Terms Flashcards
Servicer
The servicer is typically the company to which borrowers make there mortgage payments. The servicer may or may not be the company that owns the loan. The servicer is also commonly and sometimes incorrectly referred to as the lender, which is the sellers mortgage company
Investor
That investor is the party/entity that currently owns the note and mortgage or deed of trust. The investor has the final approval on any short sale
Borrower
In distressed property transactions, the borrower is the property owner/seller. The borrower is not the buyer. The term borrower is used by the investor/servicer to reference the party who is there borrower.
Purchaser
The purchaser is the buyer who has entered into a purchase agreement with the exiting short sale seller.
GSEs
The acronym GSEs refers to the government sponsored enterprises, which include Fannie Mae and Freddie Mac. GSEs were created to ensure that there would be affordable mortgages available to homebuyers. They establish a secondary market to package mortgages and sell them as mortgage back securities. They are under the jurisdiction of the federal housing finance agency (FHFA)
Mortgage
A mortgage is a loan to finance the purchase of real estate. The real estate itself is the asset used as a collateral for the mortgage. If the loan is not paid as agreed, the investor has the right to seize the asset (The real estate). It is the mortgage that puts the lien on the property.
Mortgage note
The mortgage note is the agreement to pay the mortgage. The terms of the repayment are spelled out in the note. It is the note that makes the borrower personally responsible for payment.
Deed of trust/trust deed
In some states, rather than using a note and a mortgage, real estate is sold using a deed of trust or a trust deed. In the states, the legal title of the property is held by a trustee who holds it as security for the loan until the loan is paid off. If the loan is is not paid as agreed the title to the property is already being held by a trustee, in the process of the investors obtaining the asset (The property) is much simpler and quicker.
Deed in Lieu of foreclosure
In some situations, rather than foreclosing on a borrower who is in distress, an investor/lender may allow the borrower to surrender the deed to the property voluntarily in exchange for a release of the note and mortgage.
Loan modification
A loan modification is a permanent change in one or more of the terms of a borrower’s loan, allowing the loan to be reinstated and resulting in a payment that the borrower can afford.
Notice of default (NOD)
The notice of default, or NOD, is an official notice from the servicer to the borrower that the borrower has defaulted on the mortgage. The NOD formally begins the foreclosure process. The NOD also outlines the reinstatement period.
Reinstatement Period
The reinstatement period is the time specified in the notice of default (NOD) and which borrowers can make all their outstanding payments, along with any late fees or expenses incurred by the servicer ; Bring their account current; No longer be in default. The length of this Reinstatement period can vary by state.
Redemption Period
The redemption Period is typically the time after the foreclosure sale that allows the owner the ability to redeem the property
Nonjudicial foreclosure
If the instrument is a deed of trust, a non-judicial foreclosure typically is used to execute the foreclosure proceedings.
Nonjudicial foreclosures generally take less time to complete then judicial foreclosures because the borrower pre-authorize the sale of the home in the loan document, which orders foreclosure upon default.
Judicial foreclosure
If the instrument is a mortgage, the judicial foreclosure or court ordered actions typically is used to execute the foreclosure proceedings.
In a judicial foreclosure, the lender/investor obtains the right to foreclose by filing and winning a lawsuit.
