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IMPORTANT TERMINOLOGY

Throughout this workbook, you may see words that you have often heard but are unclear about their
definitions. Below are a few definitions that are important to know as you go through this guide. A more
detailed glossary is included in the Tools for the Homeowner section.

HUD-Approved Non-profit Housing Counseling Agency – The U.S. Department of Housing and Urban
Development (HUD) sponsors housing counseling agencies to provide free or low-cost advice on buying a
home, renting, default, foreclosure avoidance, credit issues, and reverse mortgages. These organizations have
extensive experience in counseling low and moderate-income families.
HUD-Approved Non-profit Housing Counseling Agency Counselor – HUD approves housing counseling
agencies rather than individual counselors. Housing counselors are required to have at least six months of
experience. HUD encourages the agencies to have their counselors obtain education and additional skills for
their housing counseling programs.
Originating Lender – The entity that gave you the mortgage loan. Your originating lender may be different
than the entity to which you send your mortgage payments. The originating lender will also be referred to as
“lender” in this Guide.
Servicer – The entity to which you send your monthly payments. The lender has contracted with the servicer
to handle your loan after closing. The servicer is your main contact for any issues you have with your mortgage
loan. Sometimes referred to as loan servicer or mortgage servicer. In some cases, the servicer may also be the
beneficiary of the loan (see definition below).
Servicing –The administration of the loan by the servicer from the time you obtain your mortgage loan until it
is paid off. Administration of a loan includes the collection and application of payments, the payment of
insurance and real estate taxes, and the maintenance of payment records and balances. Servicing also includes
working with the borrower to resolve delinquencies.
Beneficiary – Washington law defines a beneficiary to be “the holder of the instrument or document
evidencing the obligations secured by the deed of trust, excluding persons holding the same as security for a
different obligation.”
Delinquency – Borrower’s failure to make mortgage payments on time.
Default – Borrower’s failure to make the loan payments as agreed in the promissory note or the workout plan.
Foreclosure – The legal process by which a homeowner’s right to a property is terminated when a beneficiary
or lienholder takes possession of the property, usually because of the homeowner’s default. Foreclosure can
also occur if a homeowner fails to pay property taxes. At a foreclosure auction, the mortgage beneficiary,
through a company called a trustee, sells the property that secures a loan on which a borrower has defaulted.
Ownership of the property is then transferred to the financial institution or purchaser of the property at the
foreclosure auction. The institution then markets and lists the property for sale to recover the balance owed.
Grantor – "Grantor" means a person, or its successors, who executes a deed of trust to encumber the person's
interest in property as security for the performance of all or part of the borrower's obligations.
Trustee – means the person designated as the trustee in the deed of trust. The trustee or successor trustee
has a duty of good faith to the borrower, beneficiary, and grantor. See RCW 61.24.010.
Borrower ‘Workout’ – Process where a servicer and a borrower develop a mutually acceptable agreement to
resolve a loan default and avoid foreclosure.
Auction – An auction is a public sale in which the foreclosed property is sold to the highest bidder in order for
the beneficiary to recover some or all of the outstanding debt.
Successor-in-Interest – Also known as an “SII.” A person who has gained a legal interest in the property from
the borrower. Successors-in-interest may gain a legal interest in the property in several ways, including by the
borrower’s will or by law after the borrower dies, or because they are awarded the property by the court in a
divorce or separation case with the borrower.
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