The Language Of Foreclosures
Talking about foreclosures, real estate can be hard enough without even entering the market. That's because foreclosures tend to have their own language, employing many obscure words originating in government housing legislation and the real estate law. Without a background in these areas, prospective investors won't be able to decipher even the simplest foreclosures contract. This article lists some of the more common foreclosures related terms as a reference for people interested in this lucrative market.
Abandonment: Wherein a property owner has given up ownership rights without coercion, and does not want to neither retrieve those rights, nor pass them to somebody else.
Acceleration Clause: A clause commonly written in a mortgage enabling the lender to demand full re-payment immediately, instead of at the end of the contracted term. This foreclosures clause must also detail an occurrence that would put it into effect, such as a default on regular payments, sale of the property, or re-assignment of property rights.
- Chattel: Personal property, also household items.
- Closing Costs: Expenses not related to the marketing and selling of the property, such as loan fees and paperwork fees. Foreclosures might also involve other extra legal and escrow fees.
- Deed in Lieu of Foreclosure: Property owners may deed their property to the lender if foreclosures are imminent, rather than go through the entire process.
- Default: Failure from the borrower's side to make payments as required by the lender. "Default" may refer to a missed payment without any further repercussion, or a series of missed payments resulting in a failed mortgage and foreclosures.
- Equity Right of Redemption: The right of the borrower to remove all encumbrances related to the mortgage, in order to avoid foreclosures.
- HUD1 Statement: A form mandated by the US Department of Housing and Urban Development that specifies the costs of buying a foreclosed home.