Home Loan Assistance Glossary
Home loan assistance terms in simple language
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A
Appraisal or Appraised Value
The professional opinion of a licensed and independent Appraiser about the value of your home. The Appraiser visits the home, evaluates its interior and exterior condition, and compares the property to other homes recently sold in the area.
C
Capitalization
Used to bring a loan in default current by adding delinquent and unpaid interest, fees and/or escrow advances to the unpaid balance of the loan.
Cash Contribution
Depending upon your financial situation and at the investor's discretion, a cash contribution or promissory note for future payment may be requested. A contribution does not always imply that the remaining deficiency will be waived.
Clear Title
A title that is marketable and free of liens or legal questions regarding ownership of the property.
D
Deed in Lieu of Foreclosure or Deed in Lieu
Used as an alternative to foreclosure, a deed in lieu of foreclosure is used to sign over the title to the property to the lender because the mortgage payments cannot be made. May also be referred to as deed in lieu or 'voluntary conveyance.' A deed in lieu of foreclosure will have a negative impact on your credit.
Default
If you are unable to keep payments up to date or meet the other terms of the loan outlined in your mortgage loan documents, the loan is considered to be in default.
Deferral (also known as Forbearance)
A postponement of home loan payments for a set period of time. Interest will still accrue but those payments can be deferred for an agreed-upon number of months. After that is over, the lender will develop a repayment plan to make the regularly scheduled mortgage payments while catching up on the deferred payments.
Delinquent
Failure to make payments on time.
E
Escrow
This is where the lender collects part of the mortgage payment in a special account to pay taxes and insurance premiums when they become due. The amount in this account is based on the estimated amount necessary to pay these obligations each year.
Extension
If you’re experiencing a temporary hardship and are less than 90 days behind on home loan payments, you may be eligible for an extension. The lender will suspend a number of home loan payments for a period of time and add those payments to the back end of the loan – extending the length of the loan term. To be considered for an extension, proof of the ability to make future payments will be required.
F
Fair Market Value (FMV)
The likely selling price of a home between a willing buyer and seller on the open market. The fair market value is usually determined by an Appraiser for a new mortgage or home equity loan. For a short sale, a specialist works on behalf of the investor to get the best possible fair market value.
Forbearance
A temporary agreement between you and the lender to postpone loan payments for a set period of time during a temporary hardship. At the end of the postponement, overdue payments can be paid all at once, the past due amount can be added to the back-end of the mortgage, or increase the monthly mortgage payments until the past due amount is repaid.
Foreclosure
A legal procedure where a lender sells a property securing a mortgage loan at a public auction or sale to repay a borrower's defaulted loan. Foreclosure proceedings typically begin after no payments are made for 60 days or more. If there are no successful third party bidders at the foreclosure auction, title to the property will be transferred to the lender, which may then market and sell the property (known as an REO property) to recover its losses on the loan.
H
Home Retention
Keeping the home in the face of foreclosure is home retention. Home retention options generally involve loan modifications, forbearance, and repayment plans. Asking for home retention help when struggling to make mortgage payments is the best strategy to try to keep the home.
I
Imminent Default
When a borrower is current on the mortgage loan but is at risk of not being able to continue paying the monthly home loan payments due to financial hardship.
Investor
The person or institution that owns the mortgages or mortgage-backed securities, provides the funds the homeowner borrows to purchase a property. Many loans have multiple investors, and each investor can set different policies regarding available remedies for loans in default.
L
Lien
The legal claim a creditor has to a property that is used as collateral or security for repayment of a debt. All outstanding liens must be paid before ownership of a property can be transferred from one party to another.
Loan Modification
A change to the original terms of a loan. These could include lowering the interest rate, extending the term or maturity date of the loan, moving from an adjustable to a fixed-rate loan, deferring some portion of the unpaid principal balance to the end of the loan, and/or forgiving some portion of the unpaid principal balance.
P
Partial Claim
A no-interest loan given by a lender on an FHA-insured loan to pay back any missing or partial mortgage payments and default-related fees and reinstate the loan. This involves a new note and mortgage/deed of trust. This is a one-time only loan. The partial claim loan is paid back when your mortgage loan is paid off or when your FHA insurance is cancelled.
R
Redemption Period
After foreclosure sale of a home in certain states where a homeowner cannot be removed or evicted from the home. This provides the homeowner additional time to pay off the loan in full to avoid foreclosure.
Repayment Plan
If behind on payments, the lender may agree to a repayment plan that allows regular scheduled mortgage payments to be made, plus pay off a portion of the past due amounts over time.
S
Second Mortgage / Second Lien
The traditional term for a home equity loan or line of credit because it is generally not the first or primary lien on the title, which usually is made to purchase the home.
Short Sale
If the mortgage payments are no longer affordable and the house is worth less than what is owed, you can sell your house at the current fair market value. Because the proceeds from the sale may not pay off all that’s owed, the investor or owner of the loan must approve the sale. When selling, the goal is for an amount greater than any and all outstanding liens against the property. You may still be responsible for any deficiency still owed to the lender.
T
Tax Information Form (IRS Form 4506-C)
This form allows an individual, or an outside third party such as your bank, to verify tax information reported on a federal income tax return for one or more years. IRS Form 4506-C adds convenience by giving you one piece of paper to sign and return as opposed to collecting years of tax documents, making copies and sending those in.
Temporary Hardship
A situation where you experience a loss of income but the circumstances have an end in sight, such as a natural disaster, job loss, or medical condition that temporarily prevents you from working.
Call us
800.669.6650
800.669.6650 Monday through Friday8 a.m. – 8 p.m. Eastern
Help is available in English, Spanish and many other languages.