provision that ensures the continuation of rental or lease agreements, or surface development rights, despite certain legal or financial disruptions.
An open mortgage is a mortgage that has matured or is overdue, making the property susceptible to foreclosure at any time. It is a financial situation where the borrower has failed to make timely payments, removing any safeguards against lender actions to reclaim the property.
Real Estate Owned (REO) refers to property acquired by a lender, typically a bank or other financial institution, through foreclosure. This property is then held in the lender's inventory and goes through an asset management process to either sell it off or put it into productive use. REOs are common outcomes of non-performing loans which lead to foreclosure actions.
Real Estate Owned (REO) refers to properties that have been repossessed by lenders, typically banks, following a foreclosure sale where the property did not sell at auction, thus becoming part of the bank's inventory.
Redeeming refers to various financial and legal acts of reclaiming or repurchasing something, such as cashing in a maturing note, bond, or curing a mortgage default.
The redemption period is the duration during which a former owner can reclaim foreclosed property or property posted for foreclosure.
Repossession is the act by which a seller reclaims property from a buyer upon failure to fulfill payment obligations as stipulated in a contract.
The right of redemption allows a property owner to recover their property that has been transferred due to a mortgage or other lien by repaying the debt, typically before or shortly after foreclosure. This right is also known as the equity of redemption.
Tax foreclosure is the legal process to enforce a lien against a property due to nonpayment of delinquent property taxes.
A tax sale is the sale of a property after the owner has failed to pay property taxes for an extended period. The grantee of such a sale receives a tax deed.
A Title-Theory State is one in which the law splits the title to mortgaged property into legal title held by the lender and equitable title held by the borrower. The borrower gains full title to the property upon retiring the mortgage debt. In a title-theory state, mortgage lenders may possess the property upon default of the borrower.
A Trustee's Sale is a foreclosure sale conducted by a trustee under the stipulations of a deed of trust, where the trustee is authorized to foreclose the mortgage and sell the property upon the borrower's default.
A mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default. It generally involves a substantial reduction in the debt service burden during an economic downturn.
