San Diego real estate blog - Peter Toner

“Foreclosure”- it’s the buzz word heard throughout the media, but very rarely do you hear an explanation of the details and process involved.

Let’s review the terms and timeline associated with the subject that seems to be lingering on the minds of our nation.

Foreclosure Timeline:  Pre-Lien ~ Lien ~ Notice of Default ~ Notice of Sale ~ Trustee Sale ~ REO

Bankruptcy – The legal filing done by an individual or business to be able to either clear debt obligations or have debt obligations evaluated and reorganized by the court in order to help the individual make the payments necessary. If an individual or business files for bankruptcy, this will halt all foreclosure proceedings on a property until the bankruptcy has been property completed by the courts or otherwise determined by the courts.

Foreclosure – The action taken by a lending institution to legally reclaim property back from a borrower/homeowner who is no longer making mortgage payments. The lender may also reclaim the property back in order to sell it and recover its losses if possible.

Foreclosure Sale – The sale of a home by the lender to recover all or some of the debt owed on the past owner’s defaulted mortgage on the property.

Junior Lien – Generally speaking, the junior lien would be the second mortgage on a property.

Lien – The lien on a property is the mortgage (debt) owned on the property by the borrower/homeowner and controlled by the lender of the mortgage. For instance, if your mortgage is with XYZ bank, then XYZ bank holds the lien on your home.

Lis Pendens (LIS) – This notice is publically filed by the lender in order to show that there is a pending lawsuit against a property owner and that the beginning steps of foreclosure are occurring.

Notice of Default (NOD) – This document is filed by the lender in order to start the foreclosure process

Notice of Sale (NTS or NFS) – A Notice of Sale is an announcement of the details of the public sale of the property done via newspaper, mailings to those affected by the sale, and written in public records to make sure that all are aware the home will be put up for sale and is undergoing the foreclosure process.

Postponement – If the foreclosure sale has been postponed the official announcement of this is called the “Postponement”, usually made at the time of the originally scheduled Notice of Sale.

Reinstatement – If the borrower is able to get current on payments again and back on track with the lender, then the foreclosure proceedings are called off and there is a “Reinstatement” of the loan.

REO – The acronym stands for Real Estate Owned and it refers to the final step of the foreclosure process when the lender receives full ownership of the foreclosed property.

Written by Raymond Vinole.