Glossary of Terms

Abandonment: The act of intentionally and permanently giving up, surrendering, deserting or relinquishing property.

Loss Mitigation: The menu of alternatives provided by the lender to a borrower in order to avoid foreclosure proceedings. These alternatives are voluntary and agreed upon by both lender and borrower.

Foreclosure: The system by which a party who has loaned money secured by a mortgage or deed of trust on real property (or has an unpaid judgment), requires sale of real property to recover the money due, unpaid interest, plus the costs of foreclosure, when the debtor fails to make payment. After the payments on the promissory note (which is evidence of the loan) have become delinquent for several months, the lender can a notice of default served on the debtor (borrower) stating that the amount due and the amount necessary to ‘cure’ the default.  If the delinquency and costs of foreclosure are not paid within a specified period, then the lender will set a foreclosure date, after which the property may be sold at public sale. Up to the time of foreclosure and after depending on some states, the defaulting borrower can pay all delinquencies and costs and ‘redeem’ the property. Upon sale of the property, the amount due is paid to the creditor and the remainder of the money received from the sale if any, is paid to the borrower.

There is also judicial foreclosure in which the lender can bring suit for foreclosure against the defaulting borrower for the delinquency and force the sale.

Short Sale: This occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owned.

Forced Sale: A sale of goods seized by the sheriff to satisfy (pay) a judgment.

Notice of Default: A notice to the borrower with property as security under mortgage or deed of trust that he/she is delinquent in payments. If the delinquency, plus costs of preparing legal papers for the default, is not paid within a certain time, foreclosure proceedings may be commenced. Other people with funds secured by the same property are usually entitled to receive copies of the notice of default.

Summary Judgment: A court ordered ruling that no factual issues remain to be tried and therefore cause of action or all causes of action in a complaint can be decided upon certain facts without trail. A summary judgment is based upon a motion by one of the parties that contend that all necessary factual issues are settled, and therefore needs to be tried. The motion is supported by declaration under oath, excerpts from depositions which are under oath, admission of fact, and other discovery, as well as a legal argument (points and authorities), that argue that there are no tri-able issues of fact and that the settled facts require a summary judgment for the moving party. The opposing party will respond by counter-declarations and legal arguments attempting to show that there are “tri-able issues of fact”. If it is unclear whether there is a tri-able issue of fact in any cause of action, then summary judgment must be denied as to that cause of action. The theory behind the summary judgment process is cut down on unnecessary litigation by eliminating without trail one or more causes of action in the complaint. The pleading procedures are extremely technical and complicated, and are particularly dangerous to the party against whom the motion is made.

Final Judgment: The written determination of a lawsuit by the judge who presided at trial (or heard a successful motion to dismiss or a stipulation for judgment), which renders on all issues and completes the case unless it is appealed to a higher court. It is also a final decree or final decision.

Forbearance Agreement: An agreement made between a mortgage lender and delinquent borrower in which the lender agrees to exercise its legal right to foreclose on a mortgage and the borrower agrees to a mortgage plan that will, over a certain time period, bring the borrower current in his/her payments. A forbearance agreement is not a long term solution for delinquent borrowers; it is designed for borrowers who have temporary financial problems due to unforeseen circumstances such as temporary unemployment or health problems.

Short Payoff: When a property is sold for less than the loan balance owed. The lender must approve this.