Foreclosure – A legal procedure by which mortgaged property is sold, upon default, in order to satisfy a debt. Foreclosures generally are governed by state law, and rules may vary between States.
Deed of Trust – a type of security instrument where the borrower conveys the property’s title to a third-party (trustee) to be held “in trust” as security for the note.
Mortgage – A conveyance of an interest in real property, given as security for the payment of a debt. An agreement between two parties: borrower and lender.
Assignment of Deed of Trust or Mortgage – Assumption by a purchaser of liability for payment of an existing mortgage, or deed of trust. May or may not be accompanied by a release of liability of the original borrower.
Publication Period – a period beginning at the expiration of the default period, and ending when the trustee’s sale has been conducted. During the publication period, the Notice of Trustees Sale is published, posted and recorded.
Recession of Notice of Default – After an amount in default has been cured, or paid-back, this document, when signed by the lender and recorded by the trustee, removes the burden of the previously recorded Notice of Default.
Reinstatement Period – The time period beginning when the Notice of Default is recorded, and ending five business days before the trustee’s auction sale. The default may be cured, or paid-back, at any time during this period by paying all delinquent amounts, including the trustee’s fees and costs.
Notice of Default (NOD) – The initial document (non-judicial) filed by a trustee that starts the foreclosure process, usually after the occurrence of a default under the deed of trust, or mortgage. Both LIS and NOD are part of the PRE-foreclosure process.
Lis Pendens (LPN) – Notification of pending lawsuit. The initial document (judicial) filed by an attorney or trustee that starts the foreclosure process after the occurrence of default under the deed of trust or mortgage. Both LIS and NOD are part of the PRE-foreclosure process.
Notice of Trustee’s Sale (NTS) – A filing by notice announcing a public auction.
Novation – The substitution of a new contract between the same, or different parties; a substitution, by mutual agreement, of one debtor for another, or one creditor for another. The result is that the old contract is extinguished, and a new contract is created, usually with the same content, but with at least one different party.
Declaration of Default – a document instructing the trustee (usually appointed by a bank) to prepare and record a Notice of Default (NOD), and if necessary, to sell the property at auction in order to satisfy the unpaid obligation or lien.
Full Reconveyance – a document prepared by a trustee, when an obligation secured by a deed of trust, or mortgage, is paid back in full. Once recorded, this reconveyance eliminates the lien from the property’s title.
Junior lien – a legal claim upon real property recorded subsequent to (after) another claim or legal obligation) for example, a senior lien would have priority in most cases.
Joint Tenancy– ownership of real property which provides that each party owns an undivided interest in the entire parcel, with both having the right to use all of it and the right of survivorship (which means that upon the death of one joint tenant, the other has title to it all).
Tenancy by the Entirety – Joint ownership of title by husband and wife, in which both have the right to the entire property, and upon the death of one, the other has title (right of survivorship). Tenancy by the entirety is used in many states and is analogous to “community property in the seven states which recognize that type of property ownership.
MERS – The company, known as MERS, was created more than a decade ago by the mortgage industry, including mortgage giants Freddie Mac, Fannie Mae, GMAC, and the Mortgage Bankers Association. MERS allowed big financial firms to trade mortgages at lightning speed while largely bypassing local property laws throughout the country that required new forms and filing fees each time a loan changed hands, lawyers say.The idea behind it was to build a centralized registry to track loans electronically as they were traded by big financial firms. Without this system, the business of creating massive securities made of thousands of mortgages would likely have never taken off. The company’s role caused few objections until millions of homes began to fall into foreclosure.