Foreclosure Glossary of Terms | Lizarraga Law Firm, PLLC

Practice Areas / Foreclosure Defense and Loan Modifications / Foreclosure Defense / Glossary of Terms

Acceleration letter: A letter sent from the lender (or its representative) to the borrower, which "calls in" the loan – effectively stating that the borrower must pay the entire loan amount by a specified date, otherwise the lender will file a foreclosure lawsuit. Once the mortgage has been accelerated, the lender is no longer compelled to accept arrears, though may still do so.

Answer: A written response to the complaint, submitted by the borrower to the lender's attorney, and filed with the court. The answer is due 20 calendar days from the date of service if the borrower is served in person, or 30 calendar days if the borrower is not personally served. The answer can be submitted with the help of an attorney, or pro se (representing yourself without an attorney). The answer contains defenses to the foreclosure and may also include counterclaims.

Arrears: The amount of back payments - plus late fees and other charges - owed by the borrower to the lender.

Auction: A public sale of foreclosed properties. Anyone can place a bid to purchase a property. Properties are sold to the highest bidder. Once the property has been sold at auction, the original homeowner loses all "right of redemption," or opportunity to regain ownership of the property by paying the amount due.

Complaint: A written document served to the borrower by the lender's attorney, indicating that the lender has filed a foreclosure lawsuit, and explaining the grounds for that action against the borrower.

Counterclaims: As part of the answer to the complaint, the borrower may include counterclaims, or claims that that the lender owes the borrower money due to violations of the law, thereby reducing the amount that the borrower may owe the lender.

Deed-in-lieu of foreclosure: To avoid going through a foreclosure, the borrower voluntarily turns over the deed to the property to the lender. In exchange, the lender agrees that the borrower does not owe any additional debt -- allowing him/her to walk away from the property without a deficiency judgment, and without a foreclosure sale on his/her credit report. This option, as well as other loss mitigation options, may have tax consequences.