Follow the house
From missed payment to bank-owned
Tap each stage to see what's happening and the words you'll hear. Timing depends on the state and the loan.
1Payment missedDelinquency
A payment is late. Most homeowners still have lots of options here.
Words you'll hear: Delinquency · Grace period · DPD · Forbearance
2Behind on the loanDefault
Payments are far enough behind that the loan is in default. The servicer starts calling and sending letters.
Words you'll hear: Default · Breach letter · Loss mitigation · Third-party authorization
3Notice of DefaultNOD recorded
The formal notice. For covered loans, federal rules generally hold the first notice until more than 120 days late.
Words you'll hear: NOD · Reinstatement · Payoff · Per diem interest
4Sale scheduledNotice of Sale
A sale date is set. Track the real date and confirm any postponement in writing.
Words you'll hear: NOS / NTS · Postponement · Short sale package · Deed in lieu
5AuctionTrustee or sheriff sale
The property is sold at auction. The lender often bids the debt it's owed.
Words you'll hear: Trustee sale · Credit bid · Third-party bidder · Redemption
6Bank-ownedREO
No buyer at auction, so the lender owns it. Now it's an REO listing for an asset manager.
Words you'll hear: REO · Asset manager · Cash for keys · Property preservation
Check yourself
Myth or true?
Eight things agents say. Tap to check yourself.
1“The homeowner got a foreclosure notice, so it's an REO now.”Myth or true?
2“We submitted the short sale package, so the auction is on hold.”Myth or true?
3“A $400,000 offer means $400,000 goes to the lender.”Myth or true?
4“The lien release means the seller owes nothing more.”Myth or true?
5“A BPO and an appraisal are basically the same thing.”Myth or true?
6“The servicer and the loan owner can be two different companies.”Myth or true?
7“Give the seller an as-is price and an after-repair price.”Myth or true?
8“An empty-looking house means you can go in and change the locks.”Myth or true?
20 terms
The basics
Who's who and the core words
Start with these core terms 8
Typical path: delinquency → default → possible foreclosure → possible REO. A short sale, modification, reinstatement, or other resolution may change that path. A third-party auction purchase does not become lender REO.
DefaultTap to flip
Default
Failure to meet a loan obligation, such as making required payments. A loan can also default for reasons other than missed payments.
Say it like this: “You're behind on what the loan requires, usually payments.”
DelinquencyTap to flip
Delinquency
A payment is overdue. Delinquency describes payment status; default describes a failure under the loan agreement.
Say it like this: “A payment is late.”
PreforeclosureTap to flip
Preforeclosure
The period before a foreclosure sale is completed. The borrower generally still owns the property; a notice does not make it bank-owned.
Say it like this: “The bank has started the process, but it's still your house.”
ForeclosureTap to flip
Foreclosure
The legal process used to enforce a lien and sell the property to satisfy a secured debt. Procedures depend on state law.
Say it like this: “The legal process the lender uses to take back and sell the home.”
REOReal Estate OwnedTap to flip
REO — Real Estate Owned
Property acquired by a lender, investor, or similar entity, typically after foreclosure or a deed in lieu. Often called bank-owned, even when the owner is not a bank.
Say it like this: “The lender owns it now. The foreclosure already happened.”
BPOBroker Price OpinionTap to flip
BPO — Broker Price Opinion
An agent or broker’s written estimate of probable selling price. It may include an interior inspection or exterior observations. It is not an appraisal.
Say it like this: “Think of it as a CMA on steroids, written for the bank.”
Short saleTap to flip
Short sale
A sale in which available proceeds are insufficient to fully pay one or more secured debts and the affected creditor approves a reduced payoff to release its lien.
Say it like this: “The bank agrees to take less than you owe so the house can sell.”
Loss mitigationTap to flip
Loss mitigation
The process of evaluating options to reduce losses from a troubled loan. Options can involve keeping the home or transferring ownership.
Say it like this: “The bank's process for finding a way out besides foreclosure.”
People documents and loan basics 12
Borrower / mortgagorTap to flip
Borrower / mortgagor
The person or entity obligated on the loan; mortgagor refers to the party granting the mortgage.
Lender / mortgageeTap to flip
Lender / mortgagee
The lender provides financing; mortgagee refers to the party receiving the mortgage security interest. The original lender may later transfer the loan.
Investor / loan ownerTap to flip
Investor / loan owner
The entity that owns the loan or an interest in it. Its requirements may control loss mitigation and approval decisions.
Servicer / subservicerTap to flip
Servicer / subservicer
The company managing payments and day-to-day loan administration. A subservicer performs servicing work for another entity.
TrusteeTap to flip
Trustee
In a deed-of-trust arrangement, the party with duties under that instrument, which may include conducting an authorized nonjudicial sale.
Asset manager / outsourcerTap to flip
Asset manager / outsourcer
An asset manager oversees property disposition for the owner. An outsourcer manages assigned work or vendors on the owner’s behalf.
Promissory noteTap to flip
Promissory note
The written promise to repay the debt, including repayment terms. It is distinct from the document securing the loan.
Mortgage / deed of trustTap to flip
Mortgage / deed of trust
A security instrument tying the property to repayment of the debt. The document used and enforcement process vary by state.
Lien / lienholderTap to flip
Lien / lienholder
A legal claim against property securing an obligation; the lienholder holds that claim. Mortgages, taxes, judgments, and HOA debts can create liens.
First lien / junior lienTap to flip
First lien / junior lien
A first lien generally has priority over junior liens. Recording order matters, but statutes and other rules can change priority.
Assignment / servicing transferTap to flip
Assignment / servicing transfer
An assignment transfers a loan-related interest; a servicing transfer changes who administers the loan. These are different events.
Principal / arrearage / escrow shortageTap to flip
Principal / arrearage / escrow shortage
Principal is unpaid borrowed money. Arrearage is overdue amounts. An escrow shortage is insufficient funds for escrow requirements such as taxes and insurance.
84 terms
Before the sale
Default, notices, court and auction
Default and foreclosure terms 12
Agent practice: Track the actual sale date and verify any postponement with the responsible party. A listing, offer, or short-sale submission alone does not establish that a sale has stopped.
NODNotice of DefaultTap to flip
NOD — Notice of Default
A formal notice identifying a default. Its legal significance, recording requirements, and cure period depend on the jurisdiction and loan.
Breach letter / demand letterTap to flip
Breach letter / demand letter
A notice describing a loan violation and amounts or actions needed to cure it. It may precede foreclosure notices.
AccelerationTap to flip
Acceleration
Making the full unpaid loan balance due after a qualifying default and required procedures.
Reinstatement / cureTap to flip
Reinstatement / cure
Bringing a loan back into compliance by paying required overdue amounts and charges or otherwise correcting the default. Availability and deadlines vary.
Payoff / payoff statementTap to flip
Payoff / payoff statement
The amount required to satisfy the loan in full as of a specified date. It can include interest, fees, and advances beyond principal.
Per diem interestTap to flip
Per diem interest
Interest accruing each day. A payoff may change when the closing date changes.
Judicial foreclosureTap to flip
Judicial foreclosure
A foreclosure pursued through a court action.
Nonjudicial foreclosureTap to flip
Nonjudicial foreclosure
A foreclosure using an authorized power-of-sale process rather than a foreclosure lawsuit. Required notices and protections still apply.
Lis pendensTap to flip
Lis pendens
A recorded notice that litigation affects the property. It is not itself proof that a foreclosure sale has occurred.
NOS / NTSNotice of Sale / Notice of Trustee SaleTap to flip
NOS / NTS — Notice of Sale / Notice of Trustee Sale
Notice of a scheduled foreclosure sale. Names, contents, publication, and deadlines vary by state.
Trustee sale / sheriff sale / credit bidTap to flip
Trustee sale / sheriff sale / credit bid
Foreclosure auction terminology depends on the process. A credit bid lets an eligible secured creditor bid using debt owed rather than only cash.
Postponement / redemption / automatic stayTap to flip
Postponement / redemption / automatic stay
Postponement moves a sale date. Redemption is a legally available right to recover property by payment. A bankruptcy automatic stay generally pauses covered collection actions, subject to exceptions and court orders.
Default servicing and borrower communications 12
Agent practice: Keep a communication log with date, contact, department, file number, exact request, response, and next deadline. Distinguish what was requested from what was confirmed.
DPDDays Past DueTap to flip
DPD — Days Past Due
The number of days a required payment is overdue under the applicable calculation. Confirm the reporting date and oldest unpaid installment.
Delinquency bucket / aging reportTap to flip
Delinquency bucket / aging report
A grouping such as 30, 60, or 90 days past due, and a report organizing accounts by age. These are status indicators, not universal foreclosure schedules.
Rolling delinquencyTap to flip
Rolling delinquency
A pattern in which payments continue but remain an installment behind. Regular recent payments do not necessarily mean the account is current.
Early intervention / continuity of contactTap to flip
Early intervention / continuity of contact
Servicing processes for contacting delinquent borrowers and providing access to help. Applicable federal requirements have scope limits and exceptions.
Right-party contact / contact attemptTap to flip
Right-party contact / contact attempt
Right-party contact reaches the borrower or an authorized person. A call, letter, or visit attempt does not necessarily establish that contact occurred.
Collections / default servicingTap to flip
Collections / default servicing
Collections seeks overdue amounts. Default servicing manages troubled accounts and related options, which may include loss mitigation, foreclosure coordination, and property monitoring.
Foreclosure referral / foreclosure holdTap to flip
Foreclosure referral / foreclosure hold
Referral sends a file for foreclosure handling. A hold pauses specified activity; confirm its scope, reason, authority, and expiration rather than assuming all activity stopped.
Dual trackingTap to flip
Dual tracking
Pursuing foreclosure while a borrower is being considered for loss mitigation. Federal and state restrictions depend on the facts; not every parallel activity is automatically prohibited.
NOENotice of ErrorTap to flip
NOE — Notice of Error
A borrower’s written assertion of a covered servicing error. Special submission addresses and procedures may apply; an agent complaint is not automatically a qualifying notice.
RFI / QWRTap to flip
RFI / QWR
Request for Information and Qualified Written Request. These are written servicing inquiry concepts with legal requirements; the labels are not interchangeable with every email to a servicer.
Successor in interest / confirmed successorTap to flip
Successor in interest / confirmed successor
A person acquiring a qualifying ownership interest through events such as death or certain family transfers. Confirmation concerns identity and ownership; it does not itself create personal liability.
Payoff dispute / servicing complaintTap to flip
Payoff dispute / servicing complaint
A challenge to account figures or servicing conduct. Document the issue and route it promptly; making a complaint does not itself cancel a foreclosure sale.
Foreclosure instruments and recorded notices 12
Agent practice: Use the legal description, recording information, and title evidence to match documents to the correct property. Similar owner names and street addresses can produce incorrect matches.
Trustor / beneficiaryTap to flip
Trustor / beneficiary
In a deed of trust, the trustor grants the security interest; the beneficiary receives its benefit. The trustee has a separate role.
Power of saleTap to flip
Power of sale
A provision authorizing sale through a legally permitted process after default and required procedures. It does not eliminate notice requirements.
Substitution of trusteeTap to flip
Substitution of trustee
A document replacing the trustee under a deed of trust. Verify its authority and recording as required for the particular file.
Allonge / endorsementTap to flip
Allonge / endorsement
An allonge is an attached paper used for note endorsements. An endorsement transfers or identifies rights in the note, subject to applicable law.
Chain of title / chain of assignmentsTap to flip
Chain of title / chain of assignments
The sequence of ownership transfers for real estate, or transfers of specified loan interests. They are related records but are not the same chain.
Recording / constructive noticeTap to flip
Recording / constructive notice
Recording places a document in public land records. Constructive notice means the law treats someone as having notice under specified circumstances.
Legal description / APNTap to flip
Legal description / APN
The legal description identifies the real property interest. An Assessor’s Parcel Number is an administrative identifier; an address or APN may not replace the required legal description.
Election to sell / notice of accelerationTap to flip
Election to sell / notice of acceleration
An election invokes a sale remedy; acceleration demands the full debt. Whether a notice accomplishes one or both depends on its wording and governing law.
Affidavit / declarationTap to flip
Affidavit / declaration
Formal statements used to establish facts, such as mailing, authority, or loan status. The oath or penalty-of-perjury requirements depend on the document.
Request for notice / notice recipientTap to flip
Request for notice / notice recipient
A recorded or otherwise recognized request to receive designated notices, and the party entitled to receive them. Required recipients vary by proceeding.
Rescission of NOD / cancellation of sale noticeTap to flip
Rescission of NOD / cancellation of sale notice
Withdrawal of a specified recorded default or sale notice. Confirm what was rescinded; it does not necessarily forgive debt or release the security instrument.
Reconveyance / release of mortgageTap to flip
Reconveyance / release of mortgage
Documents used to release a deed of trust or mortgage after satisfaction or another authorized release. Verify recording and the obligations actually released.
Judicial foreclosure and court proceedings 12
Agent practice: Court deadlines belong with counsel. A hearing, filed motion, or pending appeal does not by itself establish that an auction is stayed.
Complaint / petitionTap to flip
Complaint / petition
The pleading that begins a court case and states requested relief. Filing it does not itself transfer title or establish that allegations are proven.
Plaintiff / defendantTap to flip
Plaintiff / defendant
The party bringing the lawsuit and the party against whom it is brought. Several owners, borrowers, or lienholders may be named.
Summons / service of processTap to flip
Summons / service of process
A summons gives formal notice of a case. Service delivers required papers using legally authorized methods; deadlines depend on the proceeding.
Answer / affirmative defenseTap to flip
Answer / affirmative defense
An answer responds to allegations. An affirmative defense raises a legal reason relief should be limited or denied. An attorney should assess filings and deadlines.
Default / default judgmentTap to flip
Default / default judgment
In litigation, default concerns failure to respond or defend as required; a default judgment is a court ruling. This differs from default under a loan agreement.
Summary judgmentTap to flip
Summary judgment
A court decision resolving a claim without trial when the legal standard is met. It is not merely an accelerated auction date.
Judgment of foreclosure / decree of saleTap to flip
Judgment of foreclosure / decree of sale
A court order establishing foreclosure relief or directing a sale. Read the order for amounts, conditions, and remaining procedural steps.
Writ of execution / order of saleTap to flip
Writ of execution / order of sale
Court process authorizing enforcement or sale as permitted by law. The name and issuing authority vary by jurisdiction.
Sheriff / referee / commissionerTap to flip
Sheriff / referee / commissioner
Officials or court-appointed persons who may conduct or administer a judicial sale. Their duties are defined by local law and the court order.
Sale confirmation / ratificationTap to flip
Sale confirmation / ratification
Court approval of a sale where required. A winning bid may precede the point at which the sale becomes legally final.
TRO / injunctionTap to flip
TRO / injunction
A Temporary Restraining Order or other injunction can prohibit specified acts. Read the actual order and effective period; a request for one is not an entered order.
Dismissal / dismissal without prejudiceTap to flip
Dismissal / dismissal without prejudice
Dismissal ends a case or claim. Without prejudice generally leaves room to bring it again, subject to applicable limits; it does not necessarily cancel the underlying debt.
Nonjudicial foreclosure and borrower protections 12
State context: Nevada and California both use deed-of-trust terminology, but their notice, mediation, redemption, and deficiency rules differ. Use the state’s current law and the actual file; do not import one state’s calendar into another.
Statutory foreclosure processTap to flip
Statutory foreclosure process
A sale process governed by legislation, often using a power of sale. There is no single national sequence or timetable.
Cure period / reinstatement deadlineTap to flip
Cure period / reinstatement deadline
The time allowed to address a default and the last point for a particular reinstatement right. Exact deadlines differ by law and transaction.
Notice by mailing / posting / publicationTap to flip
Notice by mailing / posting / publication
Different ways of giving legally required notice. Completion of one method may not satisfy requirements for the others.
Proof of mailing / proof of publicationTap to flip
Proof of mailing / proof of publication
Evidence that specified notices were sent or published. These documents help establish compliance but require review in context.
First notice or filing / foreclosure startTap to flip
First notice or filing / foreclosure start
Terms identifying the action that legally begins foreclosure for a particular rule. A collection call or late notice may not be that action.
Federal 120-day restrictionTap to flip
Federal 120-day restriction
For covered loans, Regulation X generally restricts the first foreclosure notice or filing until more than 120 days delinquent, subject to exceptions. This is not a guaranteed sale delay.
Loss mitigation foreclosure restrictionTap to flip
Loss mitigation foreclosure restriction
A rule limiting specified foreclosure steps in qualifying application circumstances. Coverage, completeness, timing, and exceptions matter; submitting any document is not enough.
Foreclosure mediation / settlement conferenceTap to flip
Foreclosure mediation / settlement conference
A structured discussion about resolution. Participation rights, application procedures, and effects on sale timing depend on the governing program.
SCRAServicemembers Civil Relief ActTap to flip
SCRA — Servicemembers Civil Relief Act
Federal protections that can affect qualifying military borrowers and foreclosure proceedings. Applicability is fact-specific; refer potential coverage for legal review.
Moratorium / administrative holdTap to flip
Moratorium / administrative hold
A moratorium restricts specified activity for an identified period or category. An administrative hold is an operational pause; neither should be assumed to cover every loan or action.
Tender / payoff before saleTap to flip
Tender / payoff before sale
Tender is an offer of payment meeting applicable requirements. The amount, method, recipient, and timing needed to stop a sale must be verified.
Wrongful foreclosure / sale challengeTap to flip
Wrongful foreclosure / sale challenge
A claim that foreclosure violated legal requirements. An allegation does not automatically void a sale or authorize agents to disregard recorded title.
Foreclosure auction and bidding terminology 12
Critical distinction: A foreclosure auction enforces a lien. An auction of an already-owned REO asset markets the owner’s property. The word auction alone does not identify the legal process or contract terms.
Opening bid / minimum bidTap to flip
Opening bid / minimum bid
The amount at which bidding begins or the least acceptable bid under sale instructions. It may differ from debt, market value, or an online advertised estimate.
Reserve / reserve metTap to flip
Reserve / reserve met
A seller’s minimum acceptable price in an auction using a reserve. Some auction formats do not use one; verify whether the event is a statutory sale or an REO auction.
Beneficiary bid / credit bidTap to flip
Beneficiary bid / credit bid
A secured creditor’s bid using qualifying debt as credit instead of paying the entire bid in cash. Applicable law and bidding authority control the amount.
Full credit bid / partial credit bidTap to flip
Full credit bid / partial credit bid
A bid crediting the full qualifying debt amount, or less than that amount. These can have legal consequences beyond who wins the auction.
Third-party bidder / successful bidderTap to flip
Third-party bidder / successful bidder
A bidder other than the foreclosing creditor, and the winning bidder. Winning does not remove conditions governing payment, finality, or title transfer.
Bidder deposit / certified fundsTap to flip
Bidder deposit / certified funds
Money required to qualify or secure a bid, and payment in an accepted guaranteed form. Auction deposit rules differ from ordinary purchase-contract earnest money.
Bid increment / proxy bid / online bidTap to flip
Bid increment / proxy bid / online bid
The amount of each bid increase, a bid placed under authorized instructions, or an electronic bid. Platform and statutory rules determine what is permitted.
Crier / auctioneer / auction platformTap to flip
Crier / auctioneer / auction platform
The person announcing or conducting bidding, or the system receiving bids. A platform may display data without being the party authorized to confirm a legal postponement.
Continued sale / postponed sale / canceled saleTap to flip
Continued sale / postponed sale / canceled sale
A continued or postponed sale moves to another time. A canceled sale is withdrawn; a new sale may later be scheduled if legally permitted.
Subject to senior liens / lien survivalTap to flip
Subject to senior liens / lien survival
An auction purchase may remain burdened by claims with priority or other surviving interests. Do not assume the sale erases every lien.
Buyer premium / auction feeTap to flip
Buyer premium / auction fee
Additional charges in some auction formats. They are not universal statutory foreclosure charges; review the actual terms before calculating a bid or buyer cost.
Redemption exposure / auction due diligenceTap to flip
Redemption exposure / auction due diligence
A qualifying redemption right can affect a purchaser after sale. Due diligence includes title, possession, condition, payment rules, and sale finality; access may be limited.
Bankruptcy terms agents encounter 12
Agent practice: Report a known bankruptcy promptly to the broker, client, and closing team. Do not independently decide that dismissal, discharge, abandonment, or relief from stay authorizes the planned closing.
Debtor / creditorTap to flip
Debtor / creditor
The person or entity owing debt and the party holding a claim. Bankruptcy uses these roles even when several loans affect one property.
Chapter 7 / Chapter 13 / Chapter 11Tap to flip
Chapter 7 / Chapter 13 / Chapter 11
Different bankruptcy chapters commonly associated with liquidation, individual debt adjustment, and reorganization. Their effect on a particular sale requires counsel.
Petition date / bankruptcy estateTap to flip
Petition date / bankruptcy estate
The filing date, and the legal estate containing property interests covered by bankruptcy law. An owner’s ability to sell may be restricted.
Bankruptcy trustee / debtor in possessionTap to flip
Bankruptcy trustee / debtor in possession
The trustee administers designated estate matters. In some cases the debtor retains operating authority as debtor in possession, subject to legal limits.
Automatic stay / relief from stayTap to flip
Automatic stay / relief from stay
A stay generally pauses covered actions. Relief permits specified action; inspect the order before treating foreclosure as authorized.
Proof of claim / secured claimTap to flip
Proof of claim / secured claim
A filed statement asserting a creditor’s claim, and a claim secured by collateral. Filing a claim does not resolve every dispute about it.
Prepetition / postpetition arrearsTap to flip
Prepetition / postpetition arrears
Amounts owing before the bankruptcy filing and amounts arising afterward. They may receive different treatment under the plan and court rules.
Plan / confirmation orderTap to flip
Plan / confirmation order
A proposed treatment of obligations and the court order approving a plan. A proposal is not yet a confirmed plan.
Discharge / dismissalTap to flip
Discharge / dismissal
Discharge removes specified personal liability. Dismissal ends the case without that discharge; a valid unavoided lien may survive discharge.
Abandonment / exempt propertyTap to flip
Abandonment / exempt property
Abandonment removes an estate interest through the authorized process. Exemptions protect qualifying debtor interests; neither automatically releases a mortgage lien.
Motion to sell / sale free and clearTap to flip
Motion to sell / sale free and clear
A request for sale authority, and a sale removing specified interests under court-approved terms. Read the order and treatment of proceeds.
Adequate protection / cash collateralTap to flip
Adequate protection / cash collateral
Protections for qualifying secured interests and cash subject to certain creditor interests. Agents should refer authority and use-of-proceeds issues to counsel.
48 terms
Saving the deal
Loss mitigation and short sales
Loss mitigation and short sale terms 12
ForbearanceTap to flip
Forbearance
An approved temporary pause or reduction in payments. Missed amounts are generally still owed; confirm how repayment will work.
Repayment plan / payment deferralTap to flip
Repayment plan / payment deferral
A repayment plan spreads missed amounts over scheduled payments. A deferral moves eligible amounts to a later repayment event under program terms.
Loan modificationTap to flip
Loan modification
An approved change to loan terms intended to address repayment problems. Possible changes depend on the loan and program.
DILDeed in Lieu of ForeclosureTap to flip
DIL — Deed in Lieu of Foreclosure
A voluntary transfer of ownership to the lender or its designee as an alternative to foreclosure. Debt treatment and other liens require review.
Hardship / hardship letterTap to flip
Hardship / hardship letter
A financial circumstance affecting the borrower’s ability to pay, and the written explanation or certification supporting it.
Loss mitigation package / complete applicationTap to flip
Loss mitigation package / complete application
The financial information and supporting documents required for review. Submission does not mean the servicer considers the application complete.
Third-party authorizationTap to flip
Third-party authorization
The borrower’s permission for a designated person to communicate with the servicer. It does not automatically authorize signing documents or making decisions.
SPOCSingle Point of Contact / negotiatorTap to flip
SPOC — Single Point of Contact / negotiator
A designated servicing contact or person coordinating review. A negotiator may need additional investor or insurer approval.
Short sale packageTap to flip
Short sale package
The submission requested for a short-sale review, often including borrower financials, authorization, listing, offer, valuation support, and estimated settlement figures.
Arm’s-length transactionTap to flip
Arm’s-length transaction
A transaction between independent parties acting in their own interests. Disclose relationships and follow any required affidavit and investor restrictions.
Short sale approval letterTap to flip
Short sale approval letter
Written terms authorizing an accepted reduced payoff. Review the approved buyer, price, net proceeds, costs, deadline, and treatment of remaining debt.
Approval expiration / extensionTap to flip
Approval expiration / extension
Approval is time-limited. A requested extension is not granted until confirmed by the approving party; changed terms may require another review.
Short sale money title and closing terms 12
Negative equity / underwaterTap to flip
Negative equity / underwater
The property’s value is below the debt secured by it. Negative equity alone does not establish short-sale eligibility.
Net proceeds / net sheetTap to flip
Net proceeds / net sheet
Net proceeds are funds remaining after transaction costs and adjustments. A net sheet estimates them; the amount available to each creditor depends on approved allocations.
DeficiencyTap to flip
Deficiency
Debt remaining after applicable sale proceeds or credits are applied. Whether it can be collected depends on law, documents, and written agreements.
Deficiency waiver / debt forgivenessTap to flip
Deficiency waiver / debt forgiveness
An agreement giving up collection of an unpaid balance. Confirm the exact written scope for each creditor.
Lien release / satisfactionTap to flip
Lien release / satisfaction
A document clearing a secured claim from title. A lien release alone does not necessarily eliminate personal liability for unpaid debt.
Seller contribution / promissory noteTap to flip
Seller contribution / promissory note
A creditor may request cash or a separate promise to repay part of the shortage. Refer the proposed obligation for legal review before acceptance.
Junior lien settlementTap to flip
Junior lien settlement
An agreement addressing a subordinate lien, often with an approved payment for release. Resolve both title release and remaining liability.
MIMortgage InsuranceTap to flip
MI — Mortgage Insurance
Coverage protecting the loan holder against certain losses. An insurer’s approval may be required; mortgage insurance is not homeowners insurance.
Title search / title commitmentTap to flip
Title search / title commitment
A title search examines recorded ownership and claims. A commitment states conditions and exceptions for issuing a title policy; it is not the final policy.
HOA lien / superpriorityTap to flip
HOA lien / superpriority
An association lien secures qualifying unpaid obligations. Some laws give part of certain liens special priority; obtain file-specific title and legal guidance.
Settlement statement / HUD-1 / Closing DisclosureTap to flip
Settlement statement / HUD-1 / Closing Disclosure
Documents showing closing charges and disbursements. The required form depends on the transaction; use the form accepted by the closing agent and approving creditor.
1099-C / cancellation of debt incomeTap to flip
1099-C / cancellation of debt income
Form 1099-C reports certain canceled debt. Cancellation can have tax consequences; exclusions depend on the taxpayer and current law. Refer to a tax professional, without promising tax-free treatment.
Home retention and workout terminology 12
Example: Reducing the monthly payment does not necessarily reduce the debt. A modification can capitalize arrears, extend maturity, and leave a separate deferred amount.
Workout / retention option / liquidation optionTap to flip
Workout / retention option / liquidation option
A workout addresses a troubled loan. Retention options aim to keep ownership; liquidation options resolve the loan through sale or transfer of the property.
Trial Payment Plan / TPPTap to flip
Trial Payment Plan / TPP
A temporary payment arrangement used in certain modification reviews. Successful trial payments do not by themselves prove that permanent modification documents have been completed.
CapitalizationTap to flip
Capitalization
Adding eligible unpaid amounts to principal under an approved agreement. It can raise the balance even when the monthly payment falls.
Term extension / maturity dateTap to flip
Term extension / maturity date
A term extension lengthens repayment. Maturity is when the remaining obligation becomes due under the loan; it is not necessarily the next payment date.
Rate reduction / step-rate modificationTap to flip
Rate reduction / step-rate modification
A reduction lowers the interest rate. A step-rate structure changes it at specified intervals; verify later payment changes.
Principal forbearance / principal forgivenessTap to flip
Principal forbearance / principal forgiveness
Forbearance sets aside repayment of specified principal under agreed terms. Forgiveness cancels principal. A deferred balance may still be due later.
Balloon payment / deferred balanceTap to flip
Balloon payment / deferred balance
A balloon is a large scheduled payment. A deferred balance is postponed debt that may become due at sale, payoff, refinance, or another event specified by the agreement.
Partial claimTap to flip
Partial claim
In certain government loan programs, an eligible amount is addressed through a separate subordinate obligation or claim mechanism. Repayment terms and eligibility are program-specific.
DTIDebt-to-Income RatioTap to flip
DTI — Debt-to-Income Ratio
Monthly debt obligations divided by qualifying monthly income. Front-end and back-end ratios measure different expense groups; confirm the program’s income and debt definitions.
NPVNet Present ValueTap to flip
NPV — Net Present Value
A method comparing projected future cash flows in today’s dollars. Some workout reviews use an NPV model; an agent’s net sheet is a different calculation.
Complete package / stale document / refreshTap to flip
Complete package / stale document / refresh
A complete package contains all required items. Documents become stale when too old for the review; refreshing updates them to the required period.
Appeal / reapplication / redefaultTap to flip
Appeal / reapplication / redefault
An appeal asks for review of a decision where available. Reapplication submits a new request. Redefault is a new failure after a cure or workout.
Advanced short sale and settlement terminology 12
Agent practice: Obtain the actual approval letter for every affected creditor. Confirm authorized disbursements, expiration, lien release, and remaining liability before describing a short sale as fully approved.
Preapproved short sale / approved priceTap to flip
Preapproved short sale / approved price
An early program or pricing authorization, subject to its written terms. It does not necessarily approve a future buyer, contract, net, or closing date.
Minimum acceptable net / net requirementTap to flip
Minimum acceptable net / net requirement
The amount an approving creditor requires from closing. A higher purchase price can still fail review if costs reduce the creditor’s net below its requirement.
Investor approval / insurer approvalTap to flip
Investor approval / insurer approval
Consent from the loan owner or applicable mortgage insurer. A servicer recommendation may still require these additional decisions.
Counteroffer / value disputeTap to flip
Counteroffer / value dispute
A counteroffer changes proposed terms. A value dispute challenges the valuation with relevant evidence; it does not authorize inaccurate or selectively misleading comps.
Borrower financial statement / P and LTap to flip
Borrower financial statement / P and L
A financial statement summarizes income, expenses, assets, and debts. A profit-and-loss statement shows business income and expenses for a stated period.
Contribution review / cash reservesTap to flip
Contribution review / cash reserves
Evaluation of whether the borrower must contribute funds, considering program rules and documented resources. Available account balances do not alone establish an approved contribution.
Settlement allocation / unauthorized paymentTap to flip
Settlement allocation / unauthorized payment
Allocation determines who receives closing funds. Side payments or disbursements outside approved terms can jeopardize the transaction; disclose and obtain required written consent.
Release of liability / reservation of rightsTap to flip
Release of liability / reservation of rights
A release gives up specified claims against a person. A reservation preserves identified rights. Read both alongside the lien-release language.
Recourse / nonrecourse debtTap to flip
Recourse / nonrecourse debt
Recourse permits personal collection as allowed by law and agreement. Nonrecourse limits recovery in specified ways. Classification depends on the actual loan and applicable law.
Anti-deficiency protectionTap to flip
Anti-deficiency protection
A legal restriction on collecting certain remaining debt. Coverage can turn on loan type, property use, foreclosure method, transaction details, and state law.
Cancellation of debt / insolvencyTap to flip
Cancellation of debt / insolvency
Cancellation eliminates qualifying debt. For tax purposes, insolvency generally measures liabilities exceeding asset value immediately before cancellation; a tax professional must apply the rules.
1099-A / 1099-C / Form 982Tap to flip
1099-A / 1099-C / Form 982
Forms concerning acquisition or abandonment of secured property, cancellation of debt, and certain debt-discharge tax exclusions or adjustments. They serve different purposes and require tax review.
12 terms
Valuing the house
BPOs, comps and pricing
BPO and valuation terms 12
BPO rule: Follow state licensing limits and client instructions. Use independent evidence, disclose assumptions and conflicts, and never select comps to force a requested result. A BPO is not a property inspection or guarantee of condition.
Subject property / comparable propertyTap to flip
Subject property / comparable property
The subject is the property being valued. A comparable is a similar property used to support the price opinion.
Interior BPO / exterior BPOTap to flip
Interior BPO / exterior BPO
An interior BPO includes authorized interior observations. An exterior or drive-by BPO relies on exterior observations and other data; disclose interior limitations.
CMAComparative Market AnalysisTap to flip
CMA — Comparative Market Analysis
An agent’s analysis of competing listings and sales, often used to guide listing or offer pricing. A client-ordered BPO typically follows a specific reporting format.
Appraisal / AVMTap to flip
Appraisal / AVM
An appraisal is a professional valuation developed under applicable appraisal requirements. An automated valuation model uses data and statistical methods to estimate value.
As-is value / as-repaired value / ARVTap to flip
As-is value / as-repaired value / ARV
As-is reflects present condition. As-repaired assumes specified repairs are completed. ARV usually means after-repair value; define the assumed work and client terminology.
Market value / probable sale price / list priceTap to flip
Market value / probable sale price / list price
Market value uses a defined valuation standard. Probable sale price estimates a likely sale outcome. List price is an asking or marketing figure; identify which the assignment requests.
Sold comps / active comps / pending compsTap to flip
Sold comps / active comps / pending comps
Closed sales show completed transactions. Active listings show competition. Pending listings show properties under contract; the final price may be unknown.
Adjustments / bracketingTap to flip
Adjustments / bracketing
Adjustments account for meaningful differences between comps and the subject. Bracketing selects comps above and below important subject features where available.
DOM / CDOMTap to flip
DOM / CDOM
Days on market and cumulative days on market. MLS definitions and rules for relisting vary; check the data source.
GLAGross Living Area / price per square footTap to flip
GLA — Gross Living Area / price per square foot
GLA is measured living area under the applicable standard. Price per square foot is a comparison tool, not a complete valuation method; use consistent area data.
Deferred maintenance / repair estimate / functional obsolescenceTap to flip
Deferred maintenance / repair estimate / functional obsolescence
Deferred maintenance is postponed upkeep. A repair estimate projects costs. Functional obsolescence is a loss of utility from design or layout shortcomings.
Market trend / absorption rate / reconciliationTap to flip
Market trend / absorption rate / reconciliation
Trend describes price or activity direction. Absorption measures selling pace; state the formula and period. Reconciliation weighs the evidence into the final supported opinion.
72 terms
After the sale
REO, preservation and closing
After foreclosure title debt and possession 12
Example: The buyer holds a recorded foreclosure deed, but occupants remain. Ownership and the right to immediate physical possession must still be analyzed separately; the deed alone does not authorize a lockout.
Trustee’s deed upon saleTap to flip
Trustee’s deed upon sale
The deed commonly used to convey title following a deed-of-trust sale. Delivery, recording, and legal effect must be verified under local law.
Sheriff’s deed / referee’s deedTap to flip
Sheriff’s deed / referee’s deed
Deeds used in certain court-supervised sales. The correct instrument depends on jurisdiction and the officer conducting the sale.
Certificate of sale / certificate of purchaseTap to flip
Certificate of sale / certificate of purchase
Evidence of a sale or purchase in jurisdictions using such certificates. It may precede the deed and may be affected by confirmation or redemption requirements.
Equity of redemption / statutory redemptionTap to flip
Equity of redemption / statutory redemption
An equitable right generally concerns paying secured debt before foreclosure. Statutory redemption may allow recovery after sale where the law provides it; amounts and deadlines vary.
Surplus funds / excess proceedsTap to flip
Surplus funds / excess proceeds
Money left after sale expenses and entitled claims are paid in the required order. Other claimants may have priority before funds reach the former owner.
Deficiency judgment / fair-value limitationTap to flip
Deficiency judgment / fair-value limitation
A judgment imposing collectible remaining liability, if permitted. Some laws limit recovery using property value or other protections rather than only the bid amount.
Merger / extinguishment / surviving lienTap to flip
Merger / extinguishment / surviving lien
Merger can combine legal interests under applicable rules. Extinguishment ends an interest; a surviving lien remains enforceable against the property. Title counsel determines the result.
Title curative / quiet titleTap to flip
Title curative / quiet title
Curative work addresses title defects. A quiet-title action asks a court to determine competing property claims; it is not a routine substitute for missing approval.
Bona fide purchaser / bona fide tenantTap to flip
Bona fide purchaser / bona fide tenant
Legal classifications involving good faith and other requirements. A purchaser’s or tenant’s rights depend on the applicable definition, not the label an agent assigns.
Notice to quit / writ of possessionTap to flip
Notice to quit / writ of possession
A notice requires occupants to leave or respond under law. A writ authorizes lawful recovery of possession through the proper enforcement process.
PTFAProtecting Tenants at Foreclosure ActTap to flip
PTFA — Protecting Tenants at Foreclosure Act
Federal protections for qualifying tenants after foreclosure, alongside state or local rules. Notice and lease rights require file-specific review.
Sale rescission / sale set-asideTap to flip
Sale rescission / sale set-aside
Reversal of a sale through an authorized process or court relief. A disputed sale is not automatically reversed, and a deed may require corrective action.
REO intake assignment and property control 12
Example: An asset assignment asks for exterior photos and an occupancy report. It does not automatically authorize interior access, a rekey, removal of belongings, or advertising the property for sale.
Acquisition date / REO boardingTap to flip
Acquisition date / REO boarding
The date an owner acquires the asset and the process of creating its REO management record. Confirm the event used by the client’s system.
REO inventory / dispositionTap to flip
REO inventory / disposition
Inventory is the owner’s stock of acquired properties. Disposition is the process of selling or otherwise resolving an asset.
Prelisting / listing authorizationTap to flip
Prelisting / listing authorization
Prelisting covers work before active marketing. Listing authorization establishes permission and terms to market; an assignment email may authorize only initial inspection.
Initial inspection / initial condition reportTap to flip
Initial inspection / initial condition report
The first authorized review and documented condition summary. Identify inaccessible areas, observed damage, utilities, safety issues, and supporting photographs.
Occupancy determination / occupant contactTap to flip
Occupancy determination / occupant contact
An assessment of who appears to be using the property, and permitted communication with occupants. Follow the approved scope and avoid representing assumptions as verified facts.
Eviction assignment / occupied REOTap to flip
Eviction assignment / occupied REO
A file assigned for lawful possession recovery, or an acquired property with occupants. Listing status does not eliminate tenant or former-owner protections.
Vendor credentialing / E and O / W-9Tap to flip
Vendor credentialing / E and O / W-9
Verification of qualifications; Errors and Omissions insurance; and an IRS taxpayer-identification form. Requirements differ by client and assignment.
REO portal / task queue / milestoneTap to flip
REO portal / task queue / milestone
The client’s workflow system, pending task list, and defined progress event. Completing a portal checkbox should correspond to actual completed work.
Due date / turnaround time / exception requestTap to flip
Due date / turnaround time / exception request
A deadline, the time allowed for a task, and a request to depart from standard requirements. An exception remains pending until approved.
Access authorization / lockbox codeTap to flip
Access authorization / lockbox code
Permission to enter and the means of obtaining keys. Possession of a code does not itself establish legal entry authority.
Vacant property registration / VPRTap to flip
Vacant property registration / VPR
A local registration process for qualifying vacant or distressed properties. Responsibility, triggers, renewal, and fees vary by municipality.
Code violation / municipal lienTap to flip
Code violation / municipal lien
A cited failure to meet local requirements, and a claim securing qualifying charges. A violation notice and a recorded lien are different records.
REO operations and asset management terms 12
Assignment / work order / SLATap to flip
Assignment / work order / SLA
An assignment authorizes specific work. A work order describes the task. A service-level agreement sets performance expectations or turnaround times.
Occupancy check / vacancy / possessionTap to flip
Occupancy check / vacancy / possession
A check documents observed occupancy indicators. Vacancy means apparently unoccupied; possession concerns lawful control. An empty-looking house does not authorize entry or a lock change.
Property preservationTap to flip
Property preservation
Authorized work to protect the property, such as securing openings, winterizing systems, maintaining grounds, or addressing hazards.
Rekey / secure / winterizationTap to flip
Rekey / secure / winterization
Rekeying changes lock access; securing addresses unauthorized access; winterization protects vulnerable plumbing or systems from freezing under the approved scope.
Trash-out / personal propertyTap to flip
Trash-out / personal property
Trash-out removes authorized debris. Remaining belongings may be protected personal property; removal and storage require proper authority and procedures.
Cash for keys / relocation assistanceTap to flip
Cash for keys / relocation assistance
A documented voluntary move-out arrangement that may offer money for agreed possession and property condition. Use owner-approved terms and follow occupancy laws.
Eviction / unlawful detainerTap to flip
Eviction / unlawful detainer
A legal process to recover possession. The available action and occupant protections depend on law; agents should not perform self-help removals.
Conveyance / marketable titleTap to flip
Conveyance / marketable title
Conveyance transfers ownership. Marketable title generally means title sufficiently free of material defects to be acceptable under governing law and the contract.
Marketing plan / MMR — Monthly Marketing ReportTap to flip
Marketing plan / MMR — Monthly Marketing Report
The strategy for exposure and sale, and a periodic update on activity, feedback, competing properties, condition, and recommended changes.
As-is sale / seller addendumTap to flip
As-is sale / seller addendum
As-is describes the agreed condition and repair allocation. An REO addendum adds seller terms; neither automatically eliminates disclosure duties or all buyer rights.
Highest and best / multiple-offer procedureTap to flip
Highest and best / multiple-offer procedure
A request for buyers’ strongest terms in a competitive process. Follow seller instructions, applicable law, and brokerage procedures for fair and accurate offer handling.
EMD / POF / reimbursement / chargebackTap to flip
EMD / POF / reimbursement / chargeback
Earnest money deposit is contract security; proof of funds supports available cash. Reimbursement repays approved expenses; a chargeback reverses or assesses an amount under the vendor agreement.
REO preservation repairs and vendor billing 12
Agent practice: Do not promise reimbursement based only on an informal conversation. Retain written scope, spending authority, vendor pricing, completion evidence, and the required submission deadline.
P and P — Property Preservation and ProtectionTap to flip
P and P — Property Preservation and Protection
Work intended to prevent deterioration and protect the asset. The client’s authorization and applicable occupancy rules define what can be performed.
FSM / field services vendorTap to flip
FSM / field services vendor
Field Service Manager, particularly in HUD operations, or a vendor performing property inspections and preservation. The field vendor may be separate from the listing brokerage.
Allowable / not-to-exceed amountTap to flip
Allowable / not-to-exceed amount
A cost category or limit under a client schedule, and a maximum authorized spend. A published allowance is not always advance permission for every job.
Bid / scope of work / work authorizationTap to flip
Bid / scope of work / work authorization
A price proposal, a detailed description of tasks, and permission to perform them. Keep all three aligned to avoid scope and billing disputes.
Emergency repair / hazard abatementTap to flip
Emergency repair / hazard abatement
Work addressing an urgent threat or removing a hazard. Follow emergency protocols, document conditions, and obtain approval when required.
Board-up / roof tarp / water extractionTap to flip
Board-up / roof tarp / water extraction
Temporary securing, leak mitigation, or removal of standing water. Temporary measures do not establish that permanent repairs are complete.
Dewinterization / rewinterizationTap to flip
Dewinterization / rewinterization
Restoring systems for authorized use or testing, then protecting them again when required. Coordinate utilities and qualified vendors to avoid damage.
Utility activation / utility transfer / utility capTap to flip
Utility activation / utility transfer / utility cap
Starting service, changing the responsible account, or a client spending limit. Inspect for safe activation and verify who pays before ordering service.
Recurring service / grass cut / pool maintenanceTap to flip
Recurring service / grass cut / pool maintenance
Repeated authorized work to maintain the site. Frequency, seasonal requirements, safety measures, and evidence requirements are client- and location-specific.
Personal property inventory / debris volumeTap to flip
Personal property inventory / debris volume
A record of remaining belongings, and a measure of removable debris. Do not classify everything left behind as trash.
Before and after photos / completion evidenceTap to flip
Before and after photos / completion evidence
Records showing the original condition and performed work. Include required dates, locations, invoices, and other support without staging or misrepresenting completion.
Invoice reconciliation / rejected expense / chargebackTap to flip
Invoice reconciliation / rejected expense / chargeback
Matching charges to approvals and proof, a disallowed submission, or an assessed reversal. Resolve differences using the contract, scope, and documentation.
REO pricing marketing contracts and closing 12
Example: Offer A is $400,000 with $15,000 in seller credits. Offer B is $395,000 with none. Before other costs, B produces $10,000 more for the seller; financing, contingencies, and certainty still matter.
List-price recommendation / pricing approvalTap to flip
List-price recommendation / pricing approval
The broker’s supported proposal and the owner’s authorization. A recommendation does not itself authorize a price change.
Price reduction / price repositioningTap to flip
Price reduction / price repositioning
A change in asking price or broader marketing position. Explain the evidence, buyer response, and expected effect; obtain required approval.
Marketing time / exposure timeTap to flip
Marketing time / exposure time
Marketing time looks forward to an expected sale period; exposure time looks backward to assumed prior market exposure supporting a valuation. Define the assignment’s terms.
Quick-sale value / liquidation valueTap to flip
Quick-sale value / liquidation value
A valuation under a specified shortened period or constrained sale premise. These labels have no universal discount; state the assumptions and required time frame.
Offer matrix / offer summaryTap to flip
Offer matrix / offer summary
A comparison of price, financing, cash, contingencies, concessions, timing, and net. Preserve complete offers and avoid omitting material terms.
Concession / seller credit / repair creditTap to flip
Concession / seller credit / repair credit
A seller-funded benefit or credit, subject to contract, owner approval, and financing limits. The highest gross price may not produce the strongest net.
Owner-occupant / investor / first-look periodTap to flip
Owner-occupant / investor / first-look period
A primary-residence purchaser, an investment purchaser, and a priority marketing period for eligible buyers. Eligibility and restrictions depend on the owner’s program.
Verbal acceptance / executed contractTap to flip
Verbal acceptance / executed contract
An informal expression of agreement versus a contract completed under applicable signing and delivery requirements. Confirm the seller’s stated contract-formation process.
Seller addendum / order of precedenceTap to flip
Seller addendum / order of precedence
Additional seller terms and the rule determining which document controls a conflict. Read all documents together and refer legal interpretation when needed.
Inspection period / contingency / financing conditionTap to flip
Inspection period / contingency / financing condition
A due-diligence window and contractual conditions affecting performance or termination. An as-is provision does not automatically delete them.
Closing extension / extension fee / per diem chargeTap to flip
Closing extension / extension fee / per diem charge
An approved later closing and any contractual fee. A contract per diem charge differs from daily interest in a lender payoff.
Final walk-through / final reconciliation / file closeoutTap to flip
Final walk-through / final reconciliation / file closeout
A preclosing condition check, matching approved financial figures to actual charges, and completing the owner’s records, keys, invoices, and required reports.
Agency REO programs and industry acronyms 12
Acronym caution: AM, P and P, REO, and other abbreviations may be used differently by clients. Confirm the meaning in the work order and program guide before relying on a familiar shorthand.
HUD / FHATap to flip
HUD / FHA
Department of Housing and Urban Development and Federal Housing Administration. FHA insures qualifying loans; a HUD Home is an acquired property, not every FHA-financed house.
VA / USDATap to flip
VA / USDA
Department of Veterans Affairs and U.S. Department of Agriculture. Their housing loan programs and acquired-property processes have distinct requirements.
Fannie Mae / Freddie MacTap to flip
Fannie Mae / Freddie Mac
Separate government-sponsored enterprises involved in mortgage finance. Their servicing guides and REO requirements are not interchangeable.
HomePath / HomeStepsTap to flip
HomePath / HomeSteps
REO marketing programs associated with Fannie Mae and Freddie Mac, respectively. Check the specific listing and current program rules for requirements.
HUD Home Store / registered brokerTap to flip
HUD Home Store / registered broker
HUD’s property marketing and bidding channel and a broker meeting HUD registration requirements. MLS access alone does not establish authority to submit a HUD bid.
M and M / AM / FSM / MCMTap to flip
M and M / AM / FSM / MCM
HUD Management and Marketing; Asset Manager; Field Service Manager; Mortgagee Compliance Manager. These roles address sale, preservation, and conveyance compliance rather than one universal agent function.
Conveyance condition / conveyance exceptionTap to flip
Conveyance condition / conveyance exception
The required condition for transferring a property under a program, and an authorized departure. Ordinary retail sale condition may use a different standard.
Insured / insured with escrow / uninsurableTap to flip
Insured / insured with escrow / uninsurable
HUD listing classifications concerning FHA financing eligibility and repair needs. They are not guarantees of condition; confirm the listing classification and lender requirements.
Exclusive period / extended periodTap to flip
Exclusive period / extended period
HUD marketing periods providing different bidding eligibility. Do not assume an investor can bid during an owner-occupant priority period.
REO addendum / agency form / program certificationTap to flip
REO addendum / agency form / program certification
Owner or program documents imposing transaction requirements. Complete the correct version and verify certifications rather than treating them as routine boilerplate.
RESPA / Regulation X / TILA / Regulation ZTap to flip
RESPA / Regulation X / TILA / Regulation Z
Real Estate Settlement Procedures Act and its implementing regulation; Truth in Lending Act and its implementing regulation. They address different mortgage and servicing requirements.
FDCPA / CFPB / NMLSTap to flip
FDCPA / CFPB / NMLS
Fair Debt Collection Practices Act; Consumer Financial Protection Bureau; Nationwide Multistate Licensing System. Applicability, oversight, and licensing depend on the role and activity.
36 terms
The back office
Servicing, payments and escrow
Loan servicing roles and systems 12
Why agents hear these terms: The company collecting payments, the loan owner, and the party approving a short sale may be different entities. Record each role rather than calling every party the bank.
Master servicerTap to flip
Master servicer
An entity overseeing servicing obligations across a portfolio, sometimes supervising subservicers. Its role depends on the governing servicing agreements.
Special servicerTap to flip
Special servicer
A servicer assigned loans needing specialized management, often because of default or other problems. This label is especially common in commercial lending.
Performing loan / nonperforming loanTap to flip
Performing loan / nonperforming loan
A performing loan meets the applicable payment criteria. A nonperforming loan fails the applicable criteria; the exact delinquency threshold depends on the reporting framework.
NPL / RPLTap to flip
NPL / RPL
Nonperforming loan and reperforming loan. An RPL previously had payment problems and later resumed qualifying payments; it is still a loan, not REO.
MSRMortgage Servicing RightsTap to flip
MSR — Mortgage Servicing Rights
Contractual rights to service loans and receive servicing compensation. Selling servicing rights does not necessarily sell ownership of the loans.
Servicing boarding / deboardingTap to flip
Servicing boarding / deboarding
Loading a transferred loan into a servicing system, or removing it from the outgoing system. Balances, documents, and pending reviews must transfer accurately.
Goodbye letter / welcome letterTap to flip
Goodbye letter / welcome letter
Common names for outgoing and incoming servicing-transfer notices. They identify changes in payment administration; verify the effective date and instructions.
System of record / servicing notesTap to flip
System of record / servicing notes
The designated authoritative system and its account activity notes. An agent portal may show only part of the information available to the servicer.
Document custodian / collateral fileTap to flip
Document custodian / collateral file
A custodian holds specified loan documents. The collateral file contains documents supporting the debt and security interest; it is different from a marketing file.
GSE / agency / private-label investorTap to flip
GSE / agency / private-label investor
Government-sponsored enterprise, government-related program, or nongovernment securitization investor. Fannie Mae and Freddie Mac are GSEs; FHA insurance and VA guarantees are different structures.
Portfolio loan / securitized loanTap to flip
Portfolio loan / securitized loan
A portfolio loan is held as an investment by an institution. A securitized loan supports securities issued under a transaction structure.
Delegated authority / escalationTap to flip
Delegated authority / escalation
Delegated authority allows decisions within assigned limits. Escalation sends an issue to a higher authority; sending it does not establish approval.
Payment accounting and servicing balances 12
Example: A $300,000 UPB can produce a higher payoff after interest and permitted charges. Ask for an itemized, dated payoff rather than using principal as the closing amount.
UPBUnpaid Principal BalanceTap to flip
UPB — Unpaid Principal Balance
The principal remaining on the loan. UPB does not automatically include accrued interest, escrow advances, legal fees, or other payoff items.
P and I / PITITap to flip
P and I / PITI
Principal and interest; principal, interest, taxes, and insurance. HOA dues and other expenses may be additional, so confirm what the quoted payment includes.
Contractual due date / grace periodTap to flip
Contractual due date / grace period
The scheduled payment deadline and any period before a specified late charge applies. A grace period does not necessarily change the due date or credit-reporting rules.
Paid-through date / next payment dueTap to flip
Paid-through date / next payment due
The installment period satisfied and the next installment owed. Read the servicer’s date convention instead of assuming that a displayed date means the account is current.
Payment application / payment waterfallTap to flip
Payment application / payment waterfall
How received funds are allocated among installments, principal, interest, escrow, fees, or other amounts. Loan terms and applicable law govern the sequence.
Partial payment / suspense accountTap to flip
Partial payment / suspense account
A payment below the required amount may be held as unapplied funds, often called suspense. It may not satisfy a full installment until sufficient funds accumulate.
Unapplied funds / payment reversalTap to flip
Unapplied funds / payment reversal
Unapplied funds have not yet been allocated to an obligation. A reversal removes a prior posting, for example after a returned payment or correction.
Curtailment / principal-only paymentTap to flip
Curtailment / principal-only payment
An extra payment applied to reduce principal under the applicable requirements. It does not necessarily replace the next scheduled installment.
Accrued interest / default interestTap to flip
Accrued interest / default interest
Accrued interest has accumulated but remains unpaid. Default interest is a contractual rate or charge triggered by qualifying default, where enforceable.
Servicing advance / corporate advanceTap to flip
Servicing advance / corporate advance
Funds paid by the servicer for costs such as protection, taxes, or legal work. Corporate advance is a system label whose contents must be verified.
Delinquency advance / recoverable advanceTap to flip
Delinquency advance / recoverable advance
A delinquency advance covers required investor remittances despite missing borrower payments. Recoverable means reimbursement is expected under applicable terms; it does not establish borrower liability.
Charge-off / write-downTap to flip
Charge-off / write-down
Accounting recognition that a debt or asset has lost value. A charge-off alone does not prove that the debt was forgiven, the lien released, or collection prohibited.
Escrow insurance and property charges 12
Agent practice: Obtain current tax, insurance, and association information. Do not assume that a monthly mortgage payment includes every property expense or that an insurance policy covers vacancy.
Servicing escrow / closing escrowTap to flip
Servicing escrow / closing escrow
Servicing escrow collects funds for recurring property charges. Closing escrow holds transaction funds and documents. The same word describes different functions.
T and I — Taxes and InsuranceTap to flip
T and I — Taxes and Insurance
Shorthand for property taxes and insurance amounts. Ask whether a quoted advance, balance, or payment refers to these items only.
Escrow analysisTap to flip
Escrow analysis
The servicer’s review of expected deposits, disbursements, and balances to calculate escrow requirements and identify shortages, surpluses, or deficiencies.
Escrow cushionTap to flip
Escrow cushion
A permitted reserve in the servicing escrow account for payment timing and variations. It is subject to legal limits and loan terms.
Escrow shortage / escrow deficiencyTap to flip
Escrow shortage / escrow deficiency
A shortage means the balance is below its required target. A deficiency means the account has a negative balance. Neither is the same as a mortgage deficiency after sale.
Escrow surplus / escrow disbursementTap to flip
Escrow surplus / escrow disbursement
A surplus is an excess over the applicable target balance. A disbursement is an actual payment from the account, such as payment of a tax bill.
Escrow waiver / nonescrowed loanTap to flip
Escrow waiver / nonescrowed loan
An arrangement in which specified property charges are paid directly by the borrower rather than through the servicer. Loan and program requirements control availability.
Hazard insurance / flood insuranceTap to flip
Hazard insurance / flood insurance
Hazard coverage addresses specified property risks; flood coverage addresses a different risk and is generally separate. Confirm actual policy terms and required coverage.
Force-placed insurance / lender-placed insuranceTap to flip
Force-placed insurance / lender-placed insurance
Coverage obtained by the servicer when required borrower coverage is absent or inadequate under applicable rules. It primarily protects the creditor’s interest and may cost more.
Loss payee / mortgagee clauseTap to flip
Loss payee / mortgagee clause
Policy provisions identifying an interested creditor and its insurance rights. Incorrect names or missing clauses can delay claim or coverage processing.
Loss draft / insurance proceeds holdbackTap to flip
Loss draft / insurance proceeds holdback
An insurance claim check and funds retained pending repair or other requirements. A claim payment is not automatically available for unrestricted use.
Tax advance / tax lien / special assessmentTap to flip
Tax advance / tax lien / special assessment
A tax advance is a payment made on the borrower’s behalf. A tax lien secures taxes; a special assessment is a separate authorized charge that may affect title or payoff.