A
Ability-to-Repay (ATR) Rule
The Regulation Z requirement (12 CFR §1026.43) that a creditor on a consumer-purpose loan secured by a dwelling make a reasonable, good-faith judgment, based on verified income and debts, that the borrower can actually make the payments. A seller who carries back financing on an owner-occupied home is generally covered. Loans that meet the Qualified Mortgage standard in §1026.43(e) get a presumption of compliance. Business-purpose credit is outside the rule.
Acceleration
The lender's election to make the whole remaining balance due now, instead of only the payments that were missed. Texas courts require the notice of acceleration to be clear and unequivocal, and it normally follows a separate notice of intent to accelerate. Acceleration starts the four-year limitations period for foreclosing the lien. A lender that later abandons or rescinds the acceleration in writing can restore the original maturity schedule, which matters if a file sits for a long time.
ACH (Automated Clearing House)
The U.S. bank-to-bank network for electronic debits and credits. Servicers use it to pull scheduled borrower payments from a checking account and to push the net proceeds out to the lender.
Adjustable Rate Mortgage (ARM)
A loan whose rate resets on a schedule, usually by adding a fixed margin to a published index. Regulation Z requires specific disclosures when the loan is made and advance notices each time the rate and payment change. Seller-financed Texas notes are almost always fixed-rate, so ARMs are uncommon in private portfolios.
Amortization
Paying a loan down over time through scheduled installments. Each payment covers that month's interest first, and the rest reduces principal, so the principal share grows as the balance shrinks.
Annual Percentage Rate (APR)
A yearly measure of the total cost of credit under Regulation Z, combining the interest rate with certain finance charges such as points and some fees. Because those charges are folded in, the APR usually sits above the note rate. On consumer-purpose mortgages it appears on both the Loan Estimate and the Closing Disclosure.
Audit Trail
The dated, loan-level history of every payment posted, adjustment made, escrow disbursement sent, and notice issued. A complete trail lets the lender, a note buyer, or a regulator reconstruct the account at any point in time.
B
Balloon Payment
A single large payment of the remaining balance due on a set date, often after five to ten years of smaller payments based on a longer amortization. Balloons are common in seller-financed notes and give the buyer a deadline to refinance or sell.
Boarding
Putting a loan on the servicing system: checking the note and lien document against each other, entering the payment schedule and current balance, setting up escrow if there is one, and sending the borrower a welcome notice. Sometimes called loan setup or onboarding.
Borrower
The person or company that owes the debt and signed the promissory note promising to repay it on the stated terms.
Bridge Loan
Short-term credit, often six months to two years, that carries a borrower from one transaction to the next, such as from a land purchase to permanent financing. In Texas these are usually secured by a deed of trust and serviced like any other secured note, just with a shorter clock to maturity.
C
CFPB (Consumer Financial Protection Bureau)
The federal regulator, created by Dodd-Frank, that writes and enforces the main consumer mortgage rules, including Regulation X (RESPA) and Regulation Z (TILA). Texas servicers are subject to those federal rules while also answering to the Texas Department of Savings and Mortgage Lending at the state level.
Closing Date
The day the sale and the loan are finalized: documents are signed, funds change hands, and the deed is delivered to the buyer.
Closing Disclosure
The federal form, delivered before a consumer mortgage closes, that sets out the final loan terms, the projected payments including escrow, and an itemized list of closing costs. It is meant to match up with the earlier Loan Estimate.
Collateral
Whatever secures repayment of the debt. For a mortgage note, the collateral is the real estate described in the deed of trust or contract, which the lender can look to if the borrower does not pay.
Credit Bid
A bid the lender makes at its own foreclosure sale using the debt owed instead of cash, typically up to the balance plus interest, fees, and costs. If nobody bids more, the lender acquires the property. If an outside buyer bids higher in cash, the lender is paid from those funds and any excess goes down the line to junior liens and then the borrower.
Cure Period
The time a borrower in default has to catch up before the lender may accelerate. For a debtor's residence, Texas Property Code §51.002(d) requires at least 20 days after a written notice of default. Deeds of trust on other property set their own window, which can be shorter. If the period ends without a cure, the lender may accelerate and move toward a sale.
Cushion (Escrow)
An extra reserve in the escrow account to absorb increases in tax or insurance bills. Regulation X (12 CFR §1024.17) caps it at one-sixth of the year's expected disbursements, roughly two monthly escrow payments. A surplus found at the annual analysis above the allowed amount generally has to be refunded.
D
Deed in Lieu of Foreclosure
An agreement where the borrower signs the property over to the lender and the lender releases some or all of the debt, so neither side goes through a sale. It can save time and cost, but the lender should check title first because a deed in lieu, unlike a foreclosure, does not wipe out junior liens.
Deed of Trust
The Texas security instrument for most real estate loans. The borrower conveys the property to a trustee to hold as security, and the trustee can sell it under a power of sale if the borrower defaults. It does the job other states assign to a mortgage.
Default
A breach of the loan terms. Missed payments are the usual case, but failing to keep the property insured, letting taxes go unpaid, or transferring the property without consent can also be defaults under the documents.
Deficiency Judgment
A court judgment for whatever debt remains after a foreclosure sale brings in less than the balance owed. Texas Property Code §51.003 governs these. The lender must sue within two years of the sale, and the borrower can ask the court to measure the property's fair market value, which may reduce or eliminate the deficiency.
Disbursement
Money the servicer sends out of the account. Most often this means the lender's monthly remittance after the servicing fee and any escrow portion are taken out of the borrower's payment, but tax and insurance payments from escrow are disbursements too.
Dodd-Frank Act
The 2010 federal financial-reform law that created the CFPB and overhauled the consumer mortgage rules. For a private lender, the parts that matter day to day show up in Regulation Z, Regulation X, and the loan originator qualification rules.
E
E-SIGN Act
A 2000 federal statute (15 USC §7001 and following) that gives electronic signatures and records the same legal effect as paper. Before a servicer delivers required notices electronically, the borrower must consent, and the borrower can withdraw that consent going forward.
Effective Date (Servicing Transfer)
The day servicing moves from one company to another. Under 12 CFR §1024.33 the borrower hears from the outgoing servicer no later than 15 days ahead and the incoming servicer within 15 days after it, or both send one combined notice. For 60 days afterward, a payment sent to the old servicer on time cannot be treated as late.
Electronic Surety Bond (ESB)
A surety bond maintained electronically in NMLS instead of on paper. Texas requires registered residential mortgage loan servicers to keep one on file under the SML rule at 7 TAC §58.107, which took effect at the start of 2026.
Escrow Account
A custodial account the servicer holds for the borrower. Part of each monthly payment goes in, and the servicer uses it to pay property taxes, hazard insurance, and sometimes HOA dues when they come due.
Escrow Analysis
The yearly review of an escrow account. The servicer compares what was collected with what was paid out, projects the next twelve months of bills, and resets the monthly escrow amount, which can produce a shortage, a surplus, or no change.
F
FDCPA (Fair Debt Collection Practices Act)
The federal statute that limits how third-party debt collectors contact and treat consumers. A servicer that takes over a loan already in default can fall under it, while one that boards a performing loan generally does not. Courteous, accurate borrower communication is good practice either way.
Federally Related Mortgage Loan
The RESPA category (12 USC §2602(1)) that determines whether the federal servicing rules apply. It covers most first and subordinate loans on one-to-four-family residential property that have some federal connection, such as a federally regulated lender or a lender that makes residential loans above a set volume.
Financed Amount
The amount the buyer borrowed at closing, which is the starting principal balance of the note. In a seller-financed sale it equals the price minus the down payment.
First-Tuesday Sale
The Texas rule that non-judicial foreclosure sales take place on a month's first Tuesday, starting no earlier than 10 a.m. and finishing by 4 p.m., in the area the county designates (Property Code §51.002(a)). If the first Tuesday is a New Year's Day or Independence Day holiday, sales shift to the Wednesday after.
Force-Placed Insurance
A hazard policy the servicer buys when the borrower's own coverage lapses or cannot be confirmed. It usually costs more and protects less than a policy the borrower would buy. Regulation X §1024.37 requires written notices before the charge, limits it to a bona fide and reasonable amount, and requires a refund for any overlap once the borrower shows proof of coverage.
Foreclosure
The process a secured lender uses to sell the collateral when the borrower defaults. In Texas most residential foreclosures are non-judicial: a trustee sells the property under the power of sale in the deed of trust, without a lawsuit.
G
Garn-St. Germain Act
The 1982 federal law (12 USC §1701j-3) that makes due-on-sale clauses enforceable nationwide, subject to a short list of protected transfers, such as a transfer to a spouse or child, into a living trust where the borrower stays a beneficiary, or on a borrower's death. Selling a house on a wrap or subject-to basis is not one of them, so the existing lender keeps the right to call its loan.
GLBA (Gramm-Leach-Bliley Act)
The 1999 federal law whose privacy provisions require financial institutions, mortgage servicers included, to protect customers' nonpublic personal information and to give privacy notices. The CFPB implements the notice rules in Regulation P (12 CFR Part 1016).
Grace Period
The days after a due date during which a payment can still arrive without a late charge. The note sets the length, commonly 10 or 15 days.
H
Hardship Letter
A borrower's written explanation of why payments stopped, such as a job loss, illness, divorce, or a failed business. It usually comes with income records and a budget when a borrower asks the lender for a workout, and the lender uses the package to decide what, if anything, to offer.
HOA (Homeowners Association)
The association that governs a subdivision or condominium and collects dues or assessments from owners. Unpaid assessments can become a lien, so some loans collect HOA dues through escrow.
Home Equity Loan (Texas §50(a)(6))
A loan against a Texas homestead that is not for purchase money, taxes, or another category the Constitution lists. Tex. Const. Art. XVI §50(a)(6) adds strict conditions: total liens no higher than 80% of fair market value, a 2% cap on most fees, a 12-day waiting period before closing, equal monthly payments, and closing only at certain locations. A lender that fails to fix a violation within 60 days after notice can forfeit principal and interest.
Homestead (Texas)
A Texas owner's protected residence. The Texas Constitution (Art. XVI, §50) bars forced sale of a homestead for most debts, but it lists exceptions, and a lien for purchase money is one of them. That is why a seller's purchase-money deed of trust can still be foreclosed when the buyer stops paying.
I
Interest Rate
The annual percentage of the outstanding principal the lender charges for the money. On a typical seller-financed note it is fixed for the life of the loan.
J
Junior Lien
Any lien that ranks behind another on the same property, usually because it was recorded later. A foreclosure of the senior lien generally cuts off junior liens, though a federal tax lien carries a 120-day right of redemption. Junior lienholders can claim excess sale proceeds after the senior debt is paid.
L
Late Fee
A charge for a payment that arrives after the grace period. The note fixes the amount, usually a flat dollar figure or a percentage of the scheduled payment.
Lender
The party owed the debt and entitled to the payments. In owner financing, the seller becomes the lender, and later holders who buy the note step into that role.
Loan Estimate
A three-page federal disclosure under Regulation Z that a creditor must deliver within three business days after receiving a consumer mortgage application. It lays out the loan amount, rate, monthly payment, estimated closing costs, and key features so the borrower can compare offers. Seller-financed consumer loans covered by the TRID rules need one too.
Loan Modification
A permanent change to an existing loan's terms, such as the rate, the maturity date, the payment amount, or the balance, agreed to by lender and borrower. It should be documented in a signed agreement, and recorded when it changes the secured debt in a way third parties need to see.
Loan Servicer
The company that runs a loan after closing: collecting and posting payments, keeping the records, administering escrow, sending statements and tax forms, and answering the borrower.
Loan-to-Value (LTV) Ratio
The loan balance divided by the property's value. Owe $150,000 on a property worth $200,000 and the LTV is 75%. On a Texas §50(a)(6) home equity loan, total liens are capped at 80% of value at closing.
Loss Mitigation
The options a lender may offer a delinquent borrower instead of foreclosure, including repayment plans, forbearance, modification, short sale, and deed in lieu. For covered loans on a borrower's principal residence, Regulation X §1024.41 sets the procedure and timing for reviewing a borrower's application.
M
Maturity Date
The date the last payment is due and any remaining balance must be paid off.
N
NMLS (Nationwide Multistate Licensing System)
The national platform state regulators use to license and register mortgage companies and individual loan originators. Texas servicers use it for their registration filings and electronic surety bonds.
Non-Escrowed Loan
A loan where the monthly payment covers only principal and interest, and the borrower pays property taxes and insurance directly. The lender then has to watch for unpaid taxes and lapsed coverage some other way.
Non-Judicial Foreclosure
Foreclosure by trustee's sale, without filing suit, which Texas allows when the deed of trust or contract grants a power of sale. Property Code §51.002 governs the notices and the sale. The quickest legal path is about 41 days from the first statutory notice to the sale date.
Note Buyer
An investor who pays the lender a lump sum for a note and takes over the right to all future payments. Selling a note ends the lender's interest in it. Hiring a servicer is different: the lender keeps the note and pays someone to administer it.
Note Servicing Company
An outside company hired to run a private mortgage note for the lender's behalf: posting payments, managing tax and insurance escrow, sending borrower statements and annual IRS forms, and keeping the loan history. It does not own the note and does not make the loan. Some servicers offer default administration as a separate service.
Notice of Default
The written notice telling a borrower the loan is in default, how much it takes to cure, and the deadline, and warning that the debt will be accelerated if the default is not cured. For a residence, Texas requires at least 20 days to cure, and nearly every deed of trust requires this notice before any sale.
Notice of Sale
The statutory notice of a foreclosure sale under Property Code §51.002(b). At least 21 days before the sale the notice has to be posted at the courthouse or the county's designated spot, filed in the clerk's office, and sent by certified mail to every debtor. All three must meet the 21-day deadline.
NSF (Non-Sufficient Funds)
A payment returned unpaid because the borrower's account could not cover it. The servicer reverses the posting, notifies the borrower, and charges any returned-payment fee the note and law allow.
O
Origination
Making a new loan: taking the application, evaluating the borrower, setting the terms, preparing disclosures, and closing. In Texas residential lending that work generally requires a licensed loan originator. Servicing starts where origination ends.
Origination Fee
A charge for arranging and closing a loan, shown on the federal closing disclosures. On a Texas §50(a)(6) home equity loan, it counts toward the 2% cap on fees.
Owner Financing
Another name for seller financing: the owner selling the property lends the buyer the purchase money, so no bank is involved.
P
Partial Release
Releasing part of the collateral from the lien while the rest stays pledged. Developers who sell lots on one blanket note rely on these, with release prices for each lot written into the deed of trust and a recorded release for each lot.
Payment Allocation
The order in which a payment is applied to interest, principal, escrow, late fees, and other charges. The note usually sets the order, and federal rules limit how servicers can treat partial payments on covered loans.
Payoff Statement
A written figure, good through a stated date, of everything needed to retire the loan: unpaid principal, interest to that date, and any fees or advances owed.
Periodic Statement
The monthly (or per-billing-cycle) statement Regulation Z §1026.41 requires on most closed-end residential mortgages. It shows the amount and due date, how the last payment was applied, any partial-payment funds held, the past-due history, and how to reach the servicer. Small servicers are exempt.
Power of Sale Clause
The provision in a Texas deed of trust that lets the trustee sell the property without a court order after a default. It is what makes a §51.002 non-judicial foreclosure possible, and virtually all Texas deeds of trust include one.
Pre-foreclosure
The stretch between the first missed payment and the sale. For covered loans, 12 CFR §1024.41(f)(1) bars the first foreclosure notice or filing until the borrower is more than 120 days delinquent, and that bar applies to small servicers too. The §51.002 notice periods are a separate state requirement.
Principal
The amount borrowed and still owed, apart from interest. Each scheduled payment reduces it.
Promissory Note
The signed promise to repay a stated amount on stated terms. It sets the rate, payment, maturity, grace period, and late charges, and the lien document secures it.
Property Tax Lien (Texas)
A lien that attaches to Texas real estate every January 1 to secure that year's taxes (Tax Code §32.01). By statute it has priority over almost every other lien, a first-lien deed of trust included. Delinquent taxes can lead to a collection suit and a tax sale under Tax Code §34.01, which is why lenders watch tax status closely.
Prorated Payment
Interest or a payment covering only part of a month, most often the odd days between a mid-month closing and the start of the regular schedule.
Q
Qualified Mortgage (QM)
A loan that meets the product and pricing standards in Regulation Z §1026.43(e) and so receives a presumption that the creditor complied with the ability-to-repay rule. QMs generally limit points and fees and exclude risky features such as negative amortization, interest-only periods, and terms over 30 years.
R
Recording
Filing a deed, lien, release, or other instrument in the county real property records so the world has notice of it. Order of recording usually fixes priority, so recording the deed of trust right after closing protects the lender against later judgment, contractor, and tax liens.
Refinance
Replacing an existing loan with a new one, usually for a better rate or different terms. On a Texas homestead, a refinance with no new money can stay in the §50(a)(4) category. Taking cash out or folding other debt in generally turns it into a home equity loan subject to all of that section's conditions.
Regulation P
The federal privacy rule at 12 CFR Part 1016 that implements the Gramm-Leach-Bliley Act. It requires covered financial institutions, servicers included, to give privacy notices and to let consumers opt out of certain sharing of their information with unaffiliated third parties.
Regulation X
The CFPB rule at 12 CFR Part 1024 that implements RESPA. For servicers it covers escrow accounting (§1024.17), transfer notices (§1024.33), force-placed insurance (§1024.37), error notices and information requests, early intervention, and loss mitigation (§1024.41), including the 120-day bar on starting foreclosure.
Regulation Z
The CFPB rule at 12 CFR Part 1026 that implements the Truth in Lending Act. It covers credit disclosures including the Loan Estimate and Closing Disclosure, ability-to-repay and Qualified Mortgage standards (§1026.43), loan originator rules (§1026.36), high-cost loans, and the periodic statement rule with its small-servicer exemption (§1026.41).
Reinstatement
Bringing a defaulted loan current by paying everything past due, including late charges and allowed costs, so the loan continues on its original schedule.
RESPA (Real Estate Settlement Procedures Act)
The federal law (12 USC §2601 and following, implemented by Regulation X) that governs settlement practices and much of mortgage servicing, including transfer notices, escrow accounting, error resolution, and force-placed insurance.
Right of Redemption
A right to buy back property after a foreclosure by paying what it sold for. Texas gives no post-sale redemption right after a §51.002 trustee's sale of residential property. Tax sales are different: Tax Code §34.21 lets the owner redeem within 180 days, or two years for a homestead or agricultural land.
RMLO (Residential Mortgage Loan Originator)
An individual licensed under the Texas SAFE Act (Finance Code Chapter 180) to take applications and negotiate terms on residential mortgage loans. Sellers who finance home sales regularly usually need one involved unless a narrow exemption fits.
S
SAFE Act
A 2008 federal law (the Secure and Fair Enforcement for Mortgage Licensing Act) requiring individual mortgage loan originators to be licensed or registered through NMLS. Texas implements it in Finance Code Chapter 180. It governs who may originate loans, not who may service them.
Seller Financing
A sale in which the seller lends the buyer part of the price and the buyer pays the seller in installments, instead of borrowing from a bank.
Servicing Transfer Letter (Goodbye/Hello)
The pair of RESPA notices sent when a loan's servicing moves. The old servicer's goodbye letter is due no later than 15 days ahead of the effective date and the new servicer's hello letter within 15 days after. For 60 days, a payment sent to the old servicer on time cannot be charged a late fee.
Setup Fee
A one-time charge a servicer bills when it boards a new loan.
Short Sale
A sale of the property for less than the loan balance, with the lender's agreement to accept the proceeds and release its lien. Whether the remaining balance is forgiven or still owed depends on what the lender and borrower agree to in writing.
Small Servicer Exemption
Relief for a servicer that, counting affiliates, handles no more than 5,000 mortgage loans, all of which it or an affiliate owns or originated (12 CFR §1026.41(e)(4)). It removes the periodic statement requirement and most Regulation X early-intervention and loss-mitigation procedures. It does not remove the 120-day bar on starting foreclosure. Lenders who service their own small portfolios often qualify.
SML (Savings and Mortgage Lending Department)
Texas's Department of Savings and Mortgage Lending licenses and supervises Texas residential mortgage companies, mortgage bankers, loan originators, and registered servicers. Its rules were reorganized into 7 TAC Chapters 55 through 59, effective November 23, 2024.
Subject-To
A purchase in which the buyer takes title and starts making the payments on the seller's mortgage, which remains a debt in the seller's name. The existing lender can still enforce its due-on-sale clause. Riverstone does not service subject-to notes.
Subservicer
A company that does the hands-on servicing work, such as payment processing, statements, and escrow, for whoever owns the servicing rights, and that owner remains the servicer of record. For most private lenders, hiring a third-party servicer is effectively hiring a subservicer.
Substitute Trustee
A trustee the lender appoints in writing to replace or act alongside the trustee named in the deed of trust, usually to conduct a foreclosure sale. Most Texas trustee's sales are run by a substitute trustee, often an attorney or a firm that handles sales regularly.
Substitute Trustee's Deed
The deed the trustee signs after a foreclosure sale to convey the property to the winning bidder. It recites the sale and the price, whether a lender's credit bid or a third party's cash bid, and is recorded in the county records.
T
TAC (Texas Administrative Code)
The compiled rules of Texas state agencies. The SML's mortgage rules are in Title 7, Chapters 55 through 59 (renumbered from the former Chapters 78 through 81 effective November 23, 2024), including the electronic surety bond rule at §58.107.
Tax Reporting (1098/1099)
The year-end IRS forms a servicer prepares. Form 1098 reports the mortgage interest a borrower paid, and Form 1099-INT reports the interest income paid to the lender.
Texas Property Code 51.002
The core Texas statute for non-judicial foreclosure. It sets the first-Tuesday sale day and hours, the 20-day notice to cure on a residence, and the 21-day sale notice with its posting, filing, and mailing requirements.
Texas Wrap Mortgage Loan Law (Finance Code Ch. 159)
The Texas statute, in effect since 2022, that regulates residential wrap mortgage loans. It brings most wrap lenders under state licensing and requires written disclosures to the buyer about the existing lien and its risks.
Three-Property Exemption
A federal exclusion at 12 CFR §1026.36(a)(4) from the loan originator definition for an individual, an estate, or a trust that seller-finances no more than three properties in any 12-month period, did not build the home, makes a fully amortizing loan, and determines in good faith that the buyer can repay. It is federal only and does not excuse compliance with Texas Chapter 180 licensing.
TILA (Truth in Lending Act)
The federal law, implemented by Regulation Z, that requires clear disclosure of credit terms. Most of its weight falls at origination, but it also drives servicing duties such as periodic statements, rate-change notices on adjustable loans, and prompt crediting of payments.
TIN (Taxpayer Identification Number)
The number the IRS uses to identify a taxpayer: a Social Security number, an employer identification number, or an individual taxpayer identification number.
Title Insurance
Coverage against loss from defects in title that existed at closing, such as an unknown lien or a forged deed. A lender's policy protects the note holder; an owner's policy protects the buyer. In Texas the Department of Insurance sets title premiums by rule, so the price is the same from any underwriter.
Trust Account
A bank account a servicer holds for others, kept separate from its own operating funds, where borrower payments and escrow money sit until disbursed.
U
Unpaid Principal Balance (UPB)
The principal still owed on a loan, not counting accrued interest, fees, or advances. It drops with each scheduled payment, and it is the starting point for payoff figures and note valuations.
W
W-9 Form
The IRS form a lender or borrower uses to give the servicer a correct taxpayer identification number so year-end tax forms can be issued.
Wrap Loan Disclosures
The written disclosures Texas Finance Code Chapter 159 requires before a residential wrap loan closes. They tell the buyer about the existing lien that stays in place, the risk that its lender calls the loan under its due-on-sale clause, and the buyer's rights. Skipping them can expose the wrap lender to civil liability and licensing action.
Wraparound Mortgage
Seller financing where the seller's own mortgage stays in place and the new note to the buyer sits on top of it. Each month the buyer's payment comes in to the seller, who in turn remits on the older loan. Riverstone does not service wraparound notes.
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