Learn more about common definitions and terms used throughout the foreclosure process by mortgage lenders, investors, and real estate professionals.
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 (LIS): 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.
Notice (Judgment) of Foreclosure Sale (NFS): An order signed by a judge, directing a "Notice of Sale" be published and that a referee (trustee) sell the property at public auction.
Real Estate Owned (REO): "Real Estate Owned" by the lender; the final step in foreclosure process. This document conveys property ownership back to lender.
Government-Owned (GOV): A foreclosed property offered for sale by the government. When a property purchased with a federally insured mortgage (i.e., FHA, VA) is foreclosed by the lender, the federal government pays the lender what is owed, takes possession of the property, and offers the property for sale.
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 among 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.
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).
Postponement: A verbal announcement made at the time and location of the scheduled trustee's sale, resetting the auction for a later date.
Publication Letter: A letter, when signed by the beneficiary (lender), authorizing the trustee to prepare, publish and record the Notice of Trustee's Sale (notice of auction).
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 Trustee's 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.
The information above was gathered from sources deemed reliable and is intended for informational purposes only. Please consult official assessment records. State and county terms and policies may vary so consult your local bylaws.
The foreclosure process varies somewhat from state to state, and depends primarily on whether the state uses mortgages or deeds of trust for the purchase of real property. Generally, states that use mortgages conduct judicial foreclosures, using the court ...