• Looking For Mortgage Relief? - Find Out if You Qualify Today



A tax document issued by the IRS in a situation where there is canceled debt. After a short sale closes, a 1099c is usually issued stating the amount of the forgiven debt that resulted from the short sale.


A document submitted to the IRS which requests the seller’s tax returns for the two most recent completed financial years. It replaces the 4506T as of March 2021.


A document submitted to the IRS which requests the seller’s tax returns for the two most recent completed financial years.

Agent Commission

A percentage of the purchase price that gets paid to the listing agent (the seller) and buyer’s agent (by the buyer) for their services in a real estate transaction. In a short sale, commission is paid by the LENDER not the seller.


An expert estimate of the value of the property based on factors such as location, amenities, and structural condition. An appraisal provides more comprehensive information than a BPO.

Approval to Participate


A document granting approval from the mortgage servicing lender and FHA deeming the seller eligible to participate a short sale for a required list price and required minimum net proceeds. ATPs are usually good for 90-days are are NOT buyer depending. An ATP is viewed as the 1st of 2 steps in receiving approval for an FHA short sale. After the ATP is issued, the bank still has to issue final, buyer-specific approval in order to allow the short sale to close.

Arm’s Length Affidavit


A contract that the mortgage servicer requires as part of a short sale closing package that confirms that the parties within the transaction are not financially benefiting in multiple ways. The best example of a transaction that is not arms-length is one where the buyer of the short sale property is the seller’s Mom. Banks would not approve this arms-length affidavit because they would be concerned that the seller would be able to remain in the home following the sale.

Arm’s Length Transaction

A transaction where all parties are not related to one another and are not financially benefiting in multiple ways. Almost all short sales are required to be arms-length transactions.


The amount a borrower is behind on mortgage payments – the outstanding amount owed to bring the account current.

As-Is Condition

The condition of a property when no repairs are made to the home prior to a sale. For short sale properties, a seller should not make any repairs to the home – since they are not receiving money from the sale of the home, they should not pour money into repairing the home.


A document signed by the borrower of a mortgage giving permission for a third party to speak to the mortgage lender about the loan.

Bad Faith Certificate

This is an outcome that a borrower could receive at the end of a Mediation session against their lender. If the lender takes actions that are deemed to be in “bad faith” by the Mediator, the Mediator may choose to issue a bad faith certificate when they close the Mediation. A bad faith certificate is often then used if litigation against the mortgage lender moves forward following the Mediation process.

Bank Statements

Official documents provided by the borrower from their bank providing personal bank information, including deposits, withdrawals and all other transactions.


The person who’s name is listed on the loan.

Borrower Election Form


A contract required by Bank of America that is signed by the seller of a short sale stating that they are electing to skip being considered for a loan modification and proceed directly to a short sale.

Broker’s Price Opinion


An estimated value or potential selling price of a property usually conducted by a hired sales agent. A BPO usually takes property comparables into consideration and is considered a less-detailed valuation than an appraisal. In a short sale, lenders complete a BPO by an agent they hire to help them determine the value of the sale.


A party purchasing the property.

Buyer’s Agent


The real estate agent representing the buyer.

Buyer’s Closing Costs

An agreed-upon portion of money paid to the buyer from the seller in a transaction to help the buyer cover his side of the closing costs. In a short sale, because all fees are paid by the lender, this has to be negotiated. Some lenders will not agree to pay the buyer closing costs in a short sale.

Buyer’s Lender


A lender who loans money to the buyer of the real estate transaction. Often referred to as a Mortgage Loan Originator (or MLO). If a buyer of a transaction is using financing to secure a loan to purchase a home, this refers to their lender.

Buyer’s Pre-Approval Letter

A document issued by a buyer’s lender stating that the buyer has demonstrated that they have pre-qualified to get a loan at the amount needed to purchase the home. This term applies to buyers using financing. This document is part of the required financial package for a short sale.

Buyer’s Proof of Funds


A document provided by the buyer’s agent verifying that the buyer has the adequate funds to purchase the property for the mutually agreed upon price. This term applies to buyers using cash. If the buyer of the property is using financing, the document they would need to provide is a “pre-approval letter.”

Closing Disclosure


A statement showing the final figures in a real estate closing for either seller, buyer, or both. This is sometimes requested in the place of the final settlement statement. This document is prepared by escrow.


A term used by the bank for any additional borrower(s) (sellers) whose name appears on loan documents. There is always a primary borrower. Other people listed as attached to the loan are referred to as co-borrowers.


A percentage of the purchase price that gets paid to the listing agent (the seller) and buyer’s agent (by the buyer) for their services in a real estate transaction. In a short sale, commission is paid by the LENDER not the seller. In a short sale, commission is usually 6% total. Some investors cap commissions at 4% or 5%.


In a short sale, this is a respones issued by the seller’s mortgage lender when the short sale offer presented is lower than what the lender believes the value should be. Counteroffers come after the BPO (or appraisal) is completed.

Customer Relationship Manager


A term used by many of the bigger banks (PHH, Ocwen, Mr. Cooper, Wells Fargo) to describe the name of the designated bank representative in charge of your account. It can be frustrating for homeowners as many times, CRMs don’t communicate well, don’t return Voicemails and are hard to get ahold of.

Deed in Lieu

This is a loss mitigation option where a borrower who is underwater on their property (and facing foreclosure) works out an agreement with their mortgage lender to deed of the home back to the bank in exchange for the bank agreeing not to foreclose on them. The full name is a Deed in Lieu of Foreclosure and is often described as “giving the home back to the bank.”


The term mortgage lenders use to explain the situation where a borrower has failed to make a mortgage payment. Once more than one payment is missed, banks refer to these accounts as “in default.”

Default Judgment

A binding judgment in favor of a party based on failure to take action by the other party. The judgment is in favor of a plaintiff when the defendant has not responded to the summons or failed to appear before a court of law. Failure of action is the default. In this practice area, it is common for debtors to be sued by a credit card company, fail to appear and then receive a default judgment against them for the debt owed. Oftentimes, the debtor then gets a “lien” on their property as a result of the default judgment.

Deficiency Waiver

This is the term used to confirm that the mortgage lender is not going to pursue a borrower for remaining amounts of debt following a settlement. Most commonly, this is used in a short sale situation. If a borrower gets approved to sell their home short and use the proceeds of the sale to satisfy their mortgage – at the end of the short sale, banks usually issue a “deficiency waiver” meaning, they will not continue to pursue the borrower for the remaining debt. The proceeds of the short sale fully satisfy the mortgage.

Distressed Sale

A distressed sale is a broad term used to refer to the sale of a home when the borrower is in a financially stressed situation. Distressed can mean that the home is underwater (meaning you owe more than the home is worth). Distressed can mean you’ve undergone financial hardship where you can no longer make the mortgage payments. Distressed can also mean that you have equity (money) in the home but you are in default (or are about to be in default) and need to sell the home quickly to preserve your equity.



A platform on the internet used by some servicers to negotiate short sales. The negotiator completes the short sale transaction through this system for specific lenders – most commonly – Bank of America, Mr. Cooper (Nationstar) and Chase use Equator.

Equity or Equity Sale

Equity means that you have “money in your property.” An equity sale means that you can sell your home and the value of your home is MORE than you owe on your mortgage(s). Once you complete an equity sale, you will walk away from the sale with money.


An industry term used to refer to the process of reaching out to upper management at the mortgage servicer to resolve a loss mitigation issue.

Escrow Agent

A party who handles the closing of a real estate transaction and disbursement of funds. They are in charge of preparing a final settlement statement, making sure all liens on Title are paid, and sending money to everyone who is owed money at the close of a real estate transaction. All short sales will be closed by an escrow agent. Sometimes, an escrow agent is referred to as a closing agent.

Exempt Lender

This is a phrase used to refer to lenders who do not have to participate in the Mediation process under the Foreclosure Fairness Act. Some of the smaller lenders do not have to attend. There is an exempt lender list published by the Department of Commerce each year detailing which lenders do not have to go to Mediation.

Fair Market Value

An amount an average buyer would pay for a property in the average market based on factors such as location, amenities, and structural condition. In a short sale, properties are supposed to be sold at “Fair Market Value” so often – the negotiation with the mortgage lender becomes about proving what is actually Fair Market Value.

Fannie Mae


An abbreviation “Fannie Mae” – for one of the main government-backed enterprises that invests in mortgages.

Federal Housing Administration


An abbreviation for the “Fair Housing Administration,” FHA is one of the main government-backed enterprises that invests in mortgages. FHA primarily lends to first-time home buyers.

Final Settlement Statement

(Final SS)

This relates to real estate closings and is the final statement prepared by escrow that shows where all funds in the transaction are going. In a short sale, the final settlement statement often needs to be approved by the seller’s mortgage lender prior to the closing of the sale.


A forbearance is an agreement between a borrower and their mortgage lender where the lender agrees to allow the borrower to stop making mortgage payments for a certain amount of time.


A process through which a lender forces the sale of a property because the underlying loan is in default. It is their way to legally either recover the balance of the defaulted loan or recoup the property when a borrower is no longer paying on the loan.

Foreclosure Attorney

The attorney representing the lender (or investor) that is foreclosing on the property. Sometimes known as the “Foreclosing Attorney.”

Foreclosure Mediation

A process in Washington given to qualifying homeowners under the Foreclosure Fairness Act that allows them to stop the foreclosure and have a meeting with their lender focused on foreclosure avoidance options.

Freddie Mac

One of the main government-backed enterprises that invests in mortgages.

Good Faith Estimate

A document prepared by the buyer’s lender in a real estate transaction that shows the estimated closing costs the buyer will have to pay as part of the real estate transaction.

Hardship Letter

A letter written by a borrower applying for loss mitigation detailing the circumstances leading to the default (or imminent default) on a mortgage. A hardship letter is part of the application / package needed to apply for loss mitigation.

Home Liquidation

This is the term the mortgage lenders use to refer to all options available to avoid foreclosure and get rid of the home. Short Sales and Deed in Lieu requests are forms of Home Liquidation.

Home Retention

This is the term the mortgage lenders use to refer to all options available to avoid foreclosure and keep the home. Loan modifications, reinstatement and repayment plans are all forms of Home Retention.

Homeowner’s Association


An organization of homeowners that work to preserve, maintain, and enhance homes and properties. Some homes have an HOA and some homes do not. If you’re applying for loss mitigation, the bank will want to know whether you have an HOA that you pay regular fees to.


The official foreclosure website that is owned by Fannie Mae (investor). You can communicate directly with the investor through this platform. It is used most commonly for short sale negotiations.

HUD-1 Settlement Statement


A form that details all fees required as part of a real estate transaction. Sometimes, this is also referred to as a “settlement statement.”


This term refers to the organization that actually loaned money as part of the original mortgage. It is not the name for the lender or servicing organization. A common example: Fannie Mae is the investor on the loan and the loan is serviced by Bank of America. The investor usually does not change over time, even if the servicer does.

Investor Buyer

A buyer that is representing a LLC or PLLC in the purchasing of property.

Judicial Foreclosure

The process through which the mortgage lender goes through the court system to obtain a judgment in order to foreclose on the home. A homeowner would receive a summons and complaint requiring them to show up in court to defend against a judicial foreclosure. Judicial foreclosures are rare in Washington State. Most foreclosures in Washington are non-judicial foreclosures.

Junior Lienholder

A party with a financial stake in a property that is recorded below a senior lienholder. A common example of this would be a lienholder resulting from a credit card judgment. They would likely be a subordinate lien because their interest is below that of the primary mortgage holder.


A party servicing a mortgage or loan.

Lender Representative / Single Point of Contact


A single person that is an employee of the mortgage lender designated as the coordinator of information concerning the borrower’s account/loan with the lender.

License Certification


A document required by Bank of America that is completed and signed by the listing agent and the buyer’s agent to verify that they are properly licensed in the state of the listed property


An official claim against a property for payment of a debt or an amount owed. Creditors file for liens against homes after receiving a judgment for unpaid debt. A lien shows up on the Title Report for the property, preventing a home from being sold unless the lien is either paid for or settled.

Lien Release

When the holder of a lien lifts or waives the lien, allowing a property to be sold. A property cannot be sold if it has a lien attached to it. The lien must be released – the most common way to release a lien is to pay it off or settle with the lienholder and receive the lien release.

Lis Pendens


A pending legal action that may indicating a judicial foreclosure on a property.

Listing Agent


The real estate agent representing the seller of a property.

Listing Agreement

A document where a property owner contracts with a real estate agent agreeing to let the agent sell their home. The agreement details how much the listing agent will be paid and how much the home will be listed for.

Loan Modification

An agreement between a mortgage lender and a borrower that is most commonly used when a homeowner is in default on their mortgage and they want to start paying again without having to pay back everything they owe.

Loss Mitigation

This is a broad term that refers to the different things a borrower can do to avoid foreclosure. Loan modifications, repayment plans, short sales, deed in lieu requests and other types of “workout plans” are all considered “loss mitigation.” At each mortgage lender, there will be a loss mitigation department that handles all of the different loss mitigation requests.


A process in Washington given to qualifying homeowners under the Foreclosure Fairness Act that allows them to stop the foreclosure and have a meeting with their lender focused on foreclosure avoidance options.

Minimum Net

An amount that the lien holder needs in order to approve a short sale after all fees have been taken into consideration. The amount of proceeds from the short sale after all the fees have been paid.

Mortgage Loan Originator


A lender who loans money to the buyer of the real estate transaction. Often referred to as a Mortgage Loan Originator (or MLO). If a buyer of a transaction is using financing to secure a loan to purchase a home, this refers to their lender.

Mortgage Statement

A document prepared by the mortgage lender and provided to the borrower with information such as the account number, current mortgage balance, current interest rate, and contact information for the mortgage lender. These are issued on a monthly basis directly to the borrower.

Non-Borrower Contributor

An individual who is not attached to the mortgage as a borrower, but whose income contributes to the payment of the loan. In a loan modification negotiation, sometimes non-borrower contributor income is used to increase the household income.

Non-Judicial Foreclosure

The process through which a mortgage lender forecloses on a home without having to go through the court system. A non-judicial foreclosure involves a Trustee who executes the foreclosure through a series of required notices finished with a public auction of the home. In Washington, these types of foreclosures are the most common.

Notice of Default


A notice sent to the seller stating that they have defaulted on their payments and if the money owed is not paid in a given time, the lender will move forward with the foreclosure of the seller’s property to receive their balance owed. This notice gets taped to the borrower’s door. Not all states have the same foreclosure laws so this only applies in Washington State and relates to non-judicial foreclosures. If you receive this notice, you may be eligible to attend foreclosure mediation in Washington.

Notice of Pre-Foreclosure Options


A notice required to be sent in Washington from the lender notifying the seller of all the options they have when they miss a mortgage payment. This is generally referred to as the 1st foreclosure notice and gives an option to attend a “meet and confer” meeting.

Notice of Sheriff’s Sale


A notice sent to the seller notifying them of the public date, time and place of a sheriff sale. This applies to judicial foreclosures only.

Notice of Trustee Sale


A notice sent to the seller notifying them of the public date, time and place of a foreclosure auction, also includes the information of the trustee. This applies to non-judicial foreclosures and is considered the last notice before the auction date. In Washington, the NOTS will give you 120-days before a foreclosure auction. You may be eligible for Mediation in Washington if you receive one of these.

Partial Payments

This term refers to any payment(s) sent by a borrower to a mortgage lender that is less than what is fully owed to be considered “current” on the mortgage.

Pay Stubs

A document that is given to an employee from their employer showing the amount of money they earned with any fees, taxes, etc. removed. Pay stubs are a required part of a loss mitigation package.

Payoff Statement

A statement prepared by a lender showing the remaining total balance on a mortgage.

Profit and Loss Statement

A financial statement that shows the revenue, cost, and expenses of a business over a period of time. If a borrower is applying for loss mitigation and they’re self-employed, this is part of the required document package.

Property Taxes

A tax on the value of a property issued by the county the property is located in. These fees typically get paid by the mortgage lender as part of a short sale.

Purchase and Sale Agreement


A contract between a buyer and a seller agreeing to the purchase of the property for a mutually agreed upon price, also known as an offer. This is part of the required document package for a short sale.

Purchase Price

The amount offered and agreed to by the buyer to purchase a property.

Quit Claim Deed


A document stating a party’s interest in a real estate property is being transferred or terminated, usually provided by divorcing clients and relating to the Title of the home only – not to the underlying mortgage.

Recording Fees

A fee paid to the county for registering or recording a real estate purchase or sale or other recorded documents.


This refers to the restructuring of a loan – typically where a new mortgage lender pays off your old mortgage lender and then provides you better terms on your mortgage. Technically, a loan modification is a type of refinance but loan modifications are usually used for people who are in default trying to simply get back on an agreement to resume payments. A refinance typically happens when someone is current on their loan trying to get better terms. If you’re currently in default on your loan, you likely need to do a loan modification first and then refinance.

Reinstatement Quote

A document outlining the amount to bring a delinquent loan current in one payment.

Relocation Incentive

A cash incentive provided by a lien holder to the borrower as part of a short sale to help them with moving expenses.

Repayment Plan

A repayment plan is a type of loss mitigation request where the lender allows you to resume a regular mortgage payment each month while you pay an agreed-upon extra amount each month toward the total amount you owe. At the end of a repayment plan, you will be current on your mortgage and you just continue forward with regular mortgage payments under the terms of your original loan agreement.

Request for Mortgage Assistance Form


A document completed by the seller to provide the lender with information about their property, hardship, and financials.


The party selling the property.

Service Release

The transfer of a mortgage loan from one servicing company to another.


A company that handles the day-to-day tasks of managing a borrower’s loan. A servicer may not be the same company that originally granted the borrower’s loan. Oftentimes, the word “servicer” and “lender” are interchangeable not to be confused with the word “investor” which refers to the party who originally funded the mortgage.

Settlement Letter

A letter stating that a creditor or lienholder has agreed to accept an amount of money less than what is owed in order to settle the debt.

Settlement Offer

An offer to resolve an outstanding account.

Sheriff Sale


A public auction of a distressed property to satisfy any unpaid debts.

Short Sale


A sale of a property in which the net proceeds from the sale do not fully pay off everything that is owed on the home. To complete a short sale, lienholders must agree to accept less than the amount owed on the debt in order for the short sale transaction to close.

Short Sale Affidavit


A document created by the mortgage lender with a list of conditions to be met to qualify for a short sale. This will be signed by all parties and notarized if requested as part of the short sale closing.

Short Sale Approval Letter

A letter from the mortgage lender stating the terms and conditions of the short sale approval. The approval letter is usually valid for 45 days from the date of approval, but can be shorter depending on the guidelines and foreclosure sale.

Short Sale Purchase Contract Addendum


A document required by Bank of America that is completed and signed by the seller and the buyer verifying their agreement to the terms and conditions of a short sale.

Subordinate Debt

A lower-ranked debt that is below other liens/judgments attached to a property. This also gets referred to as a “junior lienholder.”

Tax Return

A document from the IRS received after submitting your yearly taxes, that summarizes incomes, payments and tax liability for the filed year.

Title Officer

A person who prepares the Title Report for the property – they search the county records and all documents related to the property to prepare a list of all creditors and liens that are attached to the home. This person often works for the same company as the escrow agent.

Title Report

A document provided by the title company that lists all the information about the property including taxes, liens, and judgements so everyone has a complete list of all creditors that need to be paid off in order to sell a home.

Transfer Tax / Excise Tax

The taxes required by the state in order to complete a sale of real property.

Trial Payment Plan


This is the primary approval agreement that banks issue when approving borrowers for a loan modification. It is usually a three-month long agreement where the mortgage lender tests the borrower to make sure that the payments are affordable for them before the banks agree to permanently modify the loan.


The company or attorney’s office representing the mortgage lender that is taking the property to sale in a non-judicial foreclosure. In Washington, there are about 8 main Trustee’s offices around the state. They are the party that actually executes the non-judicial foreclosure on behalf of the mortgage lender.

Trustee Sale


This refers to the foreclosure auction of a non-judicial foreclosure sale. If the home is sold at a foreclosure auction, this is called a “Trustee Sale.”

Underwater Property

This is a term that refers to a home where the balance owed on the mortgage is MORE than the home is worth. There is no money in this property and if sold, this home would have to be sold through a short sale.



The individual in the lender’s office who approves or declines loss mitigation options. They are the decision makers on applications for short sales, loan modifications, and other workout plans.

Uniform Borrower Assistance Form


A document that is completed by the seller for the lender with information about their property, hardship, and financials.


A generic term for a broker’s price opinion (BPO) or appraisal of a home that tells the mortgage lender how much the home is worth.

Value Dispute

This term refers to the process through which a short sale negotiator disputes the lender’s value of a home during a short sale. If the mortgage lender will only approve a short sale with a much higher offer than what you have, you may have to complete a value dispute where you prove to the mortgage lender that their valuation is too high.


A document provided by an employer to an employee that the IRS requires from employers to report wage and salary information. Sometimes, mortgage lenders request these as part of the document package for a loss mitigation application.

Workout Attempt

This is a term mortgage lenders use to refer to any loss mitigation option like a loan modification, short sale, deed in lieu, or repayment plan. If you apply for one of these, mortgage lenders will call your application an application for a “workout option.”

How Can I Help?

    By providing your phone number you agree to receive texts from The Law Office of Nadia K. Kilburn. You may opt out anytime by texting STOP. Standard msg and data rates may apply.

    Back to top