LOSS MITIGATION GLOSSARY
Abandonment A situation in which a homeowner leaves a home without any intention of returning. If there is a mortgage on the property
a foreclosure will occur. Many times these are called “key tosses”, where the keys to the house are left inside or mailed to the mortgage
lender.
Auction The process of selling a property the highest bidder. In the case of foreclosures, there may be starting price, which is the lowest
amount the lender will accept. In an Absolute Auction of a foreclosure, there is no minimum price.
Bill of Complaint The initial paperwork that is filed in many states to the foreclosure process.
Compromise Sale A VA property sale in which the amount on the VA loan is greater than the home’s sale price. The VA may cover the loss.
Deed in Lieu of Foreclosure Instead of waiting until the lender forces the sale of a house in the foreclosure process, the borrower deeds
the property to the lender.
Deed of Trust A deed of trust is a regarded a three-party mortgage arrangement between the borrower, the lender and a trustee. If the
borrower fails to pay his mortgage, the trustee is preauthorized by the borrower to sell the house and apply the sales proceeds to pay off
what remains unpaid on the loan secured by the deed of trust of give the deed to the lender in exchange for cancellation of some or all of
the borrower’s debt.
Defeased A legal term meaning to lose ownership as in the case of a foreclosure.
Deficiency Money a borrower who has lost real estate in foreclosure still owes to the lender because the foreclosure sale failed to generate
enough from the sale price of the property to pay off the loan.
D’oench, Duhme Doctrine A legal term that state that when FDIC takes over a lender, they may disallow almost any counterclaims by
borrowers against the lenders they have taken over. This clears the way for them to assume all loans and enforce all foreclosures.
Dutch Auction An auction, which begins at a starting price and is lowered until a purchase occurs.
Entry and Possession A foreclosure method used in some states which the lender either peacefully or by court order takes possession of
the property from the borrower.
Execution Sale The sale of a foreclosed property by a sheriff pursuant to a court orders.
Fix and Flip See Flipping and Hard Money.
Flipping, House Flips The selling of a house quickly, usually at a profit.
Often done with foreclosures.
Forbearance Prior to foreclosing on a property, a lender may agree to accept lower payments than originally agreed upon or added missed
payments to the end of loan to help a borrower avoid foreclosure. This is normally handled by the lender’s Loss Mitigation Department.
Hard Money Lenders for persons who cannot acquire funds through usual sources. Their interest rates are above the average. Some
foreclosure investors who fix and flip acquire funds from these sources.
Holder in Due Course This legal document holds that a person or entity that obtains a note without notice of any borrower defenses to its
enforcement may enforce payment of that note in a court despite any borrower defense or other reason for not paying.
Judicial Foreclosure A court-ordered foreclosure. The lender must first file and win a lawsuit to foreclose.
Junior Lien holder A holder of a right to foreclose on a property that is inferior to the first lien holder.
Lis Pendens A recorded notice of a lawsuit in process, which may change the title of property. It is the first indication of pending
foreclosure in some states.
Liquidating Plan A plan by which a borrower repays missed payments to a lender over time. Again this in lieu of a foreclosure. This handled
by the lender’s Loss Mitigation Department.
Loan Modification A procedure whereby a loans payment plan is altered due to the hardship of the borrower. This can include the rate,
term and monthly payment amounts.
This is handled by the lender’s Loss Mitigation Department.
Loss Mitigation Department This is the lenders department to oversee delinquency of loans prior to foreclosure. See Forbearance, Loan
Modification, Relief/Recasting and Short Payoffs/Short Sales.
Mechanic’s Lien A lien allowed by law upon a building or other improvement upon land, as a security for the payment of labor done and
materials furnished for improvement. Many contractors have acquired properties through this legal mechanism.
Mortgage Lien The right of a mortgage lender to sell a mortgaged property is the borrower fails to repay the loan as agreed.
Nonjudicial Foreclosure A foreclosure on a mortgage without filing a lawsuit. Many states foreclose on properties in this way.
Power of Sale Clause The clause in a deed of trust or mortgage, by which the borrower preauthorizes the sale of a house to pay off the
balance on a loan in the event of the borrower’s default. Usually the trustee will hold the sale. In some states it is done by the sheriff’s
office.
Relief/Recasting Various loans will offer various types of special payment plans to assist struggling borrowers prior to them going into
foreclosure. See Loss Mitigation Departments.
REO The department that holds and disposes of foreclosure property within a lending institution.
Scire Facias A court command to a borrower requiring them to appear at hearing to show why a foreclosure should not be authorized.
Short Payoffs/Short Sales The sale of property prior to foreclosure at a reduced amount. See Loss Mitigation Departments.
Strict Foreclosure A legal premise in some states that the lender owns a property and may simply evict the borrower for nonpayment and
gain full and complete title free of the borrower’s right to redeem after the prescribed waiting period has passed.
Trustee’s Deed A type of deed issued to the buyer at a trustee foreclosure sale.
Vendee Loan A VA Loan made to help the VA resell a VA foreclosure. Can be given to a non-vet.
Warranty Deed A deed in which the seller guarantees or warrants that good title can be traced back in time when the land was owned by
country.
Abandonment A situation in which a homeowner leaves a home without any intention of returning. If there is a mortgage on the property
a foreclosure will occur. Many times these are called “key tosses”, where the keys to the house are left inside or mailed to the mortgage
lender.
Auction The process of selling a property the highest bidder. In the case of foreclosures, there may be starting price, which is the lowest
amount the lender will accept. In an Absolute Auction of a foreclosure, there is no minimum price.
Bill of Complaint The initial paperwork that is filed in many states to the foreclosure process.
Compromise Sale A VA property sale in which the amount on the VA loan is greater than the home’s sale price. The VA may cover the loss.
Deed in Lieu of Foreclosure Instead of waiting until the lender forces the sale of a house in the foreclosure process, the borrower deeds
the property to the lender.
Deed of Trust A deed of trust is a regarded a three-party mortgage arrangement between the borrower, the lender and a trustee. If the
borrower fails to pay his mortgage, the trustee is preauthorized by the borrower to sell the house and apply the sales proceeds to pay off
what remains unpaid on the loan secured by the deed of trust of give the deed to the lender in exchange for cancellation of some or all of
the borrower’s debt.
Defeased A legal term meaning to lose ownership as in the case of a foreclosure.
Deficiency Money a borrower who has lost real estate in foreclosure still owes to the lender because the foreclosure sale failed to generate
enough from the sale price of the property to pay off the loan.
D’oench, Duhme Doctrine A legal term that state that when FDIC takes over a lender, they may disallow almost any counterclaims by
borrowers against the lenders they have taken over. This clears the way for them to assume all loans and enforce all foreclosures.
Dutch Auction An auction, which begins at a starting price and is lowered until a purchase occurs.
Entry and Possession A foreclosure method used in some states which the lender either peacefully or by court order takes possession of
the property from the borrower.
Execution Sale The sale of a foreclosed property by a sheriff pursuant to a court orders.
Fix and Flip See Flipping and Hard Money.
Flipping, House Flips The selling of a house quickly, usually at a profit.
Often done with foreclosures.
Forbearance Prior to foreclosing on a property, a lender may agree to accept lower payments than originally agreed upon or added missed
payments to the end of loan to help a borrower avoid foreclosure. This is normally handled by the lender’s Loss Mitigation Department.
Hard Money Lenders for persons who cannot acquire funds through usual sources. Their interest rates are above the average. Some
foreclosure investors who fix and flip acquire funds from these sources.
Holder in Due Course This legal document holds that a person or entity that obtains a note without notice of any borrower defenses to its
enforcement may enforce payment of that note in a court despite any borrower defense or other reason for not paying.
Judicial Foreclosure A court-ordered foreclosure. The lender must first file and win a lawsuit to foreclose.
Junior Lien holder A holder of a right to foreclose on a property that is inferior to the first lien holder.
Lis Pendens A recorded notice of a lawsuit in process, which may change the title of property. It is the first indication of pending
foreclosure in some states.
Liquidating Plan A plan by which a borrower repays missed payments to a lender over time. Again this in lieu of a foreclosure. This handled
by the lender’s Loss Mitigation Department.
Loan Modification A procedure whereby a loans payment plan is altered due to the hardship of the borrower. This can include the rate,
term and monthly payment amounts.
This is handled by the lender’s Loss Mitigation Department.
Loss Mitigation Department This is the lenders department to oversee delinquency of loans prior to foreclosure. See Forbearance, Loan
Modification, Relief/Recasting and Short Payoffs/Short Sales.
Mechanic’s Lien A lien allowed by law upon a building or other improvement upon land, as a security for the payment of labor done and
materials furnished for improvement. Many contractors have acquired properties through this legal mechanism.
Mortgage Lien The right of a mortgage lender to sell a mortgaged property is the borrower fails to repay the loan as agreed.
Nonjudicial Foreclosure A foreclosure on a mortgage without filing a lawsuit. Many states foreclose on properties in this way.
Power of Sale Clause The clause in a deed of trust or mortgage, by which the borrower preauthorizes the sale of a house to pay off the
balance on a loan in the event of the borrower’s default. Usually the trustee will hold the sale. In some states it is done by the sheriff’s
office.
Relief/Recasting Various loans will offer various types of special payment plans to assist struggling borrowers prior to them going into
foreclosure. See Loss Mitigation Departments.
REO The department that holds and disposes of foreclosure property within a lending institution.
Scire Facias A court command to a borrower requiring them to appear at hearing to show why a foreclosure should not be authorized.
Short Payoffs/Short Sales The sale of property prior to foreclosure at a reduced amount. See Loss Mitigation Departments.
Strict Foreclosure A legal premise in some states that the lender owns a property and may simply evict the borrower for nonpayment and
gain full and complete title free of the borrower’s right to redeem after the prescribed waiting period has passed.
Trustee’s Deed A type of deed issued to the buyer at a trustee foreclosure sale.
Vendee Loan A VA Loan made to help the VA resell a VA foreclosure. Can be given to a non-vet.
Warranty Deed A deed in which the seller guarantees or warrants that good title can be traced back in time when the land was owned by
country.
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| Loss Mitigation Glossary |
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