Foreclosure Glossary

Foreclosure: The legal process by which a creditor with a claim on real estate forces a sale of the property.

Deed in lieu of foreclosure: An arrangement that allows the homeowner to turn over the deed of the house, stopping the foreclosure process and canceling the mortgage debt.

Forbearance: A temporary suspension in payments allowed by the lender for a period usually no longer than a few months. Sometimes offered if the borrower has lost his job but has prospects for a new one in the near future. The payments have to be made up later.

Modification: A change in the mortgage terms. Most common modification is a temporary reduction in the interest rate to reduce the payment amount.

Notice of default: A legal notice from the lender giving the homeowner a set period of time to make up past payments.

Reinstating a mortgage: Bringing a mortgage back in compliance by catching up missed payments and paying late fees and interest.

Repayment plan: Usually, a plan that allows the homeowner to make up missed payments over time.

Short sale: An arrangement between the homeowner and the lender that allows the owner to get out from under a mortgage by selling the home for less than is owed on the mortgage. The lender agrees to the amount, and the mortgage is canceled.