Glossary of Terms

Glossary of Terms

Key Mortgage Terms and Definitions

In today's world keeping up with the real estate terminology can be a challenge in itself!  To help out, here are definitions of the most common real estate terms that you may hear being tossed around.

Delinquency- Failure to make a payment when it is due.  The condition of a loan when a scheduled payment has not been received by the due date, but generally used to refer to a loan for which payment is 30 or more days past due.

Forbearance- The lender's postponement of legal action when a borrower is delinquent.  It is usually granted when a borrower makes satisfactory arrangements to bring the overdue mortgage payments to to date.

Foreclosure- The legal process by which a property that is mortgage as security for a loan may be sold and the proceeds of the sale applied to the mortgage debt.  A foreclosure occurs when the loan becomes delinquent because payments have not been made or when the borrower is in default for a reason other than failure to amke timely mortgage payments.

Foreclosure Prevention- Steps by which the servicer works with the borrower to find a permanent solution to resolve an existing or impending loan delinquency.

Investor- The owner of the loan.  These guys are behind the scenes which means you will never speak with them.

Loss Mitigation- The department that works directly with homeowners, real estate agents and other third parties to resolve situations with homeowners that are facing difficulties.

Mortgage- A legal document that pledges property to a lender as security for the repayment of the loan.  The term is also used to refer to the loan itself.

Mortgage Insurance- Insurance that protects lenders against losses caused by a borrower's default on a mortgage loan.  Mortgage insurance (or MI) typically is required if the borrower's down payment is less than 20% of the purchase price.  Many people avoided getting mortgage insurance or "MI" by getting two loans- one for 80% and the other for 20%.

Notice of Default (NOD)- A notification given to a borrower stating that he or she has not made their payments by the predetermined deadline.  In the state of California a lender can file this as soon as 90 days of missed payments has elapsed.  The NOD dictates that if the money owed (plus an additional legal fee) is not paid in a given time, the lender may choose to foreclose the borrower's property.  Any other people whom may be affected by the foreclosure may also receive a copy of the notification.

Notice of Trustee Sale- An official notice that is posted, mailed, published/advertised and recorded by the Trustee at the direction of the lender indicating the lenders intention to complete the foreclosure process and sell the property at public auction.  The notice typically includes a specific date, time and location of the sale.

Postponement- The trustee's sale may be postponed by the Trustee at the discretion of the lien holder (your lender).

Servicer- A firm that performs servicing functions, including collecting mortgage payments, paying the borrower's taxes and insurance and generally managing borrower escrow accounts.  This is who you send your payment to and also who you communicate with.  AKA: your lender.

Trustee- A (foreclosure) trustee is appointed by the lender when a mortgage reaches default status for the purpose of processing or completing the foreclosure.

Alternative to Foreclosure

Deed-in-Lieu- The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure.  Also called a "voluntary conveyance."  Basically you sign the title back over to the bank, these are rare.

Loan Modification- Any adjustment to the terms of a mortgage loan, including changes to the interst rate, loan balance, or loan term to assist a homeowner who is either behind on their mortgage or one whom mortgage difficulty appears unavoidable.

Repayment Plan- An arrangement by which a borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments.

Short Re-Finance- A short re-fi, short refinance, or also known as a short payoff, is a transaction, where the curent lender agrees to accept less than the full amount owned on property.  This process is similar to a short sale but, instead of the property being sold, it is refinanced with a new lender.  The short refinance allows the homeowner to retain ownership of the property, while at the same time avoiding a foreclosure or possible bankruptcy.  In most cases this process involves an agreement to share any future equity with the lender (50/50)

Short Sale- The sale of a home which is completed through a negotiation with the existing lender to accept less than the full amount owed to satisfy the debt allowing the debt to be "paid off" short. 

Contact Information

The Barringer Team
Century 21 M&M and Associates
912 W 11th Street
Tracy CA 95376
Fax: 209-229-7426
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