Foreclosure Terminology

Learn terms used in foreclosure to prevent foreclosure in California

Absolute Auction – Auction with no minimum bid amount. The highest bidder gets the property no matter what he/she bids.

Abstract – Recorded history of the property.

Appurtenance – A right, privilege or improvement that belongs to and passing with the land.

Balloon payment – Large installment payment by the end of the term.

Building code – An ordinance specifying the minimum standards of construction for buildings to protect public safety and health.

Closing – Accounting of costs of buyer and seller in a real estate sale.

Cloud – Gap in the chain of ownership, lien, unpaid taxes, etc. affecting ownership.

CMA – Comparative Market Analysis to compare the prices of recently sold homes that have similar specifications in terms of location, style and amenities.

Consideration – Money, value, something in kind, benefit, interest, good, real estate, service, anything that has a value. It does not have to be cash.

Contingency – A contract clause requiring a certain act to be done or a certain event to occur before the contract becomes binding.

Conventional loan – Loan extended without a government agency insurance or guarantee.

Conveyance – A document transferring title to real property.

Deed – Document to transfer ownership to real estate property.

Deed of trust – Written instrument in place of mortgage in some states.

Default – Nonperformance of a duty, failure to meet obligations.

Deficiency Judgment – Borrower is requested to pay the lender the difference between the mortgage balance and the proceeds of the foreclosure sale.

Due-on-Sale – Lender has the right to request repayment in full upon sale of property.

Earnest Money – Money given with the offer to purchase a property showing buyer's serious intent.

Easement – The right to use the land of another for a particular purpose.

Encroachment – A building or some portion of it (a wall, or a fence) extending beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street.

Encumbrance – Mortgage, lien, tax, or any restriction on the use of land.

Equity – Value in a property that exceeds owner’s indebtedness.

Escrow – Deposit with a third party (broker, title company or attorney) for performance under a contract.

Escrow agent – A third party holding money, check, etc. to secure real estate transaction. Typically it is a listing (selling) broker.

Equity – value of the property owned by the homeowner = buying price + appreciation in value + improvement made – mortgage.

Execution – Signing and delivery of an instrument.

Fee Simple – Very common term used to indicate complete legal ownership of a property.

Fraud – Deception intended to cause a person to give up property or a lawful right.

Gross lease – Landlord pays all property charges.

Guarantee – Any person receiving (such as buyer) any interest in real estate.

Guarantor – Person giving (such as seller) any interest in real estate.

Homestead – Land owned and occupied as the family home.

Hypothecate – Pledge a property as a security for a loan without giving up possession.

Improvement – Privately owned structure (building, fence, etc.) on a site to enhance the value of the property.

Lis Pendens – Pending lawsuit.

Mechanic's lien – Lien on property by suppliers of labor or material.

Origination fee – Application fee for processing a loan

PITI – Principal, Interest, Taxes and Insurance

Plat map – Section or subdivision of a town showing the location and boundaries of a property.

Points – Charge by the lender in extending a loan. One point equals one percent of the loan amount.

Prepayment penalty – Fee charged to borrower who pays off the loan before its due date.

Probate – Legal action where court determines who will inherit the property of a decedent, and what assets he/she had.

Quitclaim deed – Deed indicating that owner gave up his/her interest/claim in the property.

Quite title – Removal of a cloud on the tile by a court action.

Ratification – Signing of agreement by both parties.

Realtor® – Sales agent who is a member of the National Association of Realtors subscribing to its ethical standards.

Redemption – Right of defaulted previous owner to re-own his/her property by curing the default.

Reserved auction – Seller determines the minimum price to be accepted.

RESPA – Real Estate Settlement Procedures Act. It requires that all lenders (except private parties) give you an estimate of lending fees.

Statute of limitations – Period of time during which certain actions must be brought to court.

Title insurance – It is used to ensure ownership where abstracts are not used.

Usury – Applying interest rate at a rate higher than what is allowed by state law.

Zoning ordinance – Regulating the use of property by municipality.

Need help? Review your options to get foreclosure help by professionals (lawyers specializing in foreclosure, foreclosure consultants registered to assist homeowners subject to foreclosure, debt counselors, and real estate agents in California), California state agencies, county agencies in California, consumer advocacy groups, and nonprofit organizations in California.