Glossary
Bankruptcy - Chapter 7
A Chapter 7 bankruptcy is the most basic type of bankruptcy. In a
Chapter 7 proceeding, under a court's supervision, all the assets of
the debtor (minus exemptions) are sold off or liquidated so the
proceeds can be distributed to qualified creditors. The debts of the
debtor (with various exceptions) are subsequently discharged to give
the debtor a fresh start
Bankruptcy - Chapter 13
A Chapter 13 bankruptcy involves a reorganization of existing debt
to allow the debtor to retain an important secured asset, such as a
house. At the end of a three to five year period, if the debtor has
kept to the original payment schedule, non-secured debts are
generally discharged, whereas secured debts for key assets will have
been brought current. A debtor who opts for Chapter 13
generally has sufficient income to pay the reorganized debt after
covering reasonable living expenses.
Deed-in-Lieu of Foreclosure
A deed-in-lieu of foreclosure is a way to avoid foreclosure by
transferring a property from a borrower directly to the mortgage
lender in exchange for a satisfaction of the debt.
Deficiency
The difference between the unpaid balance on a mortgage loan and the
sales price for the property at foreclosure or short sale (assuming
such price is fair market value).
Deficiency Judgment
A judgment that a mortgage lender obtains through a court process to
hold a borrower personally liable for the difference between the
unpaid balance on a mortgage loan and the sales price of the
property at foreclosure or short sale.
Foreclosure
Foreclosure is the process of selling real property to satisfy a
defaulting borrower’s debt that is secured by that property.
Loss Mitigation
This term usually refers to a department or division within a bank
that deals with a borrower’s request for an alternative to
foreclosure, such as a short sale or loan modification.
Notice of Default (NOD)
A notification of a borrower’s nonpayment or other default on a
mortgage loan that is recorded and mailed to a borrower as part of
the foreclosure process. A Notice of Default must be filed at
least three months minus five days before the lender can file a
Notice of Sale under California law.
Notice of Sale
A notification of an upcoming foreclosure by trustee’s sale that
must be recorded, mailed, posted on the property, and otherwise
disseminated as specified at least 20 days before the trustee’s sale
under California law.
Short Sale
A short sale is a property sales transaction where the lender agrees
to accept less money than what is actually owed on the mortgage
loan.
Trustee’s sale
A foreclosure sale conducted by a trustee under a deed of trust to
satisfy the defaulting borrower’s debt secured by real property. In
California , most foreclosure sales are conducted by trustee’s sale
(also known as non-judicial foreclosure), as opposed to a judicial
foreclosure that is conducted under a judge’s supervision.
Underwater
A property is "underwater" when its market value is less than the
amount owed on the mortgage loan(s) (also known as "upside down").
Upside down
A property is "upside down" when its market value is less than the
amount owed on the mortgage loan(s) (also known as "underwater").