Unit 7: Foreclosure Flashcards
What is a foreclosure?
A procedure whereby title to property used as security for a debt is taken by a creditor/lendor and sold to satisfy the debt.
T/F All liens on a property are still present during the foreclosure process.
False. All liens on a property are REMOVED during the foreclosure process.
What are the 2 types of foreclosures?
1) Judicial
2) Nonjudicial
What clause is present if the lender can do a nonjudicial foreclosure?
Power of Sale clause
What is filed with the county recorder during a judicial foreclosure?
Lis pendens
What is a lis pendens?
An official notice that there is a lawsuit over the claim of a property.
What is the equitable redemption period?
It is a specific amount of time given to borrowers in foreclosure during which they can pay to “redeem” their property.
T/F To stop the foreclosure process, the borrower needs to only pay the missed payments.
False. To stop the foreclosure process, the borrower needs to pay the missed payments plus the interest and penalties.
Why do homeowners agree to deed in lieu of foreclosure agreements with their lenders?
To avoid the foreclosure process
What is deed in lieu of foreclosure?
The borrower gives the property deed to the lender to satisfy the debt.
T/F A deed in lieu of foreclosure, wipes out all liens.
False. A deed in lieu of foreclosure DOES NOT wipe out secondary liens.
What is a short sale?
The borrower needs to sell the property and the market value of the property is not sufficient to pay off the loan balance.
T/F Once a short sale offer is accepted, the lender may not agree to accept the reduced price.
True
T/F The lender may require the seller to pay any deficiencies along with any tax consequences.
True
What is the time difference between the equitable redemption period and the statutory redemption period?
Equitable redemption starts when the lender declares default until the sale is set. Statutory redemption period takes place when the sale date starts and ends when the highest bidder receives the deed.
