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Disclaimer

Presentation of this glossary is for general purposes only. No information on this page is to be viewed as legal advice or as an official description of judicial process. These terms are general and are displayed strictly as a service to consumers. They are not intended to be all inclusive or to cover default situations in all states. Consumers are advised to seek professional legal counsel in any default proceeding.

Foreclosure Glossary

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Assignment of Deed of Trust: A written document, which transfers the beneficial interest in a note and deed of trust from one person/entity to another.

Authorization to sign as Agent Agreement: A written document given by a beneficiary authorizing an agent to sign a document on their behalf (such as a notice of default).

Bankruptcy: (In general terms) Proceedings under federal law, a bankruptcy status is to relieve a debtor from insurmountable non-payment of bills or debt. The bankrupt’s property is distributed by the court to the creditors as full satisfaction of the debts, in accordance with certain priorities and exemptions. Voluntary bankruptcy is generally petitioned by the debtor, involuntary by the creditors.

Beneficiary: The lender or their successor in interest for whose benefit a trust is created and to whom the debt is owned.

Bid Authorization Letter: Written authorization instructing the trustee to make the initial opening bid at the trustee’s sale on the lender’s behalf. This form will also advise our office of any additional amounts to be included in the opening bid, (total debt such as funds advanced by you to pay delinquent real estate taxes, etc.)

Breach: The failure without legal excuse to perform any promise made in a contract. A breach is stated in the notice of default.

Declaration of Default: A written document that instructs the trustee to prepare and record a notice of default and, if necessary, to sell the secured property in order to satisfy the unpaid obligation. This document does not require the acknowledgment of a notary public or recording and is merely retained by the trustee in their foreclosure file.

Deed of Trust: A written document, describing the real property that is being given as security for the repayment of an obligation.

Eviction: See “Unlawful Detainer”

Extension Agreement: An agreement (normally written) giving additional time to pay an obligation.

Federal Tax Lien (IRS Lien): A lien attaching to property for non-payment of a federal tax (state, income, etc). A federal tax lien differs from other liens in that it is not automatically wiped out by foreclosing on a mortgage or trust deed recorded before the tax lien (except by judicial foreclosure).

Foreclosure (Non-Judicial): A term used to describe the procedure followed in enforcing a creditor’s rights when a debt secured by any lien on property is in default; however, the correct term for a “Foreclosure involving a deed of trust is a “Trustee’s Sale Proceeding.”

Endorsement/Datedown: A continuation of the trustee’s sale guarantee that reports any changes in the status of the property being foreclosed. Such “date downs” are requested from the title company prior to preparation of the notice of trustee’s sale and prior to the trustee’s sale.

Important Notice: A written document required by the California Civil Code (2924c(b)(1), to be part of the recorded Notice of Default. This document is completed by our office and attached to the Notice of Default (as page 1) prior to recording. It sets forth the reinstatement or payoff amounts as of a specific date and contains certain language directed to the borrower and emphasizes the fact that a foreclosure proceeding has been initiated and may be sold without any court action.

Invalid: Not legally sufficient, no binding force.

Junior Lien: A legal claim upon real property recorded subsequent (or recorded prior but has subordinated) to another legal claim upon the same real property. A lien which is subordinate to a prior lien.

Limited Power of Attorney: A recorded document which authorizes someone to act as attorney-in-fact in a specific manner for someone else.

Lis Pendens: A legal notice recorded to show a pending litigation relating to real property, and giving notice that anyone acquiring an interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation.

Mechanics Lien: A claim created by law to secure priority of payment of work performed and materials provided for work performed by a vendor. Land may be attached as well as buildings, equipment, or other property.

Modification Agreement: A written document, signed by the beneficiary and the borrower that alters the terms of either the note of deed of trust.

Non-Military Affidavits: A sworn statement, in writing from the beneficiary or his agent which declares that the property owned is not entitled to any rights under the Service Members Civil Relief Act. (SSCRA)

Note: A written document, (promise to pay), that sets forth the amount of the obligation and the terms of repayment.

Notice of Default: A written document that gives constructive notice of a trustor’s failure to perform this obligation under a deed of trust. This document must be recorded with the county recorder in the county in which the property is located.

Notice of Rescission: A written document that cancels or annuls the effect of a notice of default when a default has been cured (reinstated). This document does not require the acknowledgment of a notary public, but must be recorded with the county recorder in the county in which the property is located.

Notice of Trustee’s Sale: A written document that sets forth the day, date and time of the trustee’s sale, describes the property to be sold and gives an estimate of the unpaid debt. This document is prepared by the trustee and must be recorded with the county recorder in the county in which the property is located. The notice of trustee’s sale must be published in a qualified newspaper in the city (or judicial district), in which the property is located.

Postponement: A verbal announcement made at the time and place of the scheduled trustee’s sale that establishes a new day or time for the trustee’s sale. The sale cannot be changed from the originally noticed location.

Preliminary Injunction: A judicial order granted by a judge of the Superior Court, which prohibits the trustee from proceeding with any further action on a specific foreclosure file until a trial is held or settlement reached. This occurs when there is a dispute between the owner of a property and the beneficiary. A Trustee’s Sale cannot be held any sooner than seven (7) days from the dismissal of the action or the expiration of a restraining order, injunction or stay from any court of competent jurisdiction. However, the order of any amendment thereto may expressly provide for an earlier sale date.

Pre-Publication Period: The period following the recording of the notice of default and ending with the first publication.

Present Owner, Current Owner, New Owner: The successor to the trustor named in the deed of trust and now the owner of the property.

Promissory Note: See “Note”

Publication Letter: This letter is sent to the lender by the trustee. When completed and returned, authorizes the trustee to proceed with the preparation of the notice of trustee's sale and schedule of the sale date.

Publication Period: This is the interval beginning the day after the pre-publication period expires and ends on the last publication date. During the publication period, the notice of trustee’s sale is published, posted, recorded and copies are mailed to all entitled parties.

Reconveyance: A recorded document which gives notice that the loan secured by the identified deed of trust has been paid in full. Also called a “deed of reconveyance or release”.

Rescission: See “Notice of Rescission”.

Reinstatement: A curing of a default and restoration of the loan to current status through payment of past-due amounts together with the fee and expenses of the trustee.

Reinstatement Period: This is the interval from the date the notice of default is recorded until five business days prior to the date of sale during which time a default may be reinstated/cured.

Request for Notice: A recorded document which requests a copy of any notice of default or notice of sale be mailed to the requesting party.

Request and Account of Sale by Trustee: An itemization prepared by the trustee or his agent and sent to the successful bidder at the sale. It gives an accounting of the total debt and the successful bid.

Request to Prepare Notice of Default: See “Transmittal Form”.

Service Members Civic Relief Act (SSCRA): An act signed in 2003 and is reserving the Soldier’s and Sailor’s Relief Act passed by Congress in 1940 for the financial protection of those persons serving in the military service. This act is the reason for the completion of the non-military affidavit forms.

Statement/Invoice: An itemization of the trustee’s fee and expenses incurred at the conclusion of the foreclosure proceeding (cancellation, reinstatement, payoff or completed sale.)

Subordination Agreement: an agreement by which, an existing encumbrance is made subject (junior) to a junior encumbrance. For example; a loan on vacant land is made subject to a subsequent construction loan. Agreement under which, a prior or superior lien is made inferior or subject to an otherwise junior lien.

Substitution of Trustee: a written document that appoints a successor trustee to the trustee of record.  This document must be acknowledged by a notary public and recorded with the county recorder in the county in which the property is located.

Temporary Restraining Order (TRO): A judicial order which is granted by a judge of the Superior Court. This order temporarily prohibits the trustee from proceeding with any further action under a specific foreclosure file until a trial is held or settlement reached. A TRO is effective, generally, for a 21 day time period or until a hearing is held and the judge decides whether preliminary injunction will be granted or denied.

Toll: To temporarily stop. Frequently used to describe the tolling (stopping) during bankruptcy of any further acts in foreclosure.

Transmittal Form (TS138): This is the “Request to prepare notice of Default” transmittal form which is completed by the lender and forwarded to TD Service Company together with note, deed of trust, assignments and other necessary loan documents. This form sets forth all pertinent information to enable TD to prepare the default documents.

Trustee: One who holds legal title to property for the benefit of another, or to secure performance of an obligation.

Trustee’s Deed Upon Sale: A written document which is prepared and signed by the trustee when the secured property is sold at a trustee’s sale. This document transfers ownership to the successful bidder at the sale; must be recorded with the county recorder in the county in which the property is located.

Trustee’s Sale: The public auction of the real property, described in the deed of trust, to satisfy the unpaid obligation.

Trustee’s Sale Guarantee: A title report given to the present trustee and beneficiary when a trustee’s sale proceeding has been initiated. This report provides the names of the current owner, all liens and encumbrances recorded and other information pertinent to the foreclosure process.

Trustee’s Sale Proceeding (Foreclosure):The term used to describe the non-judicial procedure followed by the trustee in enforcing a creditor’s rights when a debt secured on real property is in default.

Trustor: The borrower (or property owner) at the time the deed of trust was created.

Unlawful Detainer Action (eviction): A legal action to remove someone who has unjustly retained possession of real property after one’s right to possess has terminated.

Valid: A condition that is legally sufficient; hat will be upheld by the courts.

Void: Having no legal force or binding effect. Incurable.

Voidable: A condition capable of being made void, although not necessarily void in itself.