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Compiled
from
several
sources
including
the
Mortgage
Bankers
Association Select Alphabetical Section 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 The
right
of the
mortgagee
(lender)
to
demand
the
immediate
repayment
of the
mortgage
loan
balance
upon
the
default
of the
mortgagor
(borrower),
or by
using
the
right
vested
in the
Due-on-Sale
Clause. Acquisition
Cost Under
an FHA
loan,
the
purchase
price
or
appraised
value
of the
property
plus
the
estimated
costing
costs. Adjustable
rate
mortgage
(ARM)
Is
a
mortgage
in
which
the
interest
rate
is
adjusted
periodically
based
on a
pre-selected
index.
Also
sometimes
known
as the
re-
negotiable
rate
mortgage,
the
variable
rate
mortgage
or the
Canadian
rollover
mortgage. Adjustment
Date The
date
the
interest
rate
changes
on an
ARM
(adjustable
rate
mortgage). Adjusted
Book
Basis The
purchase
price
of a
property
plus
any
capital
improvements
less
accrued
depreciation,
if
any,
to the
date
of the
sale. Adjustment
Interval
On
an
adjustable
rate
mortgage,
the
time
between
changes
in the
interest
rate
and/or
monthly
payment,
typically
one,
three
or
five
years,
depending
on the
index. Amortization
Means
loan
payment
by
equal
periodic
payment
calculated
to pay
off
the
debt
at the
end of
a
fixed
period,
including
accrued
interest
on the
outstanding
balance. Amortization
Schedule A
schedule
which
shows
how
much
of
each
payment
is
applied
to the
principal
and
how
much
is
applied
to the
interest
during
the
term
of the
loan,
showing
the
balance
until
it
reaches
zero. Annual
Percentage
Rate (A.P.R.) Is
an
interest
rate
reflecting
the
cost
of a
mortgage
as a
yearly
rate.
This
rate
is
likely
to be
higher
than
the
stated
note
rate
or
advertised
rate
on the
mortgage,
because
it
takes
into
account
point
and
other
credit
cost.
The
APR
allows
home
buyers
to
compare
different
types
of
mortgages
based
on the
annual
cost
for
each
loan.
A
rough
formula
that
you
can
use to
figure
out
your
APR is
this: (Loan
amount
-
closing
costs)
*
interest
rate =
Estimated
APR The
estimated
APR is
always
going
to be
higher
than
your
note
rate,
as you
are
using
the
same
payment
on a
smaller
amount. Annuity A
series
of
income
payments
of
receipts
over a
period
of
years. Application A
mortgage
application
requires
borrowers
to
submit
information
regarding
their
income,
savings,
assets,
debts,
and
more. Appraisal An
estimate
of the
value
of
property,
made
by a
qualified
professional
called
an
"appraiser." Assessment
A
local
tax
levied
against
a
property
for a
specific
purpose,
such
as a
sewer
or
street
lights. Assumption The
agreement
between
buyer
and
seller
where
the
buyer
takes
over
the
payments
on an
existing
mortgage
from
the
seller.
Assuming
a loan
can
usually
save
the
buyer
money
since
this
is an
existing
mortgage
debt,
unlike
a new
mortgage
where
closing
cost
and
new,
probably
higher,
market-rate
interest
charges
will
apply. Appreciation Increases
in
property
value
due to
fluctuations
in the
market,
inflation,
et al. Asset
Valuable
items,
encumbered
or
not,
owned
by a
person,
corporation,
or
entity. Assumable
Mortgage A
mortgage
that
provides
for a
buyer
to
"assume"
all
outstanding
payments
when a
home
is
sold.
The
buyer
usually
must
meet
qualification
standards
to
assume
a
loan.
Balloon
(payment)
Mortgage Usually
a
short-term
fixed-rate
loan
which
involves
small
payments
for a
certain
period
of
time
and
one
large
payment
for
the
remaining
amount
of the
principal
at a
time
specified
in the
contract. Balloon
Payment
The
final
lump
sum
that
is
paid
at the
end of
the
balloon
mortgage. Bankruptcy A
legal
process
that
individuals
use to
relieve
themselves
of
debts
and/or
liabilities
when
they
are no
longer
able
to
repay.
The
most
common
form
of
individual
bankruptcy
is a
Chapter
7,
when
an
individual
frees
himself
from
most
of
his/her
debts.
Borrowers
who
have
undergone
bankruptcy
usually
cannot
qualify
for
"A"
paper
loans
until
after
two
years
after
declaration
and a
re-establishment
of
credit. Best
Faith
Estimate An
estimate
of the
total
costs
for
securing
a real
estate
loan,
that
is
given
to
borrowers
prior
to
closing. Bill
of
Sale A
written
document
that
transfers
a
title
to
personal
property. Biweekly
Mortgage Mortgage
loan
payments
that
requires
a
payment
twice
monthly,
yielding
thirteen
payments
per
year
instead
of
twelve.
This
significantly
reduces
the
time a
principal
is
paid
off. Blanket
Mortgage
A
mortgage
covering
at
least
two
pieces
of
real
estate
as
security
for
the
same
mortgage. Book
Value Acquisition
costs
less
any
accrued
depreciation. Borrower
(Mortgagor) One
who
applies
for
and
receives
a loan
in the
form
of a
mortgage
with
the
intention
of
repaying
the
loan
in
full. Bridge
Loan An
equity
loan
secured
to
solve
short-term
financing
problem. Broker An
individual
in the
business
of
assisting
in
arranging
funding
or
negotiating
contracts
for a
client
buy
who
does
not
loan
the
money
himself.
Brokers
usually
charge
a fee
or
receive
a
commission
for
their
services. Budget
Mortgage A
mortgage
that
/includes
a
portion
for
taxes
and
insurance
as
well
as
principal
and
interest. Buy-down When
the
lender
and/or
the
home
builder
subsidized
the
mortgage
by
lowering
the
interest
rate
during
the
first
few
years
of the
loan.
While
the
payments
are
initially
low,
they
will
increase
when
the
subsidy
expires.
Callable
Debt A
debt
security
in
where
the
issuer
has
the
right
to
redeem
the
security
at a
specified
price
on or
after
a
specified
date,
but
prior
to its
stated
final
maturity
date. Cash
Flow
The
amount
of
cash
derived
over a
certain
period
of
time
from
an
income-producing
property.
The
cash
flow
should
be
large
enough
to pay
the
expenses
of the
income
producing
property
(mortgage
payment,
maintenance,
utilities,
etc.) Caps
(interest)
Consumer
safeguards
which
limit
the
amount
the
interest
rate
on an
adjustable
rate
mortgage
may
change
per
year
and/or
the
life
of the
loan. Caps
(payment)
Consumer
safeguards
which
limit
the
amount
monthly
payments
on an
adjustable
rate
mortgage
may
change. Carry-back
Loan A
loan
in
which
a
seller
agrees
to
finance
a
buyer
in
order
to
complete
a
property
sale. Certificate
of
Eligibility
The
document
given
to
qualified
veterans
which
entitles
them
to VA
guaranteed
loans
for
homes,
business,
and
mobile
homes.
Certificates
of
eligibility
may be
obtained
by
sending
DD-214
(Separation
Paper)
to the
local
VA
office
with
VA
form
1880
(request
for
Certificate
of
Eligibility). Certificate
of
Reasonable
Value
(CRV)
An
appraisal
issued
by the
Veterans
Administration
showing
the
property's
current
market
value. Certificate
of
veteran
status
The
document
given
to
veterans
or
reservists
who
have
served
90
days
of
continuous
active
duty
(including
training
time).
It may
be
obtained
by
sending
DD 214
to the
local
VA
office
with
form
26-8261a
(request
for
certificate
of
veteran
status).
This
document
enables
veterans
to
obtain
lower
down
payments
on
certain
FHA
insured
loans. Clear
Title
A
title
that
is
free
of
liens
or any
legal
question
as to
the
ownership
of the
property. Closing
The
meeting
between
the
buyer,
seller
and
lender
or
their
agents
where
the
property
and
funds
legally
change
hands.
Also
called
settlement.
Closing
costs
usually
include
an
origination
fee,
discount
points,
appraisal
fee,
title
search
and
insurance,
survey,
taxes,
deed
recording
fee,
credit
report
charge
and
other
costs
assessed
at
settlement.
The
costs
of
closing
usually
are
about
3
percent
to 6
percent
of the
mortgage
amount. Closing
Costs
Closing
costs
are
fees
paid
by the
borrower
when a
property
is
purchased
or
refinanced.
Costs
incurred
include
a loan
origination
fee,
discount
points,
appraisal
fee,
title
search,
title
insurance,
survey,
taxes,
deed
recording
fee,
and
credit
report
charges.
All
closing
costs
are
separated
into
"non-recurring,"
and
"pre-paid."
Non-recurring
charges
are
any
items
that
are
paid
only
once
because
a loan
was
obtained
or a
property
bought,
such
as a
loan
origination
fee.
Pre-paid
charges
are
those
that
recur
over
time,
like
insurance
and
property
taxes.
These
are
summarized
in the
Good
Faith
Estimate. Cloud
An
outstanding
claim
or
encumbrance,
that,
if
valid,
would
affect
or
impair
the
owner's
property
title. Collateral
Property,
real
or
personal,
pledged
as a
security
to
back
up a
promise.
In a
home
loan,
the
property
is
considered
collateral
that
can be
revoked
if
loan
is not
repaid
according
to the
terms
of the
mortgage
or
deed
of
trust. Commitment
A
promise
by a
lender
to
make a
loan
on
specific
terms
or
conditions
to a
borrower
or
builder.
A
promise
by an
investor
to
purchase
mortgages
from a
lender
with
specific
terms
or
conditions.
An
agreement,
often
in
writing,
between
a
lender
and a
borrower
to
loan
money
at a
future
date,
subject
to the
completion
of
paperwork
or
compliance
with
stated
conditions. Conforming
loan
A
New
Home
loan
with a
set of
standards
that
must
be met
for
the
loan
amount
and
the
down
payment
amount.
The
maximum
you
can
borrow
with a
conforming
loan
is
$240,000
for a
single-family
house
in the
continental
U.S.
The
benefit
to
applying
for a
conforming
loan
is
that
you
will
qualify
for
lower
interest
rates
and
better
financing
options.
If you
need
to
borrow
more
than
the
conforming
loan
standard
allows
you
to,
you
should
apply
for a
non-conforming
or
jumbo
loan. Construction
loan
A
short
term
interim
loan
to pay
for
the
construction
of
buildings
or
homes.
These
are
usually
designed
to
provide
periodic
disbursements
to the
builder
as he
progresses. Contract
sale
or
deed
A
contract
between
a
purchaser
and a
seller
of
real
estate
to
convey
title
after
certain
conditions
have
been
met.
It is
a form
of
installment
sale. Conventional
Mortgage A
mortgage
loan
that
is
obtained
without
any
additional
guarantees
for
repayment,
such
as FHA
insurance,
VA
guarantees,
or
private
insurance.
This
is
usually
given
at an
80%
loan-to-value
ratio. Credit
Loan
A
credit
loan
is a
mortgage
that
is
issued
on
only
the
financial
strength
of a
borrower,
without
great
regard
for
collateral. Credit-Loss
Ratio
The
ratio
of
credit-related
losses
to the
dollar
amount
of MBS
outstanding
and
total
mortgages
owned
by the
corporation. Credit
Rating
Used
by
lenders
to
assess
borrowers'
credit-worthiness
or
risk
profile.
A
credit
rating
is
expressed
as
letter
grades,
such
as A,
B+, or
C-,
etc.
Ratings
are
based
on
factors
such
as
payment
history,
bankruptcies,
and
charge-offs. Credit-Related
Expenses
The
sum of
foreclosed
property
expenses
plus
the
provision
for
losses. Credit-Related
Losses
The
sum of
foreclosed
property
expenses
plus
charge-offs. Credit
Report
A
report
documenting
the
credit
history
and
current
status
of a
borrower's
credit
standing.
The
ratio,
expressed
as a
percentage,
which
results
when a
borrower's
monthly
payment
obligation
on
long-term
debts
is
divided
by his
or her
gross
monthly
income.
See
housing
expenses-to-income
ratio. Deed
The
written
document
conveying
real
property.
Once
recorded
at the
Courthouse,
the
original
piece
of
paper
is not
needed
to
convey
title
in the
future. Deed
of
Trust
A
voluntary
lien
to
secure
a debt
deeding
the
property
to
Trustees
who
foreclose,
sell
the
property
at
public
auction,
in the
event
of
default
on the
Note
the
Deed
of
Trust
secures.
In
many
states,
this
document
is
used
in
place
of a
mortgage
to
secure
the
payment
of a
note. Default
Failure
to
meet
legal
obligations
in a
contract,
specifically,
failure
to
make
the
monthly
payments
on a
mortgage. Deferred
interest
When
a
mortgage
is
written
with a
monthly
payment
that
is
less
than
required
to
satisfy
the
note
rate,
the
unpaid
interest
is
deferred
by
adding
it to
the
loan
balance.
See
"negative
amortization". Delinquency
Failure
to
make
payments
on
time.
This
can
lead
to
foreclosure. Department
of
Veterans
Affairs
(VA)
An
independent
agency
of the
federal
government
which
guarantees
long-term,
low-or
no-down
payment
mortgages
to
eligible
veterans. Deposit
A
lump
sum
given
in
advance
as
security.
A
deposit
is
always
paid
of a
larger
amount
to be
paid
in the
future.
In
mortgage
and
real
estate
terms,
this
is
called
the
"earnest
money
deposit." Depreciation
In
real
estate
and
mortgage
terms,
the
decline
in the
property
value. Discount
Difference
between
the
face
amount
of a
note
or
mortgage
and
the
price
at
which
the
instrument
is
sold
in the
secondary
market. Discount
Point
(Same
as
"points",
below.)
Prepaid
interest
assessed
at
closing
by the
lender.
Each
point
is
equal
to 1
percent
of the
loan
amount
(e.g.,
two
points
on a
$100,000
mortgage
would
cost
$2,000). Down
Payment
Money
paid
to
make
up the
difference
between
the
purchase
price
and
the
mortgage
amount. Due-on-Sale-Clause
A
provision
in a
mortgage
or
deed
of
trust
that
allows
the
lender
to
demand
immediate
payment
of the
balance
of the
mortgage
if the
mortgage
holder
sells
the
home. Money
given
by a
buyer
to a
seller
as
part
of the
purchase
price
to
bind a
transaction
or
assure
payment. Easement
Giving
other
persons,
other
than
the
owner,
access
to a
property. Eminent
Domain
The
government
right
to
take
private
property
for
public
use
depended
on the
payment
of its
fair
market
value. Encumbrance
Any
lien
against
a
property
or any
restriction
it its
use,
such
as an
easement;
a
right
or
interest
in a
property
held
by one
who is
not
the
legal
owner. Entitlement
The
VA
home
loan
benefit
is
called
entitlement.
Entitlement
for a
VA
guaranteed
home
loan.
This
is
also
known
as
eligibility. Equal
Credit
Opportunity
Act (ECOA)
Is
a
federal
law
that
requires
lenders
and
other
creditors
to
make
credit
equally
available
without
discrimination
based
on
race,
color,
religion,
national
origin,
age,
sex,
marital
status
or
receipt
of
income
from
public
assistance
programs. Equity
The
difference
between
the
fair
market
value
and
current
indebtedness,
also
referred
to as
the
owner's
interest.
The
value
an
owner
has in
real
estate
over
and
above
the
obligation
against
the
property. Escalator
Clause
A
clause
in a
loan
providing
for
increases
in
payments
or
interest
based
on
pre-determined
schedules
or on
a
specific
economic
index,
such
as the
consumer
price
index. Escrow
An
account
held
by the
lender
into
which
the
home
buyer
pays
money
for
tax or
insurance
payments.
Also
earnest
deposits
held
pending
loan
closing. Escrow
Account
(impound
account)
An
account
that a
borrower
can
hold
with a
lender
once a
purchase
transaction
is
closed.
This
requires
borrowers
to pay
more
than
the
principal
and
interest
each
month.
The
overage
is put
into
escrow,
which
the
lender
uses
to pay
items
like
property
taxes
and
homeowner's
insurance
when
they
are
due.
This
eliminates
the
actual
number
of
payments
that a
homeowner
has to
worry
about,
but
not
the
amount
that
has to
actually
be
paid. Escrow
Analysis
An
analysis
performed
by a
lender
each
year
to
escrow
accountholders
to
ensure
that
the
correct
amount
of
money
is
being
collected
to
cover
anticipated
payments. Estate
The
ownership
interest
an
individual
holds
in
real
property.
This
is
also
the
sum
total
of all
the
real
property
and
personal
property
owned
by an
individual
at
time
of
death. Eviction
The
legal
removal
of
real
property
occupants
for
unlawful
actions
carried
out by
those
occupants.
A
law
that
protects
consumer
that
regulates
the
reporting
of
consumer
credit
by
agencies
and
establishes
procedures
for
correcting
errors
on an
individual
record.
Federal
National
Mortgage
Association
(FNMA)
also
know
as
"Fannie
Mae".
A
tax-paying
corporation
created
by
Congress
that
purchases
and
sells
conventional
residential
mortgages
as
well
as
those
insured
by FHA
or
guaranteed
by VA.
This
institution,
which
provides
funds
for
one in
seven
mortgages,
makes
mortgage
money
more
available
and
more
affordable. Fannie
Mae's
Community
Home
Buyer's
Program
A
program
that
offers
flexible
underwriting
guidelines
to
subsidize
a low-
to
moderate-income
family's
purchase
of a
home.
The
program
usually
decreases
the
total
amount
of
cash
needed
to
purchase
a
home. Farmers
Home
Administration
(FmHA)
Provides
financing
to
farmers
and
other
qualified
borrowers
who
are
unable
to
obtain
loans
elsewhere. Federal
Home
Loan
Bank
Board
(FHLBB)
The
former
name
for
the
regulatory
and
supervisory
agency
for
federally
chartered
savings
institutions.
The
agency
is now
called
the
"Office
of
Thrift
Supervision". Federal
Home
Loan
Mortgage
Corporation
(FHLMC)
also
called
"Freddie
Mac"
A
quasi-governmental
agency
that
purchases
conventional
mortgages
from
insured
depository
institutions
and
HUD-approved
mortgage
bankers. Federal
Housing
Administration
(FHA)
A
division
of the
Department
of
Housing
and
Urban
Development.
Its
main
activity
is the
insuring
of
residential
mortgage
loans
made
by
private
lenders.
FHA
also
sets
standards
for
underwriting
mortgages. Federal
National
Mortgage
Association
(FNMA)
also
know
as
"Fannie
Mae"
A
tax-paying
corporation
created
by
Congress
that
purchases
and
sells
conventional
residential
mortgages
as
well
as
those
insured
by FHA
or
guaranteed
by VA.
This
institution,
which
provides
funds
for
one in
seven
mortgages,
makes
mortgage
money
more
available
and
more
affordable. Fee
Simple
The
best
title
that
one
can
obtain;
unqualified
and
conveys
the
highest
bundle
of
rights. FHA
loan
A
loan
insured
by the
Federal
Housing
Administration
(FHA)
open
to all
qualified
home
purchasers.
While
there
are
limits
to the
size
of FHA
loans
($208,800
maximum,
depending
on
location),
they
are
generous
enough
to
handle
moderately-priced
homes
almost
anywhere
in the
country. FHA
mortgage
insurance
Federal
Housing
Administration
(FHA)
insurance
requires
a fee
(up to
2.25
percent
of the
loan
amount)
paid
at
closing
to
insure
the
loan
with
FHA.
In
addition,
FHA
mortgage
insurance
requires
an
annual
fee of
up to
0.5
percent
of the
current
loan
amount,
paid
in
monthly
installments.
The
lower
the
down
payment,
the
more
years
the
fee
must
be
paid. FHLMC
The
Federal
Home
Loan
Mortgage
Corporation
provides
a
secondary
market
for
savings
and
loans
by
purchasing
their
conventional
loans.
Also
known
as
"Freddie
Mac." Firm
Commitment
A
promise
by
Federal
Housing
Administration
(FHA)
to
insure
a
mortgage
loan
for a
specified
property
and
borrower.
A
promise
from a
lender
to
make a
mortgage
loan. First
Mortgage
A
mortgage
that
has
priority
over
other
mortgages. Fixed
Rate
Mortgage
The
mortgage
interest
rate
will
remain
the
same
on
this
type
of
mortgage
throughout
the
term
of the
mortgage
for
the
original
borrower. FNMA
The
Federal
National
Mortgage
Association
(FNMA)
is a
secondary
mortgage
institution
which
is the
largest
single
holder
of
home
mortgages
in the
United
States.
FNMA
buys
VA,
FHA,
and
conventional
mortgages
from
primary
lenders.
Also
known
as
"Fannie
Mae." Forbearance
The
postponement
for a
limited
time
of a
portion
or all
the
payments
on a
loan
when a
borrower
is
delinquent. Foreclosure
A
legal
process
by
which
the
lender
or the
seller
forces
a sale
of a
mortgaged
property
because
the
borrower
has
not
met
the
terms
of the
mortgage.
Also
known
as a
repossession
of
property. 401(k)/403(b)
An
investment
plan
sponsored
by
employers
that
allows
individuals
to set
aside
tax-deferred
income
for
retirement
or
emergency
purposes.
A
401(k)
applies
to
private
corporations,
while
a
403(b)
applies
to
non-profit
organizations. 401(k)/403(b)
Loan
A
loan
that
can be
taken
against
the
amount
accumulated
in the
401(k)/403(b)
plans,
if so
allowed
by the
plan
administrator.
Loans
against
these
plans
are an
acceptable
source
of
down
payment
for
most
types
of
other
loans.
Federal
Home
Loan
Mortgage
Corporation
(FHLMC)
also
known
as
"Freddie
Mac".
A
quasi-governmental
agency
that
purchases
conventional
mortgages
from
insured
depository
institutions
and
HUD-approved
mortgage
bankers.
See
Government
National
Mortgage
Association
(GNMA),
below. Good
Faith
Estimate
An
estimate
of
charges
which
a
borrower
is
likely
to
incur
in
connection
with a
loan
closing. Government
Loan
A
type
of
mortgage
insured
by the
FHA
(Federal
Housing
Authority),
VA
(Veteran's
Administration),
or RHS
(Rural
Housing
Authority). Government
National
Mortgage
Association
(GNMA)
Also
known
as
"Ginnie
Mae";
provides
sources
of
funds
for
residential
mortgages,
insured
or
guaranteed
by FHA
or VA. Grace
Period
A
time
allowed,
usually
15
days,
for
making
late
payments
without
a
penalty. Graduated
Payment
Mortgage
(GPM)
A
type
of
flexible-payment
mortgage
where
the
payments
increase
for a
specified
period
of
time
and
then
level
off.
This
type
of
mortgage
has
negative
amortization
built
into
it. Grantee
The
person
to
whom
an
interest
in
real
property
is
conveyed. Grantor
The
person
conveying
an
interest
in
real
property Guaranty
A
promise
by one
party
to pay
a debt
or
perform
an
obligation
contracted
by
another
if the
original
party
fails
to pay
or
perform
according
to a
contract.
Cash
loan
to a
borrower. Hazard
Insurance
A
form
of
insurance
in
which
the
insurance
company
protects
the
insured
from
specified
losses,
such
as
fire,
windstorm
and
the
like. Home
Equity
Conversion
Mortgage
(HECM)
Also
known
as the
reverse
annuity
mortgage.
This
mortgage
provides
that
instead
of
making
payments
to a
lender,
the
lender
makes
payments
to the
individual.
Older
homeowners
are
able
to
convert
home
equity
into
cash
this
way,
in the
form
of
monthly
payments.
Borrowers
don't
qualify
on the
basis
of
income,
but on
the
value
of his
or her
home.
Such a
loan
does
not
have
to be
repaid
until
the
borrower
no
longer
occupies
the
property. Home
Equity
Line
of
Credit
A
mortgage
loan
in
second
position
that
allows
a
borrower
to
obtain
cash
drawn
against
home
equity,
up to
a
certain
amount. Home
Inspection
A
thorough
assessment
by a
professional
regarding
the
structural
and
mechanical
condition
of a
property. Homeowner's
Insurance
An
insurance
policy
that
combines
personal
liability
insurance
and
hazard
insurance
for a
home
and
its
contents. Homeowner's
Warranty
An
insurance
policy
that
is
purchased
by a
buyer
that
covers
certain
repairs,
should
they
be
necessary
over a
certain
period. Housing
Expenses-to-Income
Ratio
The
ratio,
expressed
as a
percentage,
which
results
when a
borrower's
housing
expenses
are
divided
by
his/her
gross
monthly
income.
See
debt-to-income
ratio. HUD
Department
of
Housing
and
Urban
Development;
regulates
Fannie
Mae
and
Ginny
Mae. Hybrid
Financing
The
joining
together
of two
forms
of
finance,
such
as
combining
a
convertible
loan
with a
participation
loan,
under
which
the
lender
has
the
right
at
loan
maturity
to
convert
the
debt
to a
50
percent
ownership
in the
property.
That
portion
of a
borrower's
monthly
payments
held
by the
lender
or
services
to pay
for
taxes,
hazard
insurance,
mortgage
insurance,
lease
payments,
and
other
items
as
they
become
due.
Also
known
as
reserves. Index
A
published
interest
rate
against
which
lenders
measure
the
difference
between
the
current
interest
rate
on an
adjustable
rate
mortgage
and
that
earned
by
other
investments
(such
as
one-
three-,
and
five-year
U.S.
Treasury
security
yields,
the
monthly
average
interest
rate
on
loans
closed
by
savings
and
loan
institutions,
and
the
monthly
average
costs-of-funds
incurred
by
savings
and
loans),
which
is
then
used
to
adjust
the
interest
rate
on an
adjustable
mortgage
up or
down. Interest
Money
("rent")
paid
for
the
use of
money Interest
Only
A
term
loan
arrangement
calling
for
payments
of
interest
only,
not to
include
any
amount
for
principal Interest
Rate
Swap
A
transaction
between
two
parties,
in
which
each
agrees
to
exchange
payments
tied
to
different
interest
rates
or
indices
for a
specified
period
of
time Interim
Financing
A
construction
loan
made
during
completion
of a
building
or a
project.
A
permanent
loan
usually
replaces
this
loan
after
completion. Intermediate-term
mortgage
A
mortgage
loan
with a
stated
maturity
at the
time
of
purchase
that
it is
equal
to or
less
than
20
years. Investor
A
money
source
for a
lender.
A
court
procedure
used
by
lenders
to
secure
clear
title
to a
property
under
a
defaulted
real
estate
loan. Jumbo
Loan
A
loan
which
is
larger
than
limits
set by
the
Federal
National
Mortgage
Association
(Fannie
Mae)
and
the
Federal
Home
Loan
Mortgage
Corporation
(Freddie
Mac)
conforming
guidelines.
Because
jumbo
loans
cannot
be
funded
by
these
two
agencies,
they
usually
carry
a
higher
interest
rate.
A
written
agreement
between
a
property
owner
and a
tenant
that
stipulates
the
payment
and
conditions
under
which
the
tenant
may
possess
the
real
estate
for a
specified
period
of
time. Leasehold
Estate
An
estate
for a
fixed
length
of
time,
established
when a
landlord
gives
up
possession
of
real
estate
to a
tenant,
giving
the
tenant
an
equitable
interest
in the
property,
as
defined
by
lease
terms. Lease
Option
A
rental
agreement
indicating
a
tenant's
option
to
purchase
a
property.
Monthly
payments
consists
not
only
of
rent,
but an
overage
that
can be
applied
towards
a down
payment
on an
already
established
amount. Leverage
Using
someone
else's
money
for
the
purchase
of
property. Liability
Insurance
Insurance
that
protects
property
owners
against
claims
that
alleges
negligence
or
inappropriate
action
that
resulted
in
bodily
injury
or
property
damage
to
another
party. Lien
A
claim
upon a
piece
of
property
for
the
payment
or
satisfaction
of a
debt
or
obligation. Life
Cap
A
limit
on the
amount
that
an
interest
rate
can be
increased
or
decreased
in an
adjustable
rate
mortgage
(ARM). Loan
The
principal,
or
amount
of
total
borrowed
money,
that
is
repaid
with
interest. Loan
Officer
An
intermediary
between
lending
institutions
and
borrowers,
loan
officers
solicit
loans,
represent
creditors
to
borrowers,
and
represent
borrowers
to
creditors. Loan
Origination
What
the
process
of
obtaining
new
loans
is
called.
Loan
Servicing
A
service
performed
by a
lender
to
protect
a
mortgage
investment,
including
collecting
monthly
payments
from
borrowers
and
dealing
with
delinquencies.
The
relationship
between
the
amount
of the
mortgage
loan
and
the
appraised
value
of the
property
expressed
as a
percentage. Lock-In
Clause
Clause
in a
loan
agreement
that
states
that
the
borrower
cannot
repay
a loan
prior
to a
specified
date.
The
amount
a
lender
adds
for
profit
to the
index
on an
adjustable
rate
mortgage
to
establish
the
adjusted
interest
note
rate. Market
Value
The
highest
price
that a
buyer
would
pay
and
the
lowest
price
a
seller
would
accept
on a
property.
Market
value
may be
different
from
the
price
a
property
could
actually
be
sold
for at
a
given
time. Maturity
Due
date
of a
loan. Merged
Credit
Report
A
credit
report
that
reports
data
from
two or
more
major
credit
repositories. MIP
(Mortgage
Insurance
Premium)
It
is
insurance
from
FHA to
the
lender
against
incurring
a loss
on
account
of the
borrower's
default. Modification
Any
change
to the
original
terms
of a
mortgage. Mortgage
A
legal
document
that
pledges
property
to a
creditor
for
the
repayment
of the
loan,
and is
the
term
used
to
describe
the
loan
itself.
Some
states
use
the
term
First
Trust
Deeds
to
refer
to
mortgage
loans. Mortgage
Insurance
Money
paid
to
insure
the
mortgage
when
the
down
payment
is
less
than
20
percent.
See
private
mortgage
insurance,
FHA
mortgage
insurance. Mortgagee
The
lender
in a
mortgage
agreement. Mortgage
Banker
A
financial
intermediary
that
originates
or
funds
loans,
collects
payments,
inspects
the
property,
and
forecloses
if
necessary.
The
main
difference
between
a
mortgage
banker
and a
loan
officer
is a
banker
funds
their
own
loans
and
sell
them
on the
secondary
market,
usually
to
Fannie
Mae,
Freddie
Mac,
or
Ginny
Mae. Mortgage
Broker
A
mortgage
company
that
originates
loans,
joining
the
borrower
and
lender
for a
real
estate
loan,
earning
a
placement
fee. Mortgage
Constant
The
factor
used
for
rapid
computation
of the
annual
payment
needed
to
amortize
a loan Mortgage
Insurance
Insurance
that
covers
the
lender
against
losses
incurred
as a
result
of a
default
on a
home
loan.
This
is
usually
required
on all
loans
that
have a
loan-to-value
higher
than
eighty
percent.
Mortgages
that
have
an 80%
LTV
that
do not
require
mortgage
insurance
have
higher
interest
rates.
The
lenders
then
pay
the
mortgage
insurance
themselves.
In
addition,
FHA
loans
and
some
first-time
homebuyer
programs
require
mortgage
insurance
regardless
of the
loan-to-value. Mortgagor
The
borrower
or
homeowner
acquiring
a loan
to
purchase
property. Multi-dwelling
Units
Properties
that
provide
separate
housing
units
for
more
than
one
family,
although
only a
single
mortgage
is
secured.
Occurs
when
your
monthly
payments
are
not
large
enough
to pay
all
the
interest
due on
the
loan.
This
unpaid
interest
is
added
to the
unpaid
balance
of the
loan.
the
danger
of
negative
amortization
is
that
the
home
buyer
ends
up
owing
more
than
the
original
amount
of the
loan. Net
Effective
Income The
borrower's
gross
income
minus
federal
income
tax. No
Cash-Out
Refinance
A
refinance
transaction
that
is not
intended
to put
cash
in the
hand
of the
borrower,
but
instead
calculates
a new
balance
to
cover
the
balance
due on
a
current
loan
and
any
costs
with
obtaining
a new
mortgage. No-Cost
Loan
A
no-cost
loan
can
either
be: 1)
a loan
that
has no
"lender
costs"
associated
with
it or,
2) a
loan
that
also
covers
purchases
or
refinancing
costs,
which
may be
incurred
in
buying
a
home,
obtaining
and/or
refinancing
a
loan,
but
are
not
directly
charged
by the
lender.
The
interest
rate
on
this
type
of
loan
is
higher. Non
Assumption
Clause
A
statement
in a
mortgage
contract
forbidding
the
assumption
of the
mortgage
without
the
prior
approval
of the
lender.
Note:
The
signed
obligation
to pay
a
debt,
as a
mortgage
note. Non
Conforming
Loan
New
Home
loans
that
allows
you to
borrow
over a
certain
amount
set by
the
Federal
National
Mortgage
Association
or the
Federal
Home
Loan
Mortgage
Corporation. Note
A
legal
document
that
obligates
a
borrower
to
repay
a
mortgage
loan
at a
stated
interest
rate
during
a
specified
period
of
time. Note
Rate
The
stated
interest
rate
on a
mortgage
note.
Office
of
Thrift
Supervision
(OTS)
The
regulatory
and
supervisory
agency
for
federally
chartered
savings
institutions.
Formally
known
as
Federal
Home
Loan
Bank
Board. Origination
Fee
The
fee
charged
by a
lender
to
prepare
loan
documents,
run
credit
checks,
inspect
and
sometimes
appraise
a
property;
usually
computed
as a
percentage
of the
face
value
of the
loan. Owner
Financing
A
property
purchase
that
is
partly
or
wholly
financed
by the
seller Owner's
Title
Policy
A
policy
protecting
the
buyer
for
the
amount
of the
purchase
price
in the
event
of a
future
title
dispute.
A
mortgage
that
/includes
equipment
and
appliances
located
on the
premises
in
addition
to the
real
property
itself. Partial
Entitlement
Under
VA
loans,
the
amount
of
guarantee
still
available
to an
eligible
veteran
who
has
used
his
previous
entitlement Partial
Payment
A
payment
that
is not
sufficient
enough
to
cover
the
month
payment.
During
times
of
economic
hardship,
a
borrower
can
make
this
request
of the
loan
servicing
collection
department. Participation
Financing
A
loan
in
which
more
than
one
mortgagee
or
more
than
one
mortgagor
harbors
an
interest.
It can
also
be a
loan
in
which
the
mortgagee
receives
partial
ownership
of the
property
being
financed. Payment
Change
Date
The
date
when a
new
monthly
payment
amount
takes
effect
on an
adjustable
rate
mortgage
(ARM)
or a
graduated
payment
mortgage
(GPM).
The
payment
change
date
occurs
the
month
immediately
after
the
interest
rate
adjustment
date. Periodic
Payment
Cap
The
limit
on the
amount
that
payments
can
increase
or
decrease
during
any
one
adjustment
period
for an
adjustable-rate
mortgage
(ARM)
where
the
interest
rate
and
principal
fluctuate
independently
of one
another. Periodic
Rate
Cap
The
limit
on the
amount
that
payments
can
increase
or
decrease
during
any
one
adjustment
period
in an
ARM
(adjustable
rate
mortgage),
regardless
of how
high
or low
the
index
fluctuates. Permanent
Loan
A
long
term
mortgage,
usually
ten
years
or
more.
Also
called
an
"end
loan." Personal
Property
Movable
property
that
does
not
fit
the
definition
of
realty. PITI
Principal,
Interest,
Taxes
and
Insurance.
Also
called
monthly
housing
expense. PITI
Reserves
A
cash
amount
that a
borrower
must
have
on
hand
after
making
a down
payment
and
paying
all
closing
costs
for
the
purchase
of a
home.
The
PITI
(principal,
interest,
taxes,
and
insurance)
must
equal
the
amount
that
the
borrower
would
have
to pay
for
PITI
for a
determined
number
of
months. Planned
Unit
Development
(PUD)
A
type
of
ownership
where
individuals
actually
own
the
building
or
unit
they
reside
in,
but
shared
areas
are
owned
jointly
with
the
other
members
of the
development
or
established
association. Pledged
Account
Mortgage
(PAM):
Money
is
placed
in a
pledged
savings
account
and
this
fund
plus
earned
interest
is
gradually
used
to
reduce
mortgage
payments. Points
(loan
discount
points)
Prepaid
interest
assessed
at
closing
by the
lender.
Each
point
is
equal
to 1
percent
of the
loan
amount
(e.g.,
two
points
on a
$100,000
mortgage
would
cost
$2,000). Power
of
Attorney
A
legal
document
authorizing
one
person
to act
on
behalf
of
another. Pre-Approval
A
term
used
to
mean
that a
borrower
has
completed
a loan
application
and
provided
debt,
income,
and
savings
information
that
has
been
reviewed
and
pre-approved
by an
underwriter. Pre-Foreclosure
Sale
A
procedure
in
which
the
borrower
is
allowed
to
sell
his or
her
property
for an
amount
less
that
what
is
owed
on it
to
avoid
foreclosure,
fully
satisfying
the
borrower's
debt. Prepaid
Expenses
Necessary
to
create
an
escrow
account
or to
adjust
the
seller's
existing
escrow
account.
Can
include
taxes,
hazard
insurance,
private
mortgage
insurance
and
special
assessments. Prepayment
A
privilege
in a
mortgage
permitting
the
borrower
to
make
payments
in
advance
of
their
due
date. Prepayment
Penalty
Money
charged
for an
early
repayment
of
debt.
Prepayment
penalties
are
allowed
in
some
form
(but
not
necessarily
imposed)
in
many
states. Pre-Qualification
After
a loan
officer
has
made
inquiries
about
a
borrower's
debt,
income,
and
savings,
he or
she
can
write
a
written
statement
(pre-qualification)
about
the
borrower's
chances
for
qualifying
for a
home
loan. Primary
Mortgage
Market
Lenders
making
mortgage
loans
directly
to
borrower's
such
as
savings
and
loan
associations,
commercial
banks,
and
mortgage
companies.
These
lenders
sometimes
sell
their
mortgages
into
the
secondary
mortgage
markets
such
as to
FNMA
or
GNMA,
etc. Prime
Rate
Interest
charged
by
financial
institutions
to
top-rate
borrowers. Principal
The
amount
of
debt,
not
counting
interest,
left
on a
loan. Private
Mortgage
Insurance
(PMI)
In
the
event
that
you do
not
have a
20
percent
down
payment,
lenders
will
allow
a
smaller
down
payment
- as
low as
5
percent
in
some
cases.
With
the
smaller
down
payment
loans,
however,
borrowers
are
usually
required
to
carry
private
mortgage
insurance.
Private
mortgage
insurance
will
usually
require
an
initial
premium
payment
and
may
require
an
additional
monthly
fee
depending
on
your
loan's
structure. Pro-rations
The
allocation
of
charges
and
credits
to the
appropriate
parties
at a
real
estate
sale
and/or
loan
closing
at a
real-estate
sale
and/or
loan
closing Promissory
Note
A
written
promise
to
repay
a
specified
amount
over a
specified
period
of
time Purchase
Agreement
A
written
contract
signed
by the
buyer
and
seller
stating
the
terms
and
conditions
under
which
a
property
will
be
sold. Purchase-Money
Mortgage
Mortgage
given
by a
borrower
to the
seller
as
part
of the
purchase
price
of the
property. Purchase-Money
Transaction
The
acquisition
of
property
through
the
payment
of
money
or its
equivalent.
Calculations
that
are
used
in
determining
whether
a
borrower
can
qualify
for a
mortgage.
The
front-end
ratio
is the
percentage
of a
borrower's
gross
monthly
income
before
taxes
that
would
cover
the
cost
of
PITI
(property,
interest,
taxes,
and
insurance).
The
back-end
ratio
is the
percentage
of a
borrower's
gross
monthly
income
that
would
cover
the
cost
of
PITI
plus
any
other
monthly
debt
payments,
such
as car
or
student
loans. Quitclaim
Deed
A
deed
that
transfers,
without
warranty,
whatever
interest
or
title
a
grantor
may
have
at the
time
the
conveyance
is
made.
A
commitment
issued
by a
lender
to a
borrower
or
other
mortgage
originator
guaranteeing
a
specified
interest
rate
for a
specified
period
of
time
at a
specific
cost. Real
Estate
A
portion
of the
earth's
surface
extending
downward
to the
center
to the
earth
and
upward
into
space,
including
all
things
permanently
attached
thereto
by
nature
or man
and
all
legal
rights
therein. Real
Estate
Agent
A
person
licensed
to
negotiate
and
transact
the
sale
of
real
estate. Real
Estate
Settlement
Procedures
Act (RESPA)
An
act
requiring
the
revelation
of all
costs
involved
in a
real
estate
closing
to all
participants. Real
Property
See
real
estate. Realtor
A
real
estate
broker
or an
associate
holding
active
membership
in a
local
real
estate
board
affiliated
with
the
National
Association
of
Realtors. Recast
To
redesign
an
existing
loan
balance
into a
new
loan
for
the
same
period
or
longer,
to
reduce
payments
and
help a
distressed
borrower.
Rescission
The
cancellation
of a
contract.
With
respect
to
mortgage
refinancing,
the
law
that
gives
the
homeowner
three
days
to
cancel
a
contract
in
some
cases
once
it is
signed
if the
transaction
uses
equity
in the
home
as
security. Reconciliation
Determining
the
final
estimate
of
value
by
weighing
the
results
of the
various
approaches
in an
appraisal. Reconveyance
Clause
The
clause
in a
trust
deed
that
gives
the
title
back
to the
borrower
when
the
loan
is
paid
in
full. Recording
The
formal
filing
of
documents
affecting
a
property's
title. Recording
Fees
Money
paid
to the
lender
for
recording
a home
sale
with
the
local
authorities,
thereby
making
it
part
of the
public
records. Refinance
Obtaining
a new
mortgage
loan
on a
property
already
owned.
Often
to
replace
existing
loans
on the
property. Refinancing
The
process
of
paying
off
one
loan
with
the
proceeds
from a
new
loan,
using
the
same
property
as
security. Regulation
Z
A
truth-in-lending
provision
that
requires
lenders
to
reveal
the
actual
costs
of
borrowing. Renegotiable
Rate
Mortgage
A
loan
in
which
the
interest
rate
is
adjusted
periodically.
See
adjustable
rate
mortgage. Rent-Loss
Insurance
Insurance
that
protects
a
landlord
against
loss
of
rent
or
rental
value
due to
fire
or
other
casualty,
resulting
in the
tenant
being
excused
from
paying
rent. Repayment
Plan
An
agreement
between
a
lender
and a
delinquent
borrower
regarding
mortgage
payments,
in
which
the
borrower
agrees
to
make
additional
payments
to pay
down
past
due
amounts
while
still
making
scheduled
payments. Residual
Qualifying
Under
a VA
loan,
using
specified
housing
expenses
to
qualify
for a
loan
payment. RESPA
Short
for
the
Real
Estate
Settlement
Procedures
Act.
RESPA
is a
federal
law
that
allows
consumers
to
review
information
on
known
or
estimated
settlement
cost
once
after
application
and
once
prior
to or
at a
settlement.
The
law
requires
lenders
to
furnish
the
information
after
application
only. Restrictions
Rules
imposed
on the
use of
real
estate
in an
effort
to
preserve
property
values. Reverse
Annuity
Mortgage
(RAM)
A
form
of
mortgage
in
which
the
lender
makes
periodic
payments
to the
borrower
using
the
borrower's
equity
in the
home
as
Satisfaction
of
Mortgage:
The
document
issued
by the
mortgagee
when
the
mortgage
loan
is
paid
in
full.
Also
called
a
"release
of
mortgage." Revolving
Debt
A
credit
arrangement
that
allows
a
customer
to
borrow
against
a
pre-approved
line
of
credit
used
to
purchase
goods
and
services.
The
borrower
is
responsible
for
the
actual
amount
borrowed
plus
any
interest
due. Right-Of-First
Refusal
A
provision
that
states
that a
property
to be
first
offered
to a
specific
person
before
it can
be
offered
for
sale
or
lease
to
other
parties. Rollover
Loan
A
loan
that
/includes
a call
date
earlier
than
its
normal
amortization
period. Rule
of 78
Calculates
proportionate
amount
of
interest
due on
a loan
being
paid
in
full
before
its
maturity. Rural
Housing
Service
(RHS)
An
agency
within
the
Department
of
Agriculture,
which
operates
principally
under
the
Consolidated
Farm
and
Rural
Development
Act of
1921
and
Title
V of
the
Housing
Act of
1949.
This
agency
provides
financing
to
farmers
and
other
qualified
borrowers
buying
property
in
rural
areas
who
are
unable
to
obtain
loans
elsewhere.
Funds
are
borrowed
from
the
U.S.
Treasury.
A
financing
arrangement
in
which
an
investor
buys
property
from a
developer
and
immediately
sells
it
back
under
a
long-term
sales
agreement,
wherein
the
investor
retains
legal
title. Sale-Leaseback
A
financing
arrangement
whereby
an
investor
purchases
real
estate
owned
and
used
by a
business
corporation,
then
leases
the
property
back
to the
business. Secondary
Mortgage
Market
A
market
where
mortgage
originators
may
sell
them,
freeing
up
funds
for
continued
lending
and
distributes
mortgage
funds
nationally
from
money-rich
to
money
poor
areas. Second
Mortgage
A
mortgage
made
subsequent
to
another
mortgage
and
subordinate
to the
first
one. Secondary
Mortgage
Market
The
place
where
primary
mortgage
lenders
sell
the
mortgages
they
make
to
obtain
more
funds
to
originate
more
new
loans.
It
provides
liquidity
for
the
lenders
security. Secured
Loan
A
loan
that
is
backed
by
collateral. Security
Something
given,
deposited,
or
pledged
to
make
secure
the
fulfillment
of an
obligation,
usually
the
repayment
of a
debt. Seller
Carry-Back
An
agreement
in
which
the
owner
of a
property
provides
financing,
often
in
combination
with
an
assumable
mortgage. Senior
Loan
A
real
estate
loan
in
first
priority
position. Servicer
An
organization
that
collects
principal
and
interest
payments
from
borrowers
and
manages
borrowers'
escrow
accounts.
The
servicer
often
services
mortgages
that
have
been
purchased
by an
investor
in the
secondary
mortgage
market. SeServicing
All
the
steps
and
operations
a
lender
performs
to
keep a
loan
in
good
standing,
such
as
collection
of
payments,
payment
of
taxes,
insurance,
property
inspections
and
etc. Settlement/Settlement
Costs
Same
as
"Closing".
The
meeting
between
the
buyer,
seller
and
lender
or
their
agents
where
the
property
and
funds
legally
change
hands.
Also
called
closing.
Settlement
costs
usually
include
an
origination
fee,
discount
points,
appraisal
fee,
title
search
and
insurance,
survey,
taxes,
deed
recording
fee,
credit
report
charge
and
other
costs
assessed
at
settlement.
The
costs
of
closing
usually
are
about
3
percent
to 6
percent
of the
mortgage
amount. Shared
Appreciation
Mortgage
(SAM)
A
mortgage
in
which
a
borrower
receives
a
below-market
interest
rate
in
return
for
which
the
lender
(or
another
investor
such
as a
family
member
or
other
partner)
receives
a
portion
of the
future
appreciation
in the
value
of the
property.
May
also
apply
to
mortgage
where
the
borrowers
shares
the
monthly
principal
and
interest
payments
with
another
party
in
exchange
for
part
of the
appreciation. Simple
Interest
Interest
which
is
computed
only
on the
principle
balance. Sinking
Fund
Monies
deposited
in
advance
in
anticipation
of
satisfying
a debt
in the
future. Stop
Date
Date
on a
term
loan
when
the
balloon
payment
is
due. Subordinate
Financing
Any
mortgage
or
other
lien
that
has a
priority
lower
than
that
of the
first
mortgage,
or
senior
loan.
See
second
mortgage. Survey
A
measurement
of
land,
prepared
by a
registered
land
surveyor,
showing
the
location
of the
land
with
reference
to
know
points,
its
dimensions,
and
the
location
and
dimensions
of any
buildings. Sweat
Equity
Equity
created
by a
purchaser
performing
work
on a
property
being
purchased.
A
permanent
mortgage,
obtained
by
pre-arrangement
between
a
builder
and a
financial
institution,
to
repay
the
interim
mortgagee
at the
completion
of
construction. Third-Party
Origination
A
process
by
which
a
lender
uses
another
party
to
completely
or
partially
originate,
process,
underwrite,
close,
fund,
or
package
the
mortgages
it
plans
to
deliver
to the
secondary
mortgage
market. Title
A
document
that
gives
evidence
of an
individual's
ownership
of
property. Title
Company
A
company
that
specializes
in
examining
and
insuring
titles
to
real
estate. Title
Insurance
A
policy
(CLTA),
usually
issued
by a
title
insurance
company,
which
insures
a home
buyer
against
errors
in the
title
search.
The
cost
of the
policy
is
usually
a
function
of the
value
of the
property,
and is
often
borne
by the
purchaser
and/or
seller.
An
(ALTA)
Policy
is
also
available
to
protect
the
lender's
interests. Title
Search
An
examination
of
municipal
records
to
determine
the
legal
ownership
of
property.
Usually
is
performed
by a
title
company. Transfer
Of
Ownership
The
means
by
which
the
ownership
of a
property
changes
hands.
Examples
of
such
include
the
purchase
of a
property
"subject
to"
the
mortgage,
the
assumption
of the
mortgage
debt
by the
property
purchases,
and
any
exchange
of
possession
of the
property
under
a land
sales
contract
or any
other
land
trust
device. Transfer
Tax
State
or
local
tax
payable
when
the
title
passes
from
one
owner
to
another. Truth-In-Lending
Law
A
federal
law
requiring
disclosure
of the
Annual
Percentage
Rate
to
home
buyers
shortly
after
they
apply
for
the
loan.
Also
known
as
Regulation
Z. Two-Step
Mortgage
A
mortgage
in
which
the
borrower
receives
a
below-market
interest
rate
for a
specified
number
of
years
(most
often
seven
or
10),
and
then
receives
a new
interest
rate
adjusted
(within
certain
limits)
to
market
conditions
at
that
time.
the
lender
sometimes
has
the
option
to
call
the
loan
due
with
30
days
notice
at the
end of
seven
or 10
years.
also
called
"Super
Seven"
or
"Premier"
mortgage.
Underwriting
The
decision
whether
to
make a
loan
to a
potential
home
buyer
based
on
credit,
employment,
assets,
and
other
factors,
and
the
matching
of
this
risk
to an
appropriate
rate
and
term
or
loan
amount. Usury
Interest
charged
in
excess
of the
legal
rate
established
by
law.
A
long-term,
low-or
no-down
payment
loan
guaranteed
by the
Department
of
Veterans
Affairs.
Restricted
to
individuals
qualified
by
military
service
or
other
entitlements. VA
Mortgage
A
mortgage
guaranteed
by the
Department
of
Veterans
Affairs
(VA). VA
Mortgage
Funding
Fee
A
premium
of up
to
1-7/8
percent
(depending
on the
size
of the
down
payment)
paid
on a
VA-backed
loan.
On a
$75,000
fixed-rate
mortgage
with
no
down
payment,
this
would
amount
to
$1,406
either
paid
at
closing
or
added
to the
amount
financed. Variable
Rate
Mortgage
(VRM)
Same
as
"adjustable
rate
mortgage".
Is a
mortgage
in
which
the
interest
rate
is
adjusted
periodically
based
on a
pre-selected
index.
Also
sometimes
known
as the
re-
negotiable
rate
mortgage,
the
variable
rate
mortgage
or the
Canadian
rollover
mortgage. Verification
of
Deposit
(VOD)
A
document
signed
by the
borrower's
financial
institution
verifying
the
status
and
balance
of
his/her
financial
accounts. Verification
of
Employment
(VOE)
A
document
signed
by the
borrower's
employer
verifying
his/her
position
and
salary. Vested
Means
that
one
has a
right
to use
a
portion
of a
fund,
such
as an
individual's
retirement
fund.
Many
mortgage
firms
must
borrow
funds
on a
short
term
basis
in
order
to
originate
loans
which
are to
be
sold
later
in the
secondary
mortgage
market
(or to
investors).
When
the
prime
rate
of
interest
is
higher
on
short
term
loans
than
on
mortgage
loans,
the
mortgage
firm
has an
economic
loss
which
is
offset
by
charging
a
warehouse
fee. Wraparound
Mortgage
Results
when
an
existing
assumable
loan
is
combined
with a
new
loan,
resulting
in an
interest
rate
somewhere
between
the
old
rate
and
the
current
market
rate.
The
payments
are
made
to a
second
lender
or the
previous
homeowner,
who
then
forwards
the
payments
to the
first
lender
after
taking
the
additional
amount
off
the
top.
A
loan
with
no
interest
in the
contract.
The
IRS
imputes
10
percent
for
both
borrower
and
lender.
Zoning
The
right
of a
community
government,
under
its
police
power,
to
dictate
the
use of
property
within
its
boundaries.
1998-03 Copyright, Disclosure and Privacy Policy EagleLending.com
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