Foreclosure refers to a legal process when a financial institution or lender initiates legal action against the borrower in order to recover the unpaid amount of mortgage loan. This legal action usually takes place after the mortgagor (or lendee) has stopped making payments as per their loan arrangement. The objective of foreclosure is to sell the property, which was offered as collateral for the mortgage.
If you are facing foreclosure, it can be extremely beneficial for your case to hire an experienced foreclosure defense lawyer. It is critical to educate yourself about legal terms regarding foreclosure defense, so you are better able to understand your case and ensure you and your lawyer are on the same page. Here are some of the legal terms you should know:
Legal Terms You Should Know
Mortgagor and Mortgagee – People always confuse these terms. A mortgagor is the person or entity who has taken out a loan by using the house they are purchasing as a collateral. A Mortgagee refers to the financial institution or lender that provides the loan to the homeowner.
Promissory Note – A promissory note, also known as a note payable, is a financial instrument called an IOU that is executed by the owner of the home when they apply for a mortgage. The mortgage arrangement results in a lien on their property, which allows the lending institution to protect their financial interests in case the homeowner is unable to make the mortgage payments.
Lis Pendens – Lis Pendens refers to the filing of a notice by the mortgagee to inform the homeowner they are initiating a legal action pertaining to the title and ownership interest in their home. It is a public record used to notify all parties who may have an interest in the concerned property.
Deed – A deed is a written document, which authenticates who is the owner of a property. It is an important legal tool that both the buyer and seller must sign to transfer the ownership rights to the new homeowner.
Secured Creditor – In cases involving foreclosure, the term secured creditor is used to refer to the financial institution or lender that provided funds to the homeowner so they can either purchase or refinance the property.
Default – The term ‘default’ simply describes a situation where a homeowner is unable to make timely payments, as per the agreed upon arrangement, with respect to their mortgage loan.
Facing Foreclosure: Do I Need A Lawyer?
When you are facing foreclosure, you have two choices: Either let your lender win or choose to fight the case. Fighting the case provides you an opportunity to avoid eviction and at least save your credit ratings, if not your home. If given sufficient time, a competent foreclosure defense lawyer might be able to work out a deal with your financial institution to avoid foreclosure, perhaps by negotiating a rearrangement of the mortgage agreement.
There are several alternatives available to prevent foreclosure, such as short sale, declaring bankruptcy and reverse mortgage. If negotiations do not work out, your foreclosure defense lawyer will attempt to seek these alternatives and devise a solid foreclosure defense strategy to ensure your financial, as well as legal interests, remain protected.
If you wish to know more about foreclosure defense legal terms or speak with an experienced real estate lawyer, contact the offices of Covert & Covert LLP at (630) 717-2783 and schedule a free consultation session.