Amortization: Repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (usually 15 to 30 years)

Annual Percentage Rate (APR): Calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

ARM / Adjustable Rate Mortgage: a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the change in monthly -payment amount, however, is usually subject to a cap.

Bankruptcy: A federal law whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.

Borrower: A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Broker Price Opinion (BPO): Estimate of probable selling price of a residential property based on selling prices of comparable properties in the area or a drive-by inspection, often used by a mortgage servicer as an alternative to a full property appraisal when a loan is placed in default or loan terms are modified

Credit history: History of an individual's debt payment; lenders use this information to gauge a potential borrower's ability to repay a loan.

Credit report: A record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.

Debt-to-income ratio (DTI): A comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

Deed-in-lieu: To avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process doesn't allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

Default: An omission; a failure to do that which is anticipated, expected, or required in a given situation. To default on a debt is to fail to pay it upon its due date. Default in contract law implies failure to perform a contractual obligation.

Delinquency: Failure of a borrower to make timely mortgage payments under a loan agreement.

Disposable Income: Net income remaining after state, federal, and local taxes are paid. In finance, a borrower's ability to meet principal and interest payments on long-term obligations out of earnings.

Equity: An owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s) from the fair market value of the property.

Extrajudicial: Actions outside the judicial (court) system

Fair market value: The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

FICO / credit score: A measure of borrower credit risk commonly used by mortgage underwriters when originating loans ; also a numeric index estimating an individual's creditworthiness and ability to repay financial obligations, taking into account promptness in paying bills, length of credit history, available credit actually used, bankruptcy, and other negative events, and other factors.

Fixed-rate mortgage: A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Foreclosure: A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

Forbearance: A loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.

Fraud: A false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.

Good faith estimate (GFE): An estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.

Hard expenses: Hard expenses are monthly expenses that are definite and documented. Examples include installment debt like mortgage payments, car loans, and personal loans. Most hard expenses will be included on one´s credit report.

Hardship: A reason for or decrease in income. This may be due to loss of your job or an injury at work that may have caused some type of medical disability that has left you unable to make your mortgage payments. Accepted forms of hardship for loan modification may be the ff:

1. Loss of job or reduction in income
2. Death of the homeowner, spouse or family member
3. Illness of homeowner or family member
4. Divorce or separation
5. Forced job relocation by employer
6. Adjustable rate reset-payment shock
7. increased expenses

Interest: A fee charged for the use of money.

Interest rate: The amount of interest charged on a monthly loan payment expressed as a percentage.

Legal Right: An interest that the law protects; an enforceable claim; a privilege that is created or recognized by law, such as the constitutional right to FREEDOM OF SPEECH.

Lender: To give/lend money on condition that it is returned and that interest is paid for its temporary use. Banks are commonly known as lenders. Your mortgage broker is not a lender, but rather sold your loan to a lender.

Lien: A legal claim against property that must be satisfied when the property is sold.

Loan Modification: Adjustment of the terms of a loan during its term in a way not accounted for in the original loan contract but accepted later by mutual consent of the lender and borrower. Usually a concession to the borrower in an attempt to avoid foreclosure.

Loan Modification Specialist: A professional who may conduct the loan modification process for a fee based on his or her experience at dealing and negotiating with lenders on a daily basis

Loan Terms: The major requirements of a loan, which determine how it is going to be repaid

Loan-to-value (LTV) ratio: A percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.

Loan Workout (Agreement): A mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default; generally involves substantial reduction in the debt service burden during a period of economic crisis

Loss Mitigation: A process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.

Mortgage: A legal document by which the owner (i.e., the buyer) transfers to the lender an interest in real estate to secure the repayment of a debt, evidenced by a mortgage note. When the debt is repaid, the mortgage is discharged, and a satisfaction of mortgage is recorded with the register or recorder of deeds in the county where the mortgage was recorded. Because most people cannot afford to buy real estate with cash, nearly every real estate transaction involves a mortgage. The party who borrows the money and gives the mortgage (the debtor) is the mortgagor; the party who pays the money and receives the mortgage (the lender) is the mortgagee. Also, a lien on the property that secures the Promise to repay a loan.

Mortgage banker: A company that originates loans and resells them to secondary mortgage lenders like: Fannie Mae or Freddie Mac.

Mortgage broker: A firm that originates and processes loans for a number of lenders.

Mortgage insurance: A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.

Prequalification: An estimate on the maximum home or loan value a buyer can afford based on the buyer's income and available liquid assets.

Principal Balance Reduction: Instance where the bank forgives a portion of your principal balance as part of a loan modification. The mortgage payment due for this note is based off the new loan amount. Only applicable in heavily depreciated areas.

Proof of Income: Documents attesting to an individual´s earnings, usually consisting of his last three pay slips and a certification of employment

Refinancing: Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Repayment Plan: Adding a portion of the delinquent mortgage balance on top of the normal monthly payments until caught up.

RESPA: Real Estate Settlement Procedures Act

Short Sale: A sale of a property in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes