REO / Foreclosure Properties may be the most complicated type of property to deal with in Real Estate. To help the average layman understand some of the REO-verbage that may be discussed, we have published this valuable REO Glossary covering the most common REO terms and their definitions.

Deed-in-lieu - the agreement of a delinquent borrower to give the deed to the property to the lender in place of foreclosure proceedings. Usually the borrower is released from responsibility of any shortfall between the loan amount and the selling price of the property

Foreclosure - the decision by the lender to exercise the legal right to obtain a collateralized property when the borrower has defaulted on the obligation to repay the loan

Loan Assumption - the agreement by a third party to take over loan payments for the borrower

LTV/Loan- to-value - the ration of the amount of unpaid principal on the loan to the value of the underlying asset.

Loss Mitigation - the attempt by financial institutions to find less costly alternatives to foreclosure. Alternatives may or may not keep the borrower in the home.

Mortgage Delinquency - the condition when a borrower is past due on a mortgage payment. In practice, a bower is usually considered delinquent only when a payment is 30 days past due.

Mortgage Default - Generally used to mean the point at which a borrower is 90 days past due. At this time, the borrower has missed three payments and a fourth is due. Most state will consider a foreclosure petition from the lender at this time.

Negative Equity - the condition in which the outstanding principal on a loan is greater than the value of the underlying asset.

Pre-foreclosure Sale - the voluntary selling of a property by a delinquent borrower to repay the loan amount due. Usually, the borrower is released from any shortfall between the value of the loan and the selling price of the property.

Short Sale - a lender approved sale of your property to relieve the unpaid debt which is less than the value of the loan.

Trigger Event - a personal economic event that renders a borrower unable to make mortgage payments. Common trigger events include loss of employment, divorce, illness and death in the family.