Illinois Short Sale and Foreclosure Terminology
Short Sale
Real estate transaction where a lienholder agrees to accept less than what is owed and will release the lien allowing the home to be transferred to a new owner.
Notice of Default
Public notice from a judicial court at the county level notifying a mortgagor is in default on a loan or loans. This is the first step a bank may take to start the process of a judicial foreclosure.
Lis Pendens
A pending legal action that is added to the title chain so that third parties with interest in real property can discover the extend of litigation on that property.
Real Estate Owened (REO)
In the event that a property does not sell to a unrelated third party at an auction sale, the bank, governemnt entity or government loan insurer has taken a real estate property back and owns it.
Forebearance
A temporary postponement of mortgage payements granted by lender or creditor vs pursuing a judicial foreclosure. This won't stop a foreclosure but it may delay it.
Loan Modification
A lender agrees to modify the terms of a loan with the intention. These are often completed to avoid a foreclosure and give a borrower an option to renegotiate the terms. These terms may include, interest rate, extension and length or repayment as well as loan type.
Deficiency Judgement
Difference between the foreclosure sale price and the total debt owed from a borrower. Illinois is a recourse state and through the courts they can obtain this type of judgement following a judicial foreclosure and seek legal option to collect the debt owed.
Recourse State
Every state has different laws regarding foreclosures. A recourse state allows a lienholder to pursue a borrower for the difference of what is owed following a foreclosure by obtaining a deficiency judgement. Illinois is a recourse state so they have a right to legally pursue the debt owed to them.
Judicial Foreclosure
Type of foreclosure that goes through the legal court system to process and complete a foreclosure. Some states are not judical foreclosure states. Illinois is a judicial foreclosure state.
