Key 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 will here being tossed aroundMortgage—A legal document that pledges property to a lender as security for the repayment of the loan.  The term also is 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%

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. 

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

Foreclosure—The legal process by which a property that is mortgaged 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 the failure to make timely mortgage payments. 

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

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

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. 

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 up to date.

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)

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