State Foreclosure Summary
Rights Of Borrower
Regarding foreclosure, many state laws give homeowners certain rights, such as the right to reinstatement, which allows them to save their home by paying the full past-due amount plus penalties and fees.
Once the loan is reinstated, the homeowner resumes their regular mortgage payments.
Your Mortgage Documents May Contain Additional Rights
While not every state provides for reinstatement or the borrower’s right of redemption defined below in our listing of terms, these and other rights may still be contained within your mortgage or deed of trust documents.
State Summaries Are General Overviews
Locate your state on the list below to learn more about your state’s foreclosure rules and policies. Please remember, however, that the state summaries provide you with an abbreviated overview of the state’s foreclosure laws.
So be sure to consult with a qualified foreclosure defense lawyer in your state in considering your options and the best way to proceed.
Select Your State to Learn More:
Common Foreclosure Terms And Concepts
If you are facing home foreclosure, being as prepared as possible will help you manage the process the best you can and to obtain the best results possible.
One way of doing this is to familiarize yourself with the basic financial and legal vocabulary commonly used in the foreclosure process.
As you review the following terms, take note that states sometimes use different terms in describing a particular legal instrument or process.
Abandoned real property
A home left vacant and neglected by the owner and/or its occupant.
Acceleration clause
A legal term in a mortgage contract that allows the lender to demand payment of the complete outstanding balance of the home loan should the borrower default on their payments.
Auction
A public sale of the foreclosed real property to the highest bidder. There are strict notice requirements that the seller must follow, and if not followed, the sale can be invalidated by the court.
Bankruptcy
A legal process that allows the homeowner to remain in possession of the property upon filing the bankruptcy petition to reorganize their finances, discharge outstanding debt, and negotiate a loan modification on the mortgage with the bank.
Borrower’s Right of Redemption
Depending on your state, the borrower in default will be given a specific number of months to redeem their property by paying the highest bid at the foreclosure sale, plus costs and interest.
Cash for keys
A program that offers borrowers cash to voluntarily vacate their property before foreclosure to avoid the expense of further litigation.
Deficiency judgment
A judgment against the homeowner-borrower for the difference between the amount owed on the mortgage and the amount the property was sold for at auction. Some states prohibit creditors from taking a deficiency judgment against the debtor as a matter of public policy.
Default
A failure of the homeowner to make their mortgage payments when due per the mortgage contract terms.
Due-on-sale clause
A clause in a mortgage contract that gives the lender the legal right to demand immediate payment of the mortgage outstanding balance should the borrower sells the property.
Eviction
In some states, the occupants’ removal is referred to as ejectment. It is the legal process of removing a tenant from the property by court order.
Foreclosure
The term describes the process that allows a lender to take ownership of real property after the borrower defaults on the mortgage.
Home equity loan
A secondary loan that allows the homeowner to borrow additional money against the equity in their home.
Homeowner’s insurance
A type of casualty policy that insures the homeowner against loss due to damage to their home or property.
Lis pendens
A notice filed, usually in the county public records, also called the recorder’s office, which notifies potential buyers that a certain property is the subject of a lawsuit.
Loan modification
A process in which the holder of the mortgage agrees to modify the repayment terms of a mortgage loan, such as reducing the interest rate or extending the repayment period, or both.
Mortgage
A loan that is secured by the property.
Judicial Foreclosure
The judicial process of foreclosure involves filing a lawsuit to obtain a court order to foreclose. It is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, the property will be auctioned off to the highest bidder.
Non-judicial foreclosure
A type of foreclosure that does not require the lender to go through the court system to foreclose on their real property.
Notice of Sale
The notice of sale must contain a legal description of the property and state the place, the time, and the date, which must be at least thirty (30) days after the notice of sale is issued, on which the foreclosure sale is to be held. The property will then be sold to the highest bidder on the date specified in the notice.
Non-recourse loan
A loan that the borrower is not personally liable for should there be a default.
Origination fee
A discretionary bank fee that is charged to the borrower for the initial processing of the mortgage loan. Sometimes, this fee is waived as an incentive for the buyer to accept the loan.
Power of sale clause
A legal clause in a mortgage contract that allows a lender to sell the mortgaged property without judicial oversight should the borrower default on the loan.
Prepayment penalty
A bank fee that a lender charges the borrower if they pay off their mortgage early, thereby avoiding additional interest payments.
REO
Acronym for “real estate owned,” which refers to a property that has already been foreclosed on by a lender.
Short sale
A sale of real property for less than the amount owed on the mortgage.
Title
A legal document evidencing ownership of a specific real property.
Title insurance
Insurance that protects a buyer of real property from financial loss due to legal defects in the title to a property.
Trustee
A person or entity who is appointed by the lender to oversee the foreclosure process.
Waiver
A document in which a party to a home foreclosure gives up a legal right they would otherwise have, such as the right for a lender to obtain a deficiency judgment against the borrower.
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