Loan Securities

• When a borrower receives a mortgage, a lender will contract with them to service the loan. That loan could be insured through an FHA program (Federal Housing Administration) backed by the Department of Housing and Urban Development, a VA secured loan (a loan backed by the Department of Veteran's Affairs) or through a private lender. Most of these loans will be serviced by banks associated with two larger entities: Fannie Mae and Freddie Mac.
  
  

Foreclosure Guidelines

• When a property owner defaults on their mortgage and fails to pay the servicer the agreed upon amount for a long duration (normally 90 or more days), the servicer will initiate the foreclosure process. To alleviate the loss of the foreclosure proceedings, the lender will call due the insurance on the loan---if it is federally backed---in the foreclosure process, meaning that whatever entity securitized the loan will be the entity to pay the servicers the fees related to the loss of capital from the anticipated revenue of the mortgage.
  
  

Foreclosure Proceedings

• When a borrower fails to make payments, the loan servicer is the entity that will initiate foreclosure proceedings. However, the entity that secured the loan could initiate foreclosure proceedings as well, but this is extremely rare.