Florida Homeowner Terms Glossary
An alphabetical guide to Florida-specific real estate and mortgage terms explained in plain language. If you are facing a difficult situation with your home, understanding these terms can help you make informed decisions.
Quick Answer
This glossary defines the most important terms Florida homeowners encounter when dealing with mortgage problems, foreclosure, short sales, and other real estate situations. Each term includes a plain-language definition, why it matters to distressed homeowners, and links to related pages on this site.
Automatic Stay
What it is: An automatic stay is a court order that immediately stops most collection actions, foreclosures, and lawsuits against you when you file for bankruptcy. It takes effect the moment your bankruptcy petition is filed.
Why it matters to distressed homeowners: An automatic stay can temporarily stop a foreclosure sale, giving you time to explore options. However, the stay may be short-lived if the lender files a motion to lift it. Bankruptcy has long-term credit consequences and should not be used solely to delay foreclosure without a broader plan.
Related pages: Foreclosure Guide, Mortgage Help
BPO (Broker Price Opinion)
What it is: A BPO is a real estate agent's estimate of a property's market value, ordered by a lender to decide how much a property is worth. It is less detailed than a full appraisal but less expensive and faster.
Why it matters to distressed homeowners: Lenders use BPOs to determine whether a short sale, deed in lieu, or loan modification makes financial sense. If the BPO comes in lower than expected, the lender may be more willing to accept a short sale. If it comes in higher, they may push for foreclosure or a different outcome.
Related pages: Short Sale Guide, Creative Solutions
CDD (Community Development District)
What it is: A CDD is a special-purpose government unit created to finance and manage community infrastructure like roads, drainage, water systems, and parks. Homeowners in a CDD pay an annual assessment on their property tax bill.
Why it matters to distressed homeowners: CDD assessments are part of your property taxes and must be paid. If you are behind on your mortgage, the CDD assessment may still be due. When selling, CDD fees can affect affordability for potential buyers. Some CDDs have a bond that must be paid off at sale.
Related pages: All Options Overview
Chapter 7 Bankruptcy
What it is: Chapter 7 bankruptcy, also called liquidation bankruptcy, discharges most unsecured debts (credit cards, medical bills, personal loans) in exchange for non-exempt assets that may be sold to pay creditors. It typically takes 3 to 6 months.
Why it matters to distressed homeowners: Chapter 7 does not automatically eliminate a mortgage lien. If you want to keep your home, you must continue making mortgage payments. If you are behind, the lender can still foreclose after the automatic stay is lifted. However, Chapter 7 can eliminate other debts, freeing up income to catch up on mortgage payments. Florida has a generous homestead exemption that may protect your primary residence's equity.
Related pages: Foreclosure Guide, Mortgage Help
Chapter 13 Bankruptcy
What it is: Chapter 13 bankruptcy, also called reorganization bankruptcy, allows you to create a 3 to 5 year repayment plan to catch up on missed mortgage payments and pay down some or all of your debts. You keep your assets and make regular payments to a trustee who distributes them to creditors.
Why it matters to distressed homeowners: Chapter 13 can be a powerful tool to stop foreclosure and catch up on missed payments over time. The automatic stay in Chapter 13 may be more durable than in Chapter 7, especially if you have income to fund a plan. However, you must have regular income to qualify. The court must approve your plan.
Related pages: Foreclosure Guide, Short Sale vs Foreclosure
Citizens Insurance
What it is: Citizens Property Insurance Corporation is a state-run, not-for-profit insurance company created by the Florida Legislature to provide property insurance to homeowners who cannot find coverage in the private market.
Why it matters to distressed homeowners: If you are a Citizens policyholder and fall behind on premiums, your coverage may lapse. An uninsured property cannot close a sale with a mortgage, and the lender may force-place expensive insurance. Additionally, Citizens policies have specific requirements that can affect a sale or refinance.
Related pages: All Options Overview
Deed in Lieu of Foreclosure
What it is: A deed in lieu of foreclosure, also called a dacion en pago, is a voluntary agreement where you transfer ownership of your property to the lender to satisfy your mortgage debt and avoid formal foreclosure proceedings.
Why it matters to distressed homeowners: A deed in lieu allows you to avoid the public auction process of foreclosure and may result in less credit damage than a completed foreclosure. However, you typically must be able to demonstrate hardship, and the property must be free of other liens. The lender must agree to accept the deed. A deficiency judgment is still possible unless negotiated otherwise.
Related pages: Deed in Lieu vs Short Sale, Foreclosure Guide
Deficiency Judgment
What it is: A deficiency judgment is a court order that holds you personally liable for the difference between what you owed on your mortgage and what the property sold for at foreclosure or short sale.
Why it matters to distressed homeowners: In Florida, lenders can pursue deficiency judgments after a foreclosure or short sale. The judgment can be used to garnish wages, levy bank accounts, or place liens on other property you own. Not all loans allow deficiency judgments. For example, Florida's homestead laws may protect against deficiency on a purchase money mortgage for your primary residence. However, refinanced loans, HELOCs, and investment properties may not have the same protection. Understanding whether a deficiency is possible is critical before choosing any option.
Related pages: Short Sale Guide, Foreclosure Guide
Documentary Stamps
What it is: Documentary stamps are a Florida state tax on documents that transfer real property. The tax is calculated based on the sale price. The rate is 70 cents per $100 of consideration.
Why it matters to distressed homeowners: Documentary stamps are typically paid by the seller at closing. For a homeowner with little or no equity, this is one more cost that must be covered. In a short sale, the lender may or may not agree to pay this cost. Understanding seller closing costs helps you evaluate your net proceeds.
Related pages: Short Sale Guide, Sell House Fast
Due-on-Sale Clause
What it is: A due-on-sale clause, also called an alienation clause, is a provision in most mortgage contracts that allows the lender to demand immediate full repayment of the loan if the property is transferred to someone else without the lender's permission.
Why it matters to distressed homeowners: If you are considering a creative solution like a subject-to transaction where you transfer title while the existing mortgage remains in your name, the due-on-sale clause gives the lender the right to call the loan due. While enforcement varies, this risk is real and should be discussed with a real estate attorney.
Related pages: Subject-To Explained, Creative Solutions
Earnest Money
What it is: Earnest money is a deposit a buyer makes to show they are serious about purchasing a property. It is held in escrow and applied to the purchase price at closing.
Why it matters to distressed homeowners: When selling your home, the buyer's earnest money deposit is held in escrow by a title company. If the buyer backs out without a contractual reason, you may be entitled to keep the deposit. This can be meaningful if you are relying on the sale to resolve a financial situation.
Related pages: Sell House Fast
Escrow
What it is: Escrow refers to a neutral third party that holds funds, documents, and instructions during a real estate transaction until all conditions of the sale are met. It also refers to the account your mortgage servicer manages to pay property taxes and insurance on your behalf.
Why it matters to distressed homeowners: If your escrow account for taxes and insurance is short (an escrow shortage), your monthly payment may increase. This can add to the financial strain if you are already struggling. During a sale, the escrow process protects both buyer and seller by ensuring all funds are properly handled.
Related pages: Mortgage Help
Flood Zone
What it is: A flood zone is a geographic area defined by FEMA based on its risk of flooding. Flood zones determine whether flood insurance is required by mortgage lenders.
Why it matters to distressed homeowners: Florida has many properties in high-risk flood zones. Flood insurance can be expensive and may affect affordability, especially when selling. If you are in a flood zone and fall behind on insurance payments, your lender may force-place a more expensive policy.
Related pages: All Options Overview
Forbearance
What it is: Forbearance is an agreement with your mortgage servicer that temporarily reduces or suspends your monthly mortgage payments for a set period. It does not forgive the missed payments; they must eventually be repaid.
Why it matters to distressed homeowners: Forbearance can provide immediate relief if you are experiencing a short-term financial hardship such as job loss, medical emergency, or natural disaster. At the end of the forbearance period, you must repay the missed amounts through a repayment plan, loan modification, deferral, or other arrangement. You should understand exactly what repayment options will be available when the forbearance ends before agreeing to the terms.
Related pages: Can't Pay Your Mortgage, Loan Modification
Four-Point Inspection
What it is: A four-point inspection is a limited property inspection that evaluates four specific systems: the roof, electrical system, plumbing, and HVAC. Florida insurance companies often require this for older homes before issuing a policy.
Why it matters to distressed homeowners: If you are selling, the buyer's insurance company may require a four-point inspection. Issues found during the inspection could affect the buyer's ability to get insurance or increase their costs. This can complicate or delay a sale. If you are keeping the home and switching insurers, a poor inspection may result in higher premiums.
Related pages: Sell House Fast
Homestead Exemption
What it is: Florida's homestead exemption is a constitutional protection that reduces the taxable value of your primary residence by up to $50,000 for property tax purposes. It also provides significant protection from creditors and may limit property tax increases.
Why it matters to distressed homeowners: The homestead exemption is one of Florida's most important homeowner protections. It can help reduce your annual property tax bill, keeping more money in your pocket. More importantly, Florida's homestead protection shields your primary residence from most creditors (though not from your mortgage lender). If you are considering options, understanding your homestead rights is critical.
Related pages: All Options Overview
Intangible Tax
What it is: Florida's intangible tax was previously a tax on intangible personal property such as stocks, bonds, and mortgages. However, as of 2007, the intangible tax on mortgages was repealed for most transactions. It may still appear in older documents or discussions.
Why it matters to distressed homeowners: While the intangible tax on mortgages is largely a thing of the past, some older mortgage documents may reference it. Understanding that this tax no longer applies can help when reviewing older loan documents. Documentary stamps (not intangible tax) are the current transfer tax in Florida.
Related pages: Short Sale Guide
Judicial Foreclosure
What it is: Judicial foreclosure is the legal process in Florida where a lender files a lawsuit against a homeowner to obtain a court order to sell the property. Florida is a judicial foreclosure state, meaning all foreclosures go through the court system.
Why it matters to distressed homeowners: Because Florida requires judicial foreclosure, you have certain rights and protections. You must be properly served with notice of the lawsuit. You have the right to respond, request mediation, and raise defenses. The court process typically takes longer than in non-judicial states, giving you more time to explore options like a short sale, loan modification, or deed in lieu. However, the process can still move relatively quickly if you do not respond.
Related pages: Foreclosure Guide, Florida Foreclosure Guide
Lis Pendens
What it is: Lis pendens is Latin for "pending lawsuit." It is a formal notice recorded in the public records that a lawsuit has been filed affecting a specific property. In Florida, a lender records a lis pendens when they begin a foreclosure lawsuit.
Why it matters to distressed homeowners: A lis pendens is the first official public notice that your property is in foreclosure. It clouds the title, making it difficult to sell or refinance the property without resolving the lawsuit. Once you see a lis pendens, you should act quickly to understand your options. The clock is now running on the foreclosure process.
Related pages: Foreclosure Guide, Florida Foreclosure Guide
Loss Mitigation
What it is: Loss mitigation is the department within a mortgage servicer that works with homeowners who are having trouble making payments. Their goal is to find an alternative to foreclosure that minimizes the lender's financial loss.
Why it matters to distressed homeowners: Loss mitigation is your primary point of contact with your lender when you are struggling. They can offer options such as forbearance, loan modification, repayment plans, short sales, and deeds in lieu of foreclosure. You should always contact loss mitigation as early as possible when you start having trouble. Be prepared to provide financial documentation and explain your hardship.
Related pages: Mortgage Help, Loan Modification
Mediation
What it is: Mediation is a voluntary or court-ordered process where a neutral third party (the mediator) helps you and your lender try to reach an agreement about your mortgage without going to trial. Florida's foreclosure mediation programs vary by county.
Why it matters to distressed homeowners: Mediation can be an effective way to negotiate a solution with your lender, whether that is a loan modification, short sale, or other arrangement. Some Florida counties have mandatory foreclosure mediation programs. Mediation is generally less expensive and faster than litigation. Having a real estate attorney or experienced professional represent you at mediation can be very helpful.
Related pages: Foreclosure Guide, Mortgage Help
Mortgage Servicer
What it is: A mortgage servicer is the company that handles the day-to-day management of your mortgage loan: collecting payments, managing escrow accounts, sending statements, and handling customer service. Your servicer may be different from the original lender.
Why it matters to distressed homeowners: Your servicer is the company you call when you have trouble making payments. They are required by federal law to have loss mitigation departments and consider you for options. Servicers change frequently through mortgage transfers. You should always know who your current servicer is and how to contact their loss mitigation department. Not all servicers offer the same options, and some are more difficult to work with than others.
Related pages: Mortgage Help
Option Fee
What it is: An option fee is a payment made by a potential buyer to a seller for the right to purchase the property at a specific price within a specific timeframe. It is most commonly used in lease-option or rent-to-own arrangements.
Why it matters to distressed homeowners: If you are considering a creative solution like a lease-option, the option fee can provide you with immediate cash while keeping the possibility of a future sale. However, option fees can also create complications if the buyer does not complete the purchase. You should have a real estate attorney review any option agreement before signing.
Related pages: Creative Solutions, Subject-To Explained
Proof of Claim
What it is: A proof of claim is a document filed by a creditor in a bankruptcy case to assert their right to be paid from the bankruptcy estate. In a Chapter 13 case, the mortgage servicer files a proof of claim showing the amount you owe.
Why it matters to distressed homeowners: The proof of claim determines how much you must pay through your Chapter 13 plan to catch up on mortgage arrearages. If the servicer files an incorrect amount, you should object. Reviewing the proof of claim with your bankruptcy attorney is important to ensure the numbers are accurate.
Related pages: Foreclosure Guide
Reinstatement
What it is: Reinstatement is the process of bringing your mortgage current by paying the total amount you are behind (including late fees and other charges) in a single lump sum. After reinstatement, the loan continues as if no default occurred.
Why it matters to distressed homeowners: Reinstatement is the simplest way to resolve a default, but it requires having enough cash on hand to cover the full arrearage. Many distressed homeowners cannot afford reinstatement, which is why alternatives like loan modifications, repayment plans, and forbearance exist. Florida law generally allows you to reinstate your mortgage up until a certain point in the foreclosure process, though the deadline may be as early as the day before the foreclosure sale.
Related pages: Mortgage Help, Foreclosure Guide
REO (Real Estate Owned)
What it is: REO refers to a property that has been taken back by a lender after an unsuccessful foreclosure auction. When no buyer bids enough at the foreclosure sale, the property becomes bank-owned.
Why it matters to distressed homeowners: An REO property means the foreclosure process has completed and the lender now owns the home. At this point, you typically must vacate the property. REO properties are often sold "as-is" by the bank, sometimes at a discount. Understanding the REO stage can help you recognize when it is too late to pursue certain options.
Related pages: Foreclosure Guide, Short Sale Guide
Save Our Homes
What it is: The Save Our Homes amendment is a Florida constitutional provision that limits annual increases in assessed value of homestead properties to 3% or the Consumer Price Index, whichever is lower. It also allows you to transfer some of your accumulated assessment benefit to a new Florida home.
Why it matters to distressed homeowners: Save Our Homes can significantly reduce your property tax burden, especially if you have owned your home for many years. If you sell and buy a less expensive home, you may be able to transfer some of your tax benefit (portability). This can affect the financial math when deciding whether to sell or stay.
Related pages: All Options Overview
Short Sale
What it is: A short sale is a transaction where your mortgage lender agrees to accept less than the full loan balance as payment for the property. The buyer pays the reduced amount, and the lender forgives the remainder.
Why it matters to distressed homeowners: A short sale can help you avoid foreclosure when you owe more than the property is worth and cannot continue making payments. It typically causes less credit damage than a foreclosure and gives you more control over the process. However, lender approval is required and is not guaranteed. The process can take months. The forgiven debt may have tax implications, and a deficiency judgment is possible depending on the loan type.
Related pages: Short Sale Guide, Short Sale vs Foreclosure, Step by Step Process
Subject-To Transaction
What it is: A subject-to transaction is a real estate deal where a buyer takes title to a property "subject to" the existing mortgage. The loan stays in the seller's name, and the buyer agrees to make the payments.
Why it matters to distressed homeowners: A subject-to sale can be a creative solution when you need to transfer ownership but cannot sell through traditional means, such as when you have negative equity or the property needs major repairs. However, the mortgage remains in your name, which means your credit is affected if the buyer stops making payments. The due-on-sale clause in most mortgages gives the lender the right to call the loan due. This is a complex transaction that requires careful legal and financial review before proceeding.
Related pages: Subject-To Explained, Creative Solutions
Title Company
What it is: A title company is a third-party firm that researches the property's ownership history, issues title insurance, and facilitates the closing process for real estate transactions. They ensure the title is clear and handle the transfer of funds.
Why it matters to distressed homeowners: The title company plays a key role in any sale, including short sales and creative transactions. They identify any liens, judgments, or other claims against the property. In a short sale, the title company works with the lender to ensure all lienholders are paid appropriately. Choosing a reputable title company is important.
Related pages: Short Sale Guide, Sell House Fast
Not Sure Which Terms Apply to Your Situation?
We can help you understand how these concepts apply to your specific circumstances and what options may be available to you.
Schedule Your Free Consultation