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FHA Foreclosure Dictionary & Glossary

A FHA foreclosure glossary can help you navigate the often confusing world of foreclosures and legal steps which are taken to prevent and to process these foreclosures.

Adjustable-Rate Mortgage (ARM) - This is a mortgage loan that does not have a fixed interest rate.

Assignment - This is the transfer of property to be held in trust or to be used for the benefit of the lender.

Bank Foreclosures - When a person has a mortgage with a bank and they do not follow the mortgage terms, the bank can take possession of the home.

Credit Score - This is a number which is calculated by using a credit report to determine whether a loan has a high chance of being repaid on time.

Debt-to-Income Ratio - This ratio is a comparison of gross income to housing and non-housing expenses.

Deed -  This is a signed document which transfers ownership of property from one person or party to another.

Deed-in-lieu of Foreclosure - This is an instance in which a borrower may voluntarily pass on their rights to a property to the lender.

Default - A mortgage is said to be in default when the borrower fails to make payments as agreed.

Fair Market Value - This is the price a property would sell for on the open market.

FHA - Federal Housing Administration.

Foreclosure - This is a legal process in which a mortgaged property is sold to pay the loan of the defaulting homeowner/borrower.

Free and Clear - This is when a property is completely paid off by the homeowner.

HUD - The U.S. Department of Housing and Urban Development.

HUD Foreclosures - If a person owns a home through the HUD and can not continue to make their payments, the HUD can foreclose on their home.

Judicial Foreclosure - This is a foreclosure which is processed by a court action.

Lien - This is a charge upon property for the satisfaction of a debt.

Loan - A loan is money borrowed and that is usually repaid with interest.

Mortgage Note - This note is a legal document obligating a borrower to pay back a loan at a agreed upon interest rate during a specified period.

Non-judicial Foreclosure - This is used when a power of sale clause exists in a mortgage or deed of trust.

Notice of Sale - This is a notice giving specific information about the loan in default and the proceedings, like an auction, about to take place.

Postponement - Postponement means to put off to a later time, as in postponing a foreclosure.

Pre-Foreclosure Sale - This process allows a borrower in default to sell their mortgaged property to satisfy the loan terms and avoid foreclosure.

Private Mortgage Insurance (PMI) - This is home insurance purchased by a buyer to protect the lender in the event of foreclosure or other default.

Request for Notice - This is a recorded document which requires a trustee send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.

REO Properties
- REO properties are foreclosures which can be purchased after the auction process.

Right of Redemption - This is a borrower's right to reacquire property lost because of foreclosure.

Title - This document provides evidence of a person's right in real property.

VA Mortgage - This is a mortgage guaranteed by the Department of Veterans Affairs (VA).

VA Foreclosures - The VA can step in to buy the loan from the homeowner in order to help the homeowner avoid the foreclosure process.  However, when this happens, the home is then the VA's property and often goes up for auction.

Warranty Deed - This is a legal document that guarantees the property seller is the true owner and has no claims on the property, giving them the right to sell the property.
  

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