Loss Claim Administration Course Glossary close     A B C D E F G H I J K L M N O P Q R S T U V W X Y Z               -A- Top         Abandoned Mortgage Obligation- Abandoned Mortgage Obligation is the situation when a borrower fails to honor the obligations under the terms and conditions of the mortgage. Examples of an abandoned mortgage obligation occur when the borrower has physically vacated the property the mortgage is three or more payments past-due, and the default was not of an involuntary nature.           Acceleration- The exercise of a mortgage clause that gives the mortgagee the right to declare the entire loan due before maturity under specified conditions, usually default. Demand for immediate repayment of the entire balance of debt if security instruments are breached.           ACF2- Access Control Facility 2 (ACF2) is security control software that protects and controls access to USDA IBM/IBM compatible mainframe environments. An ACF2 ID is the password needed by USDA employees to enter and use these systems (also known as the “FH ID”).           Acquired Property - Acquired Property is a property owned by the Servicer as a result of a foreclosure or acceptance of a deed-in-lieu; often referred to as “real estate owned.” For additional information, see Real Estate Owned           Acquisition Date- Acquisition Date is the date of foreclosure sale, or the date the title is lawfully transferred to Servicer, or deed-in-lieu recordation.           Additional Interest- The amount of interest accrued on the amount of the principal loss between the settlement date and the loss claim check date on a properly filed claim. See RD Instruction 1980-D, section 1980.376(a).           Additional Recovery- Additional Recovery are any proceeds recovered by the Servicer occurring after a previously paid loss payment, or report of a Real Estate Owned (REO) sale. Additional recovery is to be reported to the Agency through use of the Additional Recovery Calculator. Examples: Examples of additional recovery include a trailing insurance refund, and/or collection of a deficiency judgment, or similar proceeds. The Additional Recovery Calculator is a form used to report additional recoveries post claim settlement. For additional information, see Other Recovery           Affidavit- A written statement made under oath before an officer of the court or notary public.           Agency- The Agency refers to the Rural Housing Service (or its successor agency) within the Rural Development mission area of the U.S. Department of Agriculture that administers the Single Family Guaranteed Rural Housing Program, formerly the Rural Housing and Community Development Service, a successor agency to the Farmers Home Administration.           Amortization- Repayment of a mortgage debt with equal periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time.           Appraisal- An opinion or estimate of value. Also refers to the process by which a value estimate is obtained.           Appraised Value- Appraised Value is an opinion of value reached by an appraiser based upon knowledge experience, and a study of pertinent data.           Appraiser- A person qualified by education, training and experience to estimate the value of real and personal property.           Arm’s Length Transaction - A proceeding where the agents involved deal completely with each other as strangers and do not collude.           Attorney Fees- Attorney Fees are actual fees incurred associated with the most recent liquidation action. The following conditions apply to attorney fees, namely they do not include costs the maximum claimable expense varies from State to State, and they are applicable to foreclosure and bankruptcy.           Attorney Costs- Attorney Costs are actual costs incurred associated with the most recent liquidation action. The following conditions apply to attorney costs, namely they do not include attorney fees, and are applicable to foreclosure and bankruptcy.           Automatic Stay- Automatic Stay is a provision of the Federal Bankruptcy Code that stops any act that can be construed to be an act against the interests of the debtor or the debtor’s property. For additional information, see Relief From Automatic Stay         -B- Top         Bankrupt- Bankrupt refers to person, firm or corporation who, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee, for the protection of creditors.  Bankruptcy may be declared under one of several chapters of the Federal bankruptcy code, namely Chapter 7, which covers individual or business bankruptcy liquidation Chapter 11, which covers reorganization of bankrupt businesses Chapter 12, which covers certain farm bankruptcies, and Chapter 13, which covers workouts of debts by individuals in which a debtor retains possession of property while making payments to creditors under a court approved plan.           Bankruptcy Discharge- Bankruptcy Discharge is a legal petition releasing the debtor from all dischargeable debts.           Bankruptcy Dismissal- Bankruptcy Dismissal is a legal order as a result of a motion filed by either the debtor or another interested party seeking to dismiss the bankruptcy case.                 Broker Price Opinion (BPO) or Broker Opinion Of Value (BOV) - Broker Price Option is used to estimate the value of a property based upon a comparison to other similar properties recently sold. It is also known as comparative market analysis (CMA).         -C- Top         Capital Improvement- Capital Improvement is any structure or component erected as a permanent improvement to real property, which adds to its value and useful life.           Capitalization- The adding of expected payments to the remaining unpaid balance of the loan.           Cash Flow- Money left from gross income after all expenses, both operating and debt service, have been deducted.           Closing Costs- Closing Costs are costs incurred by buyers and sellers to effect the closing of a mortgage loan. For additional information, see Sales Expenses           Closing Date- Closing Date, in real estate, refers to the delivery of a deed, financial adjustments, the signing of notes and the disbursement of funds necessary to consummate a sale or loan transaction. For additional information, see Settlement Date           Comparative Market Analysis- See Broker Price Opinion (BPO)           Collateral- Property pledged as security for a debt. For example, real estate pledged as security for a mortgage.           Comparables- Properties used for comparative purposes in the appraisal process that have similar characteristics to the subject property.           Condominium- A form of property ownership whereby the purchaser receives title to a specified residential unit and a proportionate interest in common areas of the condominium project in which the unit is located.           Confirmation Hearing (Bankruptcy) - A hearing where the Debtors proposed Chapter 13 plan is reviewed and either approved or denied by the Bankruptcy Judge.           Confirmation Hearing (Foreclosure) - Confirmation Hearing is a hearing where the Sheriff's Sale is confirmed and title is transferred to the successful bidder from the sale.           Confirmation of Bankruptcy Plan- A Bankruptcy Court order which approves a debtor’s plan to pay the debts owed to his/her/their creditors as of the date of the filing of the bankruptcy petition. In some jurisdictions, Confirmation may be referred to as “Ratification.”           Credit Repository or Credit Bureau- An institution that for a fee provides historical credit records of individuals provided to them by creditors subscribing to their services.         -D- Top         Debt Collection Improvement Act (DCIA)- The Debt Collection Improvement Act of 1996 centralized the government-wide collection of delinquent debt. The Financial Management Service (FMS) is the US Treasury agency responsible implementation of the debt collection provisions of the DCIA.           Deed-In-Lieu- A Deed-In-Lieu of Foreclosure is a voluntary transfer of title on a defaulted mortgage by deed from the borrower to the Servicer as an alternative to foreclosure. By arrangement between the parties, the Servicer saves the expense of foreclosure and the borrower generally expects to receive credit for payment of the debt in full.           Deed of Trust- A type of security instrument in which the borrower conveys a trust to hold property to a third party (trustee) as security for the lender, with the condition that the trustee shall reconvey the title upon the payment of the debt and, conversely, will sell the land and pay the debt in the event of a default by the borrower.           Default Judgment- Judgment entered in a lawsuit when a defendant has failed to enter a plea or otherwise defend himself.           Defendant- Any person or entity that is being sued.           Deficiency- The difference between the balance outstanding on a loan and proceeds from the sale of the loan collateral.           Deficiency Judgment- A court order to pay the balance owed on a loan if the proceeds from the sale of the security are insufficient to pay off the loan.           Default- Default is a breach or nonperformance of the terms of a note or the covenants of a mortgage. For additional information see Delinquency Default Loans           Delinquency- Sometimes used synonymously with default, Delinquency is a type of default where the breach or nonperformance is non payment. For additional information see Default           Depreciation- A sum representing presumed loss in the value of a building or other real estate improvement, resulting from physical wear and economic obsolescence.           Due Date of Last Paid Installment (DDLPI) - Due Date of Last Paid Installment is the due date of the last fully paid monthly installment of principal, interest and escrow (if any), not the date on which such payment was credited or the date of the next scheduled installment.           Due-on-Sale Clause- A clause in the mortgage in the mortgage providing that if the mortgagor sells, transfers, or in any way encumbers the property, the mortgagee has the right to implement the acceleration clause making the balance of the obligation due. Also known as encumbrance. See also Garn-St. Germain Act         -E- Top         eAuthentication- A government-wide security access system. Log-in security for all system users includes screening by the eAuthentication process.           Escrow Balance- Escrow Balance is the balance of the escrow account as of the application of the last borrower payment.           Estimated Net Recovery (ENR)- Estimated Net Recovery is the figure used by Rural Development to settle a loss claim on an unsold REO. A Servicer’s ENR is based on a liquidation value appraisal to which is applied the current REO cost factor to estimate REO expenses to be deducted.           Eviction Action- Eviction Action is a court action to obtain possession of premises by the person entitled to actual possession. It may also be known as forcible entry and detainer (FED). For additional information see FED         -F- Top         FED- FED is forcible entry and detainer. It may also be referred to as an eviction action. For additional information see Eviction Action           First Legal Action- First Legal Action is the date of first action required by law to initiate foreclosure. Action varies by State. For additional information see Foreclosure Initiation           First Lien- A First Lien is any lien that meets both of the following requirements: The lien is acceptable to private institutional first-mortgage investors in the area where the mortgaged premises are located, and, The lien grants to the lien holder a claim against the property that, under the law of the jurisdiction where the mortgaged premises are located, is prior to the rights of all others, subject only to prior liens and encumbrances expressly waived.           Forbearance- The act of refraining from taking legal action despite the fact that a mortgage is in arrears. It is usually granted only when a mortgagor makes a satisfactory arrangement by which the arrears will be paid at a later date.           Foreclosure- Foreclosure is a legal procedure in which a mortgaged property is sold to pay the outstanding debt in case of default.           Foreclosure Initiation- Foreclosure Initiation is the date of the first legal action required by law to initiate foreclosure. Action varies by State. For additional information, see First Legal Action           Foreclosure Sale- Foreclosure Sale is a forced sale of mortgaged property at public auction conducted either by the court or in some other prescribed fashion, with the proceeds of the sale going to satisfy the debt. The Servicer is usually the successful bidder at the foreclosure sale.           Future Recovery - Future Recovery is the recovery of additional funds to be applied to the REO account subsequent to the settlement of the original loss claim payment. Report future recovery after the sale of the REO by utilizing the Future Recovery Calculator. Report other recovery using the Additional Recovery (Post Sale) Calculator.         -G- Top         Garn-St. Germain Act- In 1982, Congress passed the Garn-St.Germain Depository Institutions Act that provides that due-on-sale clauses are enforceable notwithstanding contrary State law. However, the act excludes from its coverage certain loans made during certain “window” periods when there may have been State law protection, and exempts certain specified transfers. See OGC’s Compilation of Laws.           Guaranteed Loan System (GLS) - Guaranteed Loan System is the currently used automated loan accounting system for RHS guaranteed rural housing loans.         -H- Top         Hazard- Hazard is a definition of the condition of the property that jeopardizes the health or safety of the occupants or members of the community. A property defined as a hazard does not necessarily make it unfit for habitation.           Hazard Insurance- Hazard Insurance is the insurance coverage that provides compensation to the insured in case of property loss or damage.           Housing Counseling Clearinghouse (HCC)- A HUD-established service for financially distressed mortgagors to call (1-800-569-4287) for information on HUD-approved housing counseling agencies. Required by the HUD Act of 1968, lenders must notify all eligible delinquent borrowers of the availability of housing counseling for residential mortgage loans, whether conventional, government insured or government guaranteed, including loans, direct or insured, by Federal, State and local governmental agencies.           HUD-1 Settlement Statement- The Settlement Statement is a loan closing document, listing funds paid by the Buyer and Seller the distributions of those funds, and the remaining cash that should go to the Seller. The settlement statement refers to the Buyer as the “Borrower” because the Buyer is the one taking out a real estate mortgage.         -I- Top         Interest Rate- Percentage paid for the use of money, usually expressed as an annual percentage.         -J- Top         Junior Lien- Lien or claim against a property that is secondary or inferior to the lien of the first mortgage. For example, a second mortgage.         -K- Top             -L- Top         Level 1 access- A secured level of access providing limited access to USDA web site portals and applications that have minimal security requirements. Note: Level 1 access is limited and does not allow you to conduct official electronic business transactions with the USDA via the internet in most cases. GUS requires a Level 1 access.           Liquidation- Liquidation of the loan occurs when the Servicer acquires title to the security a third party buys the property at the foreclosure sale, or the borrower sells the property to a third party in order to avoid or cure a default situation with the prior approval of the Servicer and RHS. In States providing a redemption period, the Servicer does not typically acquire title until after expiration of the redemption period.           Loan-to-Value Ratio (LTV)- The ratio of mortgage amount to appraised value or sales price of real property. Used by lenders to determine maximum loan amounts as set by law.           Loss Claim- Loss Claim is the method by which the Agency provides reimbursement to a Servicer who has fulfilled all program requirements, but has incurred a loss on a guaranteed loan.           Loss Mitigation- Loss Mitigation refers to a Servicer’s efforts with a borrower to work out a delinquency, or resolve a defaulted loan to maximize recovery and avoid foreclosure. Loss Mitigation actions may include extension of loan terms, forbearance, moratorium, modification, refinancing, short sale or deed-in-lieu.         -M- Top         Maintenance Costs- Maintenance Costs are recurring fees associated with holding custodial or REO property. Example: Yard maintenance and/or mowing.           Marketable Title - A title that is free from material defects and under which a purchaser may have quiet and peaceful enjoyment of the property subject to easements, covenants and restrictions readily acceptable to a well-informed buyer. Also known as merchantable title.           Market Value- Market Value is the most probable price that a property should bring after reasonable exposure in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgably.           Mortgage- A formal document executed by an owner of property, pledging that property as security for payment of a debt or performance of some other obligation; the security instrument. For additional information, see Deed of Trust           Mortgagor- The borrower in a mortgage transaction who pledges property as a security for the debt.           Motion Requesting Relief from Stay- Motion Requesting Relief from Stay is a pleading filed in a bankruptcy case wherein the creditor requests that its collateral be removed from the automatic stay imposed by the bankruptcy filing.         -N- Top         National Appeals Division (NAD)- The National Appeals Division is the organization within the United States Department of Agriculture that is responsible for the Department’s administrative appeals procedures for Servicers who desire to appeal an adverse decision made by the Agency.           Net Recovery Value- Net Recovery Value is the market value of the security property minus anticipated expenses of liquidation acquisition, and sale as determined by the Agency           Note- A general term for any kind of paper or document signed by a borrower that is an acknowledgement of the debt, and is, by inference, a promise to pay. When the note is secured by a mortgage, it is called a “mortgage note” and the mortgagee is named as the payee.         -O- Top         ORE- Owned Real Estate. For additional information, see the definition of Real Estate Owned (REO)           Other Recovery- Other Recovery refers to the recovery (return of funds, refund, etc.) of funds not previously reported in the primary claim or report of REO sale. Examples: Some examples of recovery are a delayed payment on an insurance refund collection of a deficiency judgment, or similar proceeds recovered. For additional information, see Additional Recovery         -P- Top         PITI- An acronym for the items included in a monthly loan payment: principal, interest, taxes and insurance.           Pre-Foreclosure Sale- Pre-Foreclosure Sale is a procedure to avoid foreclosing on the property, in which the borrower is allowed to sell his or her property, and the investor and borrower agree to accept the proceeds of the sale to satisfy a defaulted mortgage. The proceeds of the sale in a Pre-Foreclosure may be less than the amount owed on the mortgage. For additional information, see Short Sale           Preservation Costs- Preservation Costs are one time costs associated with securing and preserving a custodial or REO property. Examples: Examples of preservation costs include changing locks debris removal, or winterization.           Protective Advance- Protective Advance is an advance of funds by a Servicer for an emergency expense necessary to preserve or protect the physical security for the loan. Examples: Examples of protective advances include escrow advances for hazard or force-placed insurance real estate property taxes, or attorney fees. For the purposes of loss claim filing, advances may be claimed under liquidation or REO pending.         -Q- Top             -R- Top         Real Estate Owned (REO)- Real Estate Owned denotes real estate that has been acquired by a lending institution for investment or through foreclosure of mortgage loans. It is also called Owned Real Estate (ORE).           Redemption Right- For additional information, see Right of Redemption at LMG 4.1.cn.           Referral Fees- Referral Fees are a portion of the commission paid to some Servicers in return for referring properties to a certain broker. Referral fees from the broker, returning a portion of the commission to the servicer are to be treated as “other recovery.”           Relief from Automatic Stay- Relief from Automatic Stay is a legal action permitting a Servicer to resume action to collect on the debt. For additional information, see Automatic Stay           Right of Redemption- Right of Redemption, in some states, is a right permitting the borrower to reclaim foreclosed property by making full payment of the foreclosure sales price. The right of redemption exists for a specified period of time, called the “redemption period.” State statutes may provide for a waiver of redemption rights or an REO sale subject to redemption rights.         -S- Top         Sales Expenses- Sales Expenses are various fees paid by the seller at the time of real estate closing. Sales expense represents the total reduction due seller from the HUD-1.           Sales Price - Sales Price is the amount REO property sold to third party. For additional information, see Contract Price           Servicer- A Servicer may be defined as the organization making, holding, and/or servicing the loan which is guaranteed under the provisions of RD Instruction 1980-D Subpart D the party requesting the guarantee, or an entity purchasing an RHCDS guaranteed loan. The Servicer is primarily responsible for originating, underwriting, servicing, and where necessary, liquidating the loan and disposing of the property in a manner consistent with maximizing the Government’s interest. A purchasing Servicer acquires all the privileges, duties, and responsibilities of the origination Servicer.           Settlement Date- The REO sold date establishes the Settlement Date for loss claims processed. The settlement date can also be the foreclosure sale date, for properties sold to third parties the short sale date the deed-in-lieu recording date, or the marketing period expiration or extension date. For additional information, see Closing Date           Sheriff’s Sale- Sheriff’s Sale is the public auction at which the property being foreclosed is offered for sale.           Short Sale- A Short Sale occurs when the Servicer releases its collateral interest for less than the indebtedness to accommodate a sale of the property to a third-party buyer. For additional information, see Pre-Foreclosure Sale         -T- Top             -U- Top             -V- Top             -W- Top             -X- Top             -Y- Top             -Z- Top