Adjustable-Rate Mortgage (ARM)
A mortgage loan with an interest rate that can change at any time, usually in response to the market or Treasury Bill rates. These types of loans usually start off with a lower interest rate comparable to a fixed-rate mortgage.
Advance (HomeSaver Advance™)
A monetary advance to cure a delinquent loan.
Amortize
Paying off a debt by making regular installment payments over a set period of time, at the end of which the loan balance is zero.
Balloon Mortgage
A mortgage loan with initially low interest payments, but that requires one large payment due upon maturity (for example, at the end of seven years).
Buy-down Mortgage
A mortgage loan in which one party pays an initial lump sum in order to reduce the borrowers monthly payments.
Collections
The efforts a lender takes to collect past due payments.
Convertible ARM
An Adjustable-Rate Mortgage loan that can be converted into a fixed-rate mortgage during a certain time period.
Deed
A legal document under which ownership of a property is conveyed.
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."
Deferred Payments
Payments that are authorized to be postponed as part of a workout process to avoid foreclosure.
Delinquency
Failure to make a payment when it is due. A loan is generally considered delinquent when it is 30 or more days past due.
Equity
Ownership interest in a project after liabilities are deducted. Also referred to as your assets.
Escrow
A lender-held account where a homeowner pays money toward taxes and insurance of a home.
Escrow Account
The actual account where the escrow funds are held in trust.
Escrow Analysis
A periodic review of escrow accounts to make sure that there are sufficient funds to pay the taxes and insurance on a home when they are due.
Fixed-Rate Mortgage
A mortgage loan in which the interest rate remains the same for the life of the loan.
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.
Foreclosure
The legal process by which a property 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.
Foreclosure Prevention
Steps by which the servicer works with the borrower to find a permanent solution to resolve an existing or impending loan delinquency.
Hazard Insurance
Insurance coverage that pays for the loss or damage or a person's home or property.
Home Equity Line of Credit
A way of borrowing money against the equity or assets that you have in your home to pay for things such as home repairs, college education, or other personal uses.
Interest-Only Mortgage
A mortgage where the borrower pays only the interest on the loan for a specified amount of time.
Investment Property
A property not considered to be a primary residence that is purchased by an investor in order to generate income, gain profit from reselling or to gain tax benefits.
Investor
The owner of the loan on a property.
Lender Placed Insurance
Insurance placed on a home or property by a lender to protect their interest on collateral which secures the loan.
Modification
Any change to the terms of a mortgage loan, including changes to the interest rate, loan balance or loan term.
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.
Pre-foreclosure
The process in which a servicer works with a delinquent borrower to sell the house by a real estate agent prior to the foreclosure sale.
Refinance
Paying off an existing loan (such as a balloon mortgage) with a newer, usually lower rate loan.
Repayment Plan
A borrower promises to pay down past-due amounts on a mortgage while still making regular monthly payments.
Servicer
A firm that performs functions in support of a mortgage that include collecting mortgage payments, paying the borrower's taxes and insurance, and generally managing borrower escrow accounts.
Short-Sale
The process in which a servicer works with a delinquent borrower to sell the house by a real estate agent prior to the foreclosure sale.
Title
The documented evidence that a person or organization has ownership of real property.
Voluntary Conveyance
The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure; also called a "Deed-in-Lieu."
Work Out
A way to resolve or restructure a loan or prevent someone from going into foreclosure through a loan modification, forbearance or short sale.