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REO/Eviction Terms

Special thanks to USFN's REO/Eviction Committee for assistance in compiling the following glossary.

An agreement or list that is added to a contract, agreement, or other document such as a letter of intent. FHA and VA require that an addendum be added to or incorporated in a sales contract, if it is written prior to the appraisal.

Deed in Lieu** 
The voluntary conveyance of the property from the borrower to the lender in lieu of foreclosure. The advantage for the lender is the cost of acquisition is less than a foreclosure and title is gained faster. The advantage for the borrower is he avoids a foreclosure and potential deficiency judgment.

Deed of Trust** 
A type of security instrument wherein the borrower conveys title to a third party (trustee) to be held in trust as security for the note.

Information relevant to specific transactions that is required by law.

The act of forcibly removing an occupant from a property.

An action to gain possession of real property. An eviction.

A legal procedure by which mortgaged property is sold upon default in order to satisfy the debt. Foreclosures are generally governed by state law and vary from state to state. The two most common types of foreclosure are “Judicial” and “Power of Sale.”

Homeowners Warranty Program*
An insurance program through which participating builders provide homebuyers with a warranty on the workmanship and materials of a home, and warrant against major structural defects.

HUD-1 Uniform Settlement Statement* 
Standard form used to disclose costs at closing. All charges imposed in the transaction, including mortgage broker fees, must be disclosed separately.

Inspection Certificate*
A document verifying that a property is as described. The inspection is usually performed by a designated agent and may be accepted in place of a survey.

Legal Description*
A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.

A conveyance of an interest in real property given as security for the payment of a debt. A two-party agreement between the mortgagor (borrower) and the mortgagee (lender). In some states a mortgage acts as a conveyance of title.

Quiet Title** 
A proceeding to establish a plaintiff's title to land by bringing into court an adverse claimant and compelling him to either establish his claim or be permanently stopped from asserting it.



Quitclaim Deed** 
A deed of conveyance used to transfer title in which the grantor gives no warranty to the grantee that its ownership exists or is valid.

Real Estate Owned (REO)* 
Property a lender acquires as the result of foreclosure.

Real Estate Settlement Procedures Act (RESPA)*
A federal statute and regulation promulgated by HUD governing real estate lending practices and disclosures. Its main features pertain to the provision of a good faith estimate of loan settlement costs and the provision of the HUD settlement booklet within three days of making a loan application.

Redemption Period**
The time allowed by law in some states during which a mortgagor may redeem or buy back its property by paying the amount owed on a foreclosed mortgage, including interest, costs and fees.

To rescind or cancel or terminate a contract.


Sales Contract*
A written agreement between buyer and seller stating terms and conditions of a sale or exchange of property.

Sheriff’s Deed** 
The deed given by the sheriff that transfers ownership to the buyer at the foreclosure sale.

Special Warranty Deed**
A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims that arose during the period of time title was held by the grantor. In a Special Warranty Deed, the grantor guarantees to the grantee that he or she has done nothing during the time the grantor held title to the property.

Super Lien**
A condominium or homeowners association lien for unpaid assessments that has priority over the first mortgage. States permitting Super Liens are referred to as Super Lien states.

Title Insurance Policy*
A contract by which the insurer agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee, or otherwise.

Title Search**
A review of public records to determine the identity of parties having an interest in a property and the existence and nature of claims outstanding against a property.

Trust Deed*
(See Deed of Trust Above).



A party who holds title to a property for the benefit of others. In a deed of trust relationship the trustee holds title for the benefit of the trustor (borrower) and the beneficiary (lender). In the case of a bankruptcy, the trustee is an individual appointed by the bankruptcy court to administer the debtor’s case. The trustee is generally a private citizen. There is a trustee in all Chapter 7, 12, and 13 cases. A trustee is appointed in some Chapter 11 cases.



* These terms have been reproduced from Mortgage Banking Terms: A Working Glossary, Copyright © 1997 with the express permission of Mortgage Bankers Association of America (MBA). The complete version of Mortgage Banking Terms contains over 1,500 terms and is available for purchase through MBA's website (www.campusmba.org).


** These terms have been reproduced from the National Mortgage Servicer's Reference Directory, 32nd Edition. USFN Copyright © 2001-2016.

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