Mortgage Note Encyclopedia

A deed-in-lieu of foreclosure is a voluntary property transfer from borrower to note holder, avoiding the cost and timeline of formal foreclosure.

Deferred payments move past-due amounts to the back end of a loan so the borrower can resume regular payments without curing the full arrearage upfront.

A discounted payoff (DPO) is a lump-sum payment for less than the total owed, fully satisfying the debt. DPOs are among the fastest, most profitable.

Ejectment is a title-based legal action to remove occupants with no right to possession, typically filed after a foreclosure sale when the borrower.

Eviction is the legal process of removing an occupant after foreclosure, typically filed alongside a cash-for-keys negotiation as a last-resort REO step.

A forbearance agreement is a temporary reduced-payment arrangement that tests a borrower's ability to pay before committing to a permanent loan.

Foreclosure is the legal process for taking ownership of collateral after a borrower defaults, varying by state between judicial and non-judicial.

Foreclosure prevention covers workout strategies — modifications, forbearance, discounted payoffs, and deeds in lieu — that resolve defaults without.

A loan modification permanently restructures mortgage terms — rate, term, or principal — to make payments affordable and avoid foreclosure on a.

Loss mitigation covers all strategies to minimize losses on a defaulted note — modifications, discounted payoffs, forbearance, short sales, and deeds in.

A modification permanently changes a mortgage loan's rate, term, or balance to make payments affordable and convert a non-performing note into cash flow.

A mortgage modification changes a loan's rate, payment, term, or balance — the primary strategy note investors use to convert NPLs into cash flow.

Principal reduction is a loan modification where the lender forgives part of the outstanding balance, making the loan affordable to keep payments coming.

Reinstatement cures a mortgage default by paying all past-due amounts to restore the loan to current status, producing maximum recovery for note investors.

REO (Real Estate Owned) is property acquired by a lender or note investor through foreclosure or deed-in-lieu after the borrower defaulted on the mortgage.

A sheriff sale is a court-ordered public auction where foreclosed property is sold, typically the final step in judicial foreclosure proceedings.

A short sale is when a borrower sells property for less than the total debt owed, with lien holders accepting reduced proceeds as settlement.

A trial payment plan is a temporary 3-6 month arrangement that tests whether a borrower can sustain modified loan terms before a permanent modification.

A workout is any negotiated agreement between a note holder and borrower that resolves a defaulted loan without completing the full foreclosure process.