Bail out Loan: A new loan whereby the defaulted mortgage is paid off. Usually a high interest, high cost temporary solution to avoid foreclosure.

Bankruptcy: A legal process that allows a debtor to discharge certain debts with paying the total amount due.

Deed-in-lieu: A deed instrunebt whereby a borrower conveys all interest in a real property to the mortgagee (lender) to satisfy a loan that is in default or to avoid foreclosure action. Also known as a voluntary reconveyance.

Deed of Trust: A written document describing the real property being given as security for an obligation.

Discounted payoff: The option allows you to retain the ownership of the property in return for proceeds that may not be sufficient to pay your loan off in full.

Fannie mae: (Federal National Mortgage Association (FNMAE)/Freddie Mac (Federal Home Loan Mortgage Corporation)Federally chartered enterprises owned by private stockholders that purchase residential mortgages and converts them into securities for sale to investors. Both entities set lending criteria and guidelines.

Financial Statement: An accounting of a borrower's current financial position, including all income and expense documented on a monthly basis. this is used for determining repayment capability.

Forbearance: A formal, written agreement between the lender and the borrower whereby the lender agrees to reduce or suspend monthly mortgage payments for a specified period of time.

Foreclosure: Enforcing a lender's rights upon the default of an obligation that is secured by a deed of trust. A deed of trust must contain a power of sale clause to enable the trustee to initiate a non-juridical foreclosure.

FHA (Federal Housing Administration): A division of HUD, insures home mortgages for lenders and sets underwriting criteria and loan limits for insurable loan programs.

HUD (Department of Housing and Urban Development): Government Agency charged with increasing homeownership, support community development and increase access to affordable housing free from discrimination.

Loan Modification: A loan modification is a process whereby the original terms of a mortgage are changed in order for the borrower to better meet the mortgage obligation and therefore avoid default.

Loss Mitigation: A general term relating to a process to assist a borrower who is unable to meet the contractual obligations of the mortgage note in order to avoid foreclosure. Most lenders maintain Loss Mitigations departments specifically for this purpose.

Notice of Default: A written document that is recorded, published, and posted giving notice of public record that a borrower had failed to perform his or her obligation under the terms of the promissory note. This document is recorded.

Short Sale: The lender agrees to accept less than what is owed on the property and agrees to cooperate with the sale of the property. all offers are presented to the lender and the lender decides which offer to accept.