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loan. In some cases, the servicer may also be the foreclosure sale is at least 90 days, and in most
beneficiary of the loan. circumstances for residential real property, at
least 120 days.
Loan-to-Value Ratio – The comparison of the .
amount of the loan to the value or selling price of
real property expressed as a percentage. For Notice of Trustee’s Sale – A notice giving specific
example, if a home with a $100,000 value has an information about the loan in default and the
$80,000 mortgage on it, the loan to value is 80%. foreclosure proceedings about to take place. In
Washington, at least 90 days (and in most
Loss Mitigation – The department within the loan circumstances for residential real property, at
servicer’s company that operates to minimize the least 120 days) before the foreclosure sale, the
company’s losses on non-performing loans. This Notice of Trustee’s Sale must be recorded in the
department works with homeowners to discuss county where the property is located, mailed,
workout plans and other solutions to defaults. and served or posted.
Mortgage Insurance – Insurance protecting a Originating Lender – The initial entity that gave
lender against loss from a borrower’s default. you the mortgage loan. It may not be the same
entity to whom you send your monthly mortgage
Negative Amortization – This occurs when there payments.
is a gradual increase in the mortgage loan
balance because the monthly payment is not Partial Claim or Partial Release – If your mortgage
enough to cover the monthly principal and is insured by FHA, you may qualify for a low
interest payments. The shortfall each month is interest or interest-free loan to bring your loan
added to the balance from the month before and current through the FHA. This loan would be
the total amount owed to the beneficiary repaid at a later date, usually when you pay off
increases as a result. Adjustable rate mortgages your first mortgage or sell your home.
with payment caps and negative amortization are
re-amortized at some point so that the remaining Pre-Foreclosure Sale or Short Sale – If you can no
loan balance can be fully paid off during the term longer afford your home, this option involves
of the loan. This could result in a substantial selling your house for less than the secured debt
increase in the borrower’s monthly payment. to prevent foreclosure. If you owe more on the
home than its current value, your servicer may
Non-Judicial Foreclosure – The process of agree to accept less than what is owed on the
foreclosure which can be used when the home mortgage. There may be income tax
loan is secured by a deed of trust (which is almost consequences with a short sale, so please talk to
always the case for home loans made in a qualified tax preparer and/or an attorney for
Washington). When the non-judicial foreclosure more information before agreeing to a short sale.
process is used against residential property, the
liability secured by the deed of trust in Pre-Payment Penalty – Is a fee charged by a
foreclosure is extinguished even if the house sells servicer when a borrower pays off a mortgage
at the foreclosure sale for less than the amount loan in full or in part prior to the maturity date.
of the debt. However, if there is another Fees are generally only applicable within the first
obligation secured by a junior deed of trust, the few years of the loan and will typically be
non-judicial foreclosure of the senior deed of assessed on prepayments of 20% of the loan
trust extinguishes the junior deed of trust but it balance or more.
does not extinguish the unsecured liability on the
obligation that was secured by the junior deed of Postponement – The trustee may continue the
trust. The timeframe from the service or posting sale date to a later time, or another place, by
of the Notice of Trustee’s Sale to the date of the giving notice of the new date, time and place by
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