Chapter 13 Bankruptcy
This type of bankruptcy sets a payment plan between the borrower and the creditor monitored by the court. The homeowner can keep the property but must make payments according to the court’s terms within a 3 to 5 year period.
Chapter 7 Bankruptcy
A bankruptcy that requires assets be liquidated in exchange for the cancellation of debt.
Co-Borrower
An additional person that is listed on the title and assumes equal responsibility for the repayment of the loan.
Co-Signed Account
An account signed by someone in addition to the primary borrower, making both people responsible for the amount borrowed.
Co-signer
A second person to sign a loan who agrees to assume a debt obligation if the principal borrower defaults on payments. This person has no ownership interest in the property and receives no benefit in any loan proceeds.
Collateral
Security in the form of money or property pledged for the payment of a loan. For example, on a home loan, the home is the collateral and can be taken away from the borrower if mortgage payments are not made.
Collection Account
An unpaid debt referred to a collection agency to collect on the bad debt. This type of account is reported to the credit bureau and will show on the borrower’s credit report.
Convertible ARM
An Adjustable-Rate Mortgage loan that can be converted into a fixed-rate mortgage during a certain time period.
Corporate Advance
Funds paid by the servicer with the servicer’s own funds rather than escrow account funds for servicing-related expenses. These may include attorney advances, bankruptcy fees, lender-placed insurance premiums, inspections, property preservation costs and other expenses. These funds will be assessed to the mortgage loan balance due if permitted under the mortgage loan documents and allowable pursuant to applicable state law.
Credit
An arrangement in which a borrower receives money to be paid back to the lender over time.
Credit Counseling
Education on how to improve bad credit and how to avoid having more debt than can be repaid.
Credit Reporting Agency or Bureau
A company that gathers and sells information relating to the credit of individuals.
Cure/Reinstatement
The amount of funds required to be paid by the borrower to bring a delinquent mortgage loan account current. The reinstatement amount may include all past due payments, late charges, attorney advance, corporate advance or other fees as may be allowable pursuant to the mortgage loan documents and applicable state law.
Curtailment
The borrower’s privilege to make payments on a loan’s principal before they are due. Paying off a mortgage before it is due may incur a penalty if so specified in the mortgage’s prepayment clause.
Cushion (Reserve)
Funds a mortgage servicer may require a borrower to pay into an escrow account to cover unanticipated disbursements or disbursements made before the borrower’s payment are available in the account. The cushion amount may be limited pursuant to applicable state law.
Customer (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.
