The foreclosure process can be confusing and difficult to understand. There is a lot of foreclosure sale terminology that may be unfamiliar, especially if you’ve never been through the foreclosure process.
If you’re facing foreclosure or at risk of foreclosure, it may be a good idea to try to familiarize yourself with the foreclosure process and common foreclosure terms. Having an understanding of the foreclosure process can help you have a better understanding of what’s happening.
Working with an experienced foreclosure attorney can help explain any unfamiliar terms as you navigate the foreclosure process. We also have a free foreclosure process guide that can help you understand the different steps and processes involved in a foreclosure.
Joshua Denbeaux is a New Jersey foreclosure attorney dedicated to protecting homeowner rights. Contact Denbeaux Law today to learn more about how we may be able to help you through the foreclosure process.
Common Terms in the Foreclosure Process
There are a lot of terms that may only be used in the foreclosure process. Understanding common foreclosure terminology is important. Knowing the terminology can help you understand how the process works and where you are in the foreclosure process.
Answer to Complaint
An answer to the complaint is your response to a foreclosure complaint. You have to file an answer to the complaint. When you receive a complaint, you are in active foreclosure litigation.
Your lender could move for a default judgment without an answer to the complaint. Filing an answer to the complaint allows you to have time to take action to defend your home from foreclosure.
Complaint
A complaint is when your bank files a foreclosure lawsuit against you as a borrower. The complaint is the first step in the actual foreclosure process. When a complaint is filed, your home is officially in the process of foreclosure.
Deed
A deed is a formal legal document proving the ownership of a home. If your name is on the deed, you own the home.
You must sign the deed over to the new owner anytime you sell your home or transfer ownership. If you are transferring home ownership because of foreclosure, you will have to sign over the deed to the new owner.
Deed In Lieu of Foreclosure
An agreement between a homeowner and lender is one in which the homeowner voluntarily gives up the deed to their home to avoid foreclosure. A deed in lieu of foreclosure can be a good option if a homeowner has tried all other options to avoid foreclosure and wants to avoid bankruptcy or further damage to their credit score.
Default
Being in default means that you are behind on your mortgage payments. The terms of your mortgage will define what constitutes being in default.
Typically, you are considered in default on your mortgage if you’re at least 90 days delinquent on mortgage payments. A mortgage being in default is what starts the foreclosure process.
Default Judgment
A default judgment is a legal ruling in favor of a lender or bank without foreclosure proceedings.
Default judgments are typically granted due to failure to respond to a legal summons. Your lender can request a default judgment if you don’t respond to the foreclosure lawsuit.
When default judgments are granted, the proceeding portion of foreclosure is skipped, which expedites the foreclosure process.
Defendant
A defendant is the individual or group subject to the legal claims in a lawsuit. In foreclosure cases, anyone whose name is on the mortgage and is subject to foreclosure is the defendant.
If your mortgage lender is foreclosing on your home, you are the defendant in the case.
Pre-Foreclosure
Pre-foreclosure is the step before a home is foreclosed on. Pre-foreclosure is when a homeowner is in default, and the lender notifies the homeowner that a foreclosure may take place.
If you’re in pre-foreclosure, you still own your home and have the chance to catch up on your missed payments and prevent foreclosure.
Lien
A legal claim on a property held as security for payment of a debt. Your mortgage company and any other loan that you’ve taken out with your home as collateral has a lien to your home.
Anyone with a lien on your home can foreclose and can be added to the foreclosure case as a defendant. The foreclosure process could be even more complicated if you have a second mortgage or other loans using your home as collateral.
Lis Pendens
Lis pendens means “is pending” and is the legal terminology used to explain that the foreclosure lawsuit is pending and has been filed with the county clerk. When your foreclosure case is in lis pendens, it will be publicly accessible that your home is under foreclosure.
Loan Modification
A loan modification is an option to avoid foreclosure. With a loan modification, you work with your lender to change the terms of your loan. Loan modifications can alter a variety of factors of your mortgage to make your mortgage payments more affordable.
If your home is already in foreclosure, a loan modification may still be an option. Your lender may be willing to work with you during the foreclosure process to avoid foreclosure.
Loss Mitigation
This is where borrowers and loan servicers work together to help homeowners avoid foreclosure. Your loss mitigation options will vary based on your loan servicer and your specific financial situation. Some loss mitigation options allow homeowners to stay in their homes.
Mortgage Refinance
You can refinance your mortgage by taking out a new mortgage to pay off your current mortgage. Getting a mortgage refinance allows you to work with a new lender who may offer better interest rates or loan terms than your current lender.
A mortgage refinance can be a good option to stop your home from being foreclosed on. If you’re unable to pay your current mortgage, refinancing your mortgage could help you.
Plaintiff
The plaintiff in a legal case is the individual or group that starts the lawsuit by filing the claim. In a foreclosure case, the mortgage company or bank is the plaintiff.
Power of Sale Foreclosure
Power of sale foreclosure is a provision included in some mortgages. A power of sale provision in your mortgage allows your lender to foreclose on your home without going through the courts.
New Jersey is a judicial foreclosure state. Power-of-sale foreclosures are considered non-judicial foreclosures. If your mortgage has a power of sale foreclosure provision, it could be invalid, and it may be a good idea to contact a foreclosure attorney.
Real Estate Owned Property
Real estate-owned properties (REO) are homes that a bank owns. A property can become an REO after a foreclosure or a deed-in-lieu of foreclosure. Most homes that are considered real estate-owned properties are homes that aren’t sold at the foreclosure auction.
Right of Redemption
A time period that allows homeowners to reclaim their property and stop the foreclosure process. Your home loan has to be out of default to reclaim your property and stop foreclosure. Homeowners have to pay any outstanding interest and penalties before the foreclosure sale goes through to redeem their property.
Short Sale
A short sale is the sale of a home to avoid foreclosure. Short sales are different than typical home sales. They are sales that take place while a house is already in foreclosure. Short sales must meet certain conditions and be approved by your mortgage company.
Contact a Foreclosure Attorney
There are a lot of unfamiliar terms that can come with foreclosure. Being unsure of the terminology can make dealing with foreclosure even more difficult and stressful.
This is a glossary of some common foreclosure terms but does not necessarily include all foreclosure terminology that you could encounter.
Working with a foreclosure attorney can help make the foreclosure process less stressful for you. Your attorney can help explain the terminology, where you are in the foreclosure process, and what your options are to stop or avoid foreclosure.
Contact Denbeaux Law to learn more about the New Jersey foreclosure process and how we may be able to help you through foreclosure.
