Bankruptcy
A legal recourse that allows a person or business to clear any debt obligations by reorganizing the payment amount and payment schedule of those debt obligations. A bankruptcy stalls the foreclosure process, not allowing a foreclosing lender to proceed with the foreclosure until the bankruptcy proceedings are completed or the court in charge of the bankruptcy allows the lender to continue with the foreclosure.

Deed of Trust
A legal document that dictates the terms of a loan used to buy a property and transfers the ownership of the property to a third party called a trustee until the loan has been paid in full. The trustee can sell the property to recover the remaining loan balance for the lender if the borrower violates the terms of the loan (i.e. does not make monthly payments).

Foreclosure Sale
A process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files the necessary documents to begin the foreclosure proceedings.

Junior Liens
Liens that have a lower priority in terms of their legal claim on a property. The priority is usually determined by the date when the lien was filed. The first lien, or senior lien, against a property is usually the first mortgage or deed of trust recorded when the owner bought the property. Junior liens are typically cleared out a public foreclosure sale, but the purchaser at the sale may be responsible to pay off senior or higher priority liens.

Lien
A legal claim on a property by a lender or other entity that is owed money by the owner of the property. The entity that files the legal claim is called the lien holder. If the owner does not pay off the loan or debt that is owed, the lien holder can take steps to sell or repossess the property to recover the debt owed (foreclosure).

Lis Pendens (LIS)
A publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. Some states require lenders to file a lis pendens to begin the foreclosure process if a borrower is in default on loan payments.

Mortgage
A document that dictates the terms of a loan used to buy a property and gives the lender some claim to the property (either ownership or a lien) until the loan has been paid in full. The lender can take steps to have the property sold to recover the remaining loan balance if the property purchaser violates the terms of the loan (i.e. does not make monthly payments.)

Notice of Default (NOD):
A publicly recorded notice that a property owner has missed scheduled loan payments for a loan secured by a property. Some states require lenders to record a notice of default to begin the foreclosure process.

Notice of Sale (NTS or NFS):
A document announcing the public sale of a property to recover a debt owed by the owner of the property. The notice is mailed to parties affected by the sale of a property, advertised in local publications and recorded in public records. Among other information, it provides the date, time and location of the sale

Postponement
An announcement – usually made at the time and place of the originally scheduled foreclosure sale – that establishes a new date and time for the sale.

Reinstatement
The stoppage of foreclosure proceedings and return to the original terms of a loan that occurs when an borrower pays off the amount in default on the loan to bring the loan payments current. The borrower’s chance to reinstate ends before the public foreclosure sale in most states.

REO:
A bank owned property that has already been through the trustee sale process and is now ready to purchase direct from the bank. These properties are normally listed with a Realtor, and placed in the Multiple Listing System.

Short Sale:
A listing on a property that is being offered for less money than the existing loan balance. The seller and the real estate agent hope to persuade the existing lender to reduce the loan balance to the amount a new buyer has offered for the property.  Many times the seller is already behind in the payments, and there is little time to complete the sale.

Most of the time the existing seller has little motivation to comply with the existing lender requirements: Provide a current financial statement, profit and loss statement, two years tax returns, and pay for a new appraisal and provide a copy of the purchase agreement between the seller and the new buyer. From most IDX feeds and metrolistmls.com. 

The MLS will not let us separate MLS listings from Short Sales, but we can search for Short Sale if you suspect the price is too good to be true in a normal MLS search, go to our MLS Listings Page, and click on Short Sales. If you find it there, it is a Short Sale.

With so many great bank owned REO properties on the market, there is little need to look at short sales.

Trustee Sale:
The legal sale that is normally held at the courthouse steps, or at a title company. The existing lender will usually bid the existing loan amount, plus existing foreclosure costs.