Loan servicer – An entity that collects scheduled loan payments from a borrower, transfers principal and interest to investors, and has lead responsibility for finding a solution if the borrower is in arrears.
Loss mitigation – Servicers try alternatives to foreclosure to avoid or reduce losses that would be incurred if the loan went into foreclosure.
Loan modification – A permanent change in one or more of the original terms of the mortgage, such as lowering the interest rate or extending the repayment period, to make payments more affordable to the borrower.
Repayment plan – The borrower resumes regular monthly payments, plus some of the amount that is past due, until the loan is current.
Forbearance agreement – Provides for a temporary reduction or suspension of payments for a specified length of time.
Short sale – A property is sold for less than the outstanding loan amount and the lender accepts the proceeds, in satisfaction of the mortgage.
Deed-in-lieu of foreclosure – A borrower voluntarily deeds the property to the lender in exchange for cancellation of the mortgage debt.