Loss Mitigation and Mortgage Servicing Terms (Part 2)
Use this concise list of terms to help you wade through the bog of loss mitigation and loan restructuring.
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Foreclosure: The legal proceeding by which a court order is issued for a mortgagor’s right of redemption to be terminated. Foreclosure is a last resort, and when utilized, should be executed quickly to minimize the amount of loss to the mortgagee and mortgagor.
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Loan Modification: A permanent change in the terms of a loan, allowing the mortgagor to pay off their debt. Usually results in a payment that the mortgagor can afford to pay, thus preventing foreclosure or default.
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Partial Claim: the act of a mortgagee advancing funds on behalf of a mortgagor in whichever amount is necessary to reinstate a loan that is delinquent.
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Pre-foreclosure Sale: a program that allows a defaulted mortgagor to sell his or her home and use the proceeds of said sale to fulfill the mortgage debt, even if the proceeds are less than the amount owed.
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Special Forbearance: a repayment agreement that is formally written and signed by a mortgagee and mortgagor, usually containing a plan to reinstate an asset that is overdue and unpaid.
