Significance

• It is important to understand commonly used terms for foreclosures. The last thing you want to is to be removed from your home because you didn't know what was happening and when. If it helps, keep a mortgage terminology cheat sheet, so that you know exactly what to expect at each stage of foreclosure, which is a process that stretches out over half a year or more.
  
  

Common Terms

• According to Mortgage Credit Terms, common terminology includes "foreclosure," which is when the home's lien holder seizes the home to collect on a past-due mortgage, judgment or tax debt. A "notice of default," filed with the county recorder's office, officially stipulates that you are behind on your payments and puts you on notice that a foreclosure may be the next step. A "lis pendens" may also be publicly filed -- in fact, in some states, it is a requirement -- to put the homeowner on notice that litigation is a possibility.
  
  Homeowners may also get a "notice of sale," which is the official foreclosure process when the bank states that it is repossessing your home and putting it up for public auction at a predetermined date and time. The "foreclosure sale" is the official sale of the foreclosed home as dictated by your state's laws. And the "real estate owned property," or REO, is the real estate that is now the property of the lender because of the foreclosure.
  
  You may also be offered a "reinstatement," which is the time period from the time of the notice of default until five days before the auction, in which the homeowner may work something out with the mortgage lender to stave off the foreclosure process.
  
  

Foreclosure

• The final stages of the foreclosure process include putting your home up for auction to the highest bidder. The home is auctioned by whoever owns it, which is generally a financial institution or government entity, according to the Mortgage Credit Problems website. However, you have time before the auction to work things out with your mortgage lender. If you were truly ignorant of what was happening before things got to the notice of default stage because of a lack of understanding of mortgage terms, sit down with your lender and say so. You may be able to make the payments you've missed or receive a forbearance, which gives you a chance to add the missed payments to the mortgage balance. Forbearance also gives you a short break from your mortgage payments -- which varies depending on the lender and the homeowner's payment history -- in order to catch up.
  
  

Considerations

• Don't be too proud to ask for help and, more importantly, clarification on the various forms of paperwork that are part of the foreclosure process. Not only will the process help to educate you on some of the pitfalls of home ownership, but also give you a clear idea of what you can -- and cannot -- do at various points during the foreclosure process.