It always helps to know the lingo. Whether you are looking

for a loan, looking for help with a loan or just getting inform-

ation, your ability to communicate will matter. Take a look at

some key words you should understand. 

Companies you may deal with

• Foreclosure Attorney – In some states, foreclosures are processed through the state court system. When this is the case, you will usually be informed about any foreclosure proceedings by an attorney that has been hired by the loan servicer to handle the legal details of foreclosing on your property.

• Investor – Investors often buy loans from the original lender, though the lender or a servicing agent usually collects the payments. If an investor owns your loan, they will usually have to approve any changes to the loan terms. Investors are often government sponsored entities like Freddie Mac or Fannie Mae, or they may be other financial institutions.

• Lender – A "lender" is the company that made the loan. It can be a bank, like the institution where you have your checking account, or it can be a non-depository institution, called a mortgage bank. The lender that gave you the loan may keep your loan or sell it to an investor. If the original lender keeps your loan, they may service it themselves or hire a loan servicing company (servicer.)

• Servicer – The “servicer” is a company to which you send your mortgage payments. It can be a lender or a third party hired by the lender to process payments sent by borrowers like you. The servicer also is the one you deal with when you miss a payment or have other questions about your loan.

Understand your payment status

• Current – A loan is “current” when all amounts due and owing as of today’s date have been paid.

• Default – A loan is in "default" if a borrower has been delinquent for two or more payments, and as a result a servicer may accelerate (declare immediately due and owing) all amounts due on the loan including the entire remaining balance. If you can’t pay everything by the date stated in the "default letter," the servicer will start foreclosure.

• Deficiency – This is the unpaid balance of a mortgage debt when the proceeds of a foreclosure sale are not sufficient to saftisfy the debt.  In some states, a lender can pursue legal remedies to collect deficiency amounts from foreclosed borrowers.  Often lenders elect not to pursue deficiency judgments due to the small probability of collecting from homeowners who have lost their homes due to financial problems.  If your mortgage is in foreclosure, and you live in a state allowing deficiency judgements, you should keep the possibility of a deficiency judgement in mind as you make financial decisions about your situation.

• Delinquent – A loan is "delinquent" when payment has been missed or other charges assessed to the loan have not been paid on time.

• Foreclosure- A loan is in foreclosure when default has occurred and the servicer begins the legal process to take back the house. They will sell the house and use the funds to apply against the amount they loaned you. Most often, there will not be enough funds from the sale of the house to cover the loan and the lender will lose money. In that case, foreclosure is the lender’s last resort. However, if you own other property or have other assets of value, you may be responsible to pay the owner of the loan the difference between the proceeds they receive when they sell the house and the amount of the loan.

• Redemption – A borrower can reinstate or redeem their mortgage if they become delinquent on payments.  The borrower must pay all payments and penalities after receiving a default notice from the lender or servicer, but before foreclosure proceedings begin.