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Mortgage Glossary

A group of words and definitions for the Mortgage Industry

3

3/2 Options search for term
An alternative financing plan that enables households whose earnings are no more than 115 percent of the medium income in their regional area to make a 3 percent down payment with their own funds, coupled with a 2 percent gift from a relative or a 2 percent grant or unsecured loan from a nonprofit or state or local government program.

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A

Abstract (of Title) search for term
A historical summary of all the recorded transactions that affect the title to the property. An attorney or a title company will review an abstract of title to determine if there are any problems affecting the title to the property. All such problems must be cleared before the buyer can be issued a clear and insurable title.
Acceleration Clause search for term
A loan provision giving the lender the power to declare all sums owing lender immediately due and payable upon the violation of a specific loan provision, such as the sale of the property, or the failure to make loan payments on time.Example : John sells his property to Mary who takes over John’s mortgage payments. They do not notify the lender of this transaction. The lender finds out that the title to the property has transferred and calls the loan, since the loan documents state that the loan is due on the sale of the property. John is now liable to pay his lender in full.
Acknowledgment search for term
Formal declaration before a public official (typically a Notary Public) that one has signed a document. Required before recording real estate legal documents, such as a deeds of trust.
Acre search for term
A measure of land equal to 43,560 square feet.
Adjustable Rate Mortgage (ARM) search for term
Also known as a variable rate mortgage. The interest rate on these mortgages changes periodically.
Adjustment Period search for term
This is the length of time for which the interest rate is fixed on an adjustable. Therefore if the adjustment period is six months, then the interest rate will remain fixed for six months, after which time it will adjust.
Agreement of Sale search for term
A written signed agreement between the seller and the purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement. Also known as contract of purchase, purchase agreement, offer and acceptance, earnest money contract or sales agreement.
Amortization search for term
A gradual paying off of a debt by periodic installments which pay principal and interest.
Amortization Schedule search for term
A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance on the loan.
Annual Percentage Rate (APR) search for term
The effective rate of interest for a loan per year. This rate is typically higher than the note rate because it takes into account closing costs. This is one way to compare loan programs offered by different lenders. Caution : the APR is sometimes computed differently by different lenders and can be misleading.
Application search for term
An initial statement of personal and financial information which is required to approve your loan.
Application Fee search for term
Fees that are paid upon application. An application fee may frequently include charges for property appraisal ($200-$400) and a credit report ($30-50).
Appraisal search for term
An opinion or estimate of the value of a property at a given date.
Appraised Value search for term
An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc., to the property and surroundings.
Appreciation search for term
An increase in the value of a house due to changes in market conditions or other causes.
Arm’s Length Transaction search for term
A transaction among parties each of who acts in his or her own best interest.Example : A transaction between a father and his son would NOT be an Arm’s length transaction
Assessed Value search for term
The valuation placed upon a property by a public tax assessor for purposes of taxation.
Assessment search for term
A local tax levied against a property for a specific purpose such as street lights.
Assumable Mortgage search for term
A mortgage loan which allows a new home buyer to take over the obligation of making loan payments with no change in the terms of the loan. Assumable loans do not have a due-on-sale clause. The lender has to be notified and agree to the assumption. The lender may require the buyer to qualify for the loan and may charge an assumption fee. The seller should obtain a written release from the lender stating clearly that he/she is no longer liable to make mortgage payments. See also Subject To.
Assumption (of Mortgage) search for term
The transfer of the seller’s existing mortgage to the buyer.
Attorney In Fact search for term
One who is authorized to act for another under a power of attorney which may be general or limited in scope.Example : John wants to sell his house but has to be out of the country for 4 months. John gives authorization to Mary to sign the grant deed to sell the property to a buyer. Mary becomes John’s Attorney In Fact.

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B

Balloon Mortgage search for term
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.Example : A balloon mortgage for $25,000 has interest only payments for 5 years at 12% ($250 per month), with the full principal of $25,000 due and payable after 5 years.
Balloon Payment search for term
A lump sum payment of the unpaid balance of the loan
Bankruptcy search for term
The financial inability to pay one’s debts when due. The debtor surrenders his assets to the bankruptcy court. An individual typically files for Chapter 7 (all debts wiped out) or Chapter 13 (establishes a payment plan to pay off debts). A bankruptcy stays on an individual’s credit report for 7 years.
Beneficiary search for term
The person who receives or is to receive the benefits resulting from certain acts.Example : The lender is named as the beneficiary on a mortgage loan.
Bi-weekly Mortgage search for term
A mortgage which requires 1/2 the normal monthly payment every two weeks. Over the course of the year, 26 half payments are made which is equivalent to 13 full mortgage payments. As a result of this extra payment the loan amortizes much faster than a loan with normal monthly payments.
Blanket Mortgage search for term
A mortgage covering more than one piece of property.Example : A developer subdivides a tract of land into lots and obtains a blanket mortgage on the whole tract.
Bond search for term
A debt instrument in the capital markets. The U.S. government, corporations and municipalities use bonds to raise money. Bonds can also be backed by mortgages. The best known bond is the 30 yr. treasury bond issued by the U.S. government.A sum of money given to a court to guarantee against a loss. For example if there is a lien on a property, the owner may remove the lien by posting a bond.
Borrower (Mortgagor) search for term
One who applies for a loan secured by real estate and is responsible for repaying the loan (mortgage).See also: Mortgagor
Bridge Loan search for term
An interim loan typically used when the buyer is unable to sell his/her house but needs money to close the transaction on the house he/she is buying. The bridge loan is made on the buyers current residence to finance the buyers new residence. The loan is paid off when the buyers current residence is sold.
Broker search for term
See Real Estate Broker or Mortgage Broker.
Buydown search for term
Obtaining a lower interest rate (buying down the rate) by paying additional points to the lender. The lower rate may apply for the full duration of the loan or for just the first few years. A buydown may be used to qualify a borrower who would otherwise not qualify. This is because a buydown results in lower payments which are easier to qualify for.Example: A very popular buydown is the 2-1 buydown. If the interest rate on the note is 9%, the buydown results in the rate being 7% (9%-2%) for the first year, 8% (9%-1%) for the second year, and 9% thereafter.
Buyer’s Broker search for term
An agent hired by a buyer to locate a property for purchase. The broker represents the buyer and negotiates with the seller’s broker for the best possible deal for the buyer.
Buyer’s Market search for term
Market conditions that favor buyers i.e. there are more sellers than buyers in the market. As a result buyers have ample choice of properties and may negotiate lower prices. Buyer’s markets may be caused by an economic slump or overbuilding.
Bylaws search for term
A set of regulations by which an organization conducts its business.Example: A condominium association prepares bylaws that state the minimum number of owners to conduct a meeting to decide policies.

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C

Cap (on Interest) search for term
Consumer safeguard which limits the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.
Cap (on Payment) search for term
Consumer safeguard which limits the amount monthly payments on an adjustable rate mortgage may change.
Capital Gains search for term
Profit earned from the sale of real estate. A seller may defer taxes on the capital gain of his/her primary residence by buying a higher priced residence within 2 years.
Cash Flow search for term
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.).
Cash Out search for term
Receiving money back when refinancing your present mortgage.
Cash Reserve search for term
A requirement of some lenders that buyers have sufficient cash remaining after closing to make the first two mortgage payments.
CC&R’s – Covenants, conditions, and restrictions. search for term
The basic rules establishing the rights and obligations of owners of real property within a condominium, townhouse, PUD, subdivision or other tract of land. An association is organized for the purpose of operating and maintaining property commonly owned by the individual owners. The association is normally made up of property owners.
Ceiling search for term
The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.
Certificate of Eligibility search for term
The document issued by the Veterans Administration to those that qualify for a VA loan which may be used to buy a house with 0 down. Certificates of eligibility may be obtained by sending the form DD-214 to the local VA office along with VA form 1880.
Certificate of Occupancy search for term
Document issued by a local governmental agency that states a property meets the local building standards for occupancy and is in compliance with public health and building codes. This document is normally required by a lender prior to closing the loan.
Certificate of Title search for term
An opinion rendered by an attorney as to the status of title to a property, according to the public records. This certificate does not the same level of protection as title insurance.
Certified Mortgage Banker (CMB) search for term
A professional designation in the mortgage banking industry.
Chain of Title search for term
The chronological order of conveyance of a parcel of land from the original owner to the present owner.Example: An abstractor can research title to property going back to the date that the property was granted to the United States.
Clear Title search for term
A marketable title, free of “clouds” and disputed interests. Most lenders require a clear title prior to closing.
Closed-end Loan search for term
A closed-end loan is an agreement in which the borrower agrees to pay a specific loan amount plus finance charges over a definite period of time. It may have either a fixed or adjustable interest rate. The borrower cannot receive additional loan advances in this type of agreement.
Closing search for term
  1. The act of transferring ownership of a property from seller to buyer in accordance with a sales contract.
  2. The time when a closing takes place.
Closing Costs search for term
Expenses incurred by the buyer and seller in a real estate or mortgage transaction. There are two types of costs: recurring and nonrecurring.Non-recurring costs are one time transactional costs which include:

  • Discount and origination points
  • Lender fees – underwriting, processing, document preparations, flood certificate, tax service, wire transfer, courier, etc
  • Title insurance fees
  • Escrow, attorney or closing agent fees
  • Recording fees
  • Inspection and appraisal fees
  • Real estate brokerage commissions
Closing Costs search for term
Expenses incurred by the buyer and seller in a real estate or mortgage transaction. There are two types of costs: recurring and nonrecurring.Non-recurring costs are one time transactional costs which include:

  • Discount and origination points
  • Lender fees – underwriting, processing, document preparations, flood certificate, tax service, wire transfer, courier, etc
  • Title insurance fees
  • Escrow, attorney or closing agent fees
  • Recording fees
  • Inspection and appraisal fees
  • Real estate brokerage commissions

Recurring fees are costs associated with owning the property and they recur month after month. These costs may include hazard insurance, interest, property taxes, mortgage insurance (PMI), and association fees. A pro-rated amount of these fees may have to be paid at closing including

  • Pre-paid interest – interest charges from the date of closing to the end of the month
  • Property taxes if due
  • Hazard insurance, fire insurance or homeowners insurance has to be paid for one year
  • Mortgage insurance (PMI) – may be required if the loan amount is more than 80% of the value of the property. In the past a whole year of PMI had to be paid up front, however in recent years many PMI companies only require 1-2 months up front. Mortgage insurance premiums are normally paid every month with the loan payment
  • Impound account may need money to be set up for future payments
Closing Disclosure search for term
Provided to borrowers three business days before closing certain types of mortgage loans. This is a new disclosure that combines the old HUD-1 settlement statement and truth-in-lending disclosure effective October 2015 for most mortgage loan types.
Cloud on Title search for term
An outstanding claim or encumbrance that, if valid, would affect or impair the owner’s title. Compare with clear title.
Co-op; Cooperative search for term
An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.
Collateral search for term
Property pledged to secure a loan.
Commission search for term
Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price ranging from 5 to 10 percent.
Commitment (Letter) search for term
A written document provided by a lender to agreeing to make a loan on specific terms to a borrower or builder.
Community Home Buyer’s Program search for term
An alternative financing option that allows households of modest means to qualify for mortgages using nontraditional credit histories, 33 percent housing-to-income and 38 percent debt-to-income ratios, and the waiver of the usual two payments cash reserves at closing.
Community Home Improvement Mortgage Loan search for term
An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs.
Community Land Trust Mortgage Loan search for term
An alternative financing option that enables low- and moderate-income home buyers to purchase housing that has been improved by a non-profit Community Land Trust, and to lease the land on which the property stands.
Condemnation search for term
  1. Taking private property for a public use with compensation to the owner under eminent domain. Used by governments to acquire land for streets, schools, freeways, etc and by utilities to acquire necessary property.
  2. Declaring a structure unfit for use because of violations in housing codes or other reasons.
Conditional Commitment search for term
A written document provided by a lender agreeing to make a loan provided certain conditions are met prior to closing.
Condominium search for term
Individual ownership of a dwelling unit and an individual interest in the common areas and facilities which serve the multi-unit project.
Conforming Loan search for term
A conventional mortgage under $417,000 that conforms to the loan amounts and mortgage guidelines used by Fannie Mae (FNMA) and/or Freddie Mac (FHLMC).
Consideration search for term
Anything of value given to induce another to enter into a contract. Earnest money deposit on a sales contract is consideration.
Construction Loan search for term
A short term loan to pay for the construction of buildings or homes. These loans typically provide periodic disbursements to the builder as each stage of the building is completed. When construction is completed, a take-out or permanent loan is used to pay off the construction loan.
Contingency search for term
Conditions which must be satisfied before the buyer can close the purchase of a property. Contingencies are generally outlined in the purchase contract between the buyer and seller.Example: The buyer has 14 days to remove the property contingency under the sales contract. In this case the buyer has 14 days to inspect the property and request the seller to perform repairs. If the buyer is not satisfied with the condition of the property or if the buyer and the seller cannot agree on repairs, the buyer may back out of the contract with no penalty. After 14 days, the buyer no longer has the right to back out with no penalty as a result of a problem with the condition of the property.
Contract search for term
An agreement between competent parties to do or not do certain things for consideration.Example: To have a valid contract for the sale of real estate there must be:

  1. an offer
  2. an acceptance
  3. competent parties
  4. consideration
  5. legal purpose
  6. written documentation
  7. description of the property
  8. signatures by principals or their attorney-in-fact
Contract Sale or Deed search for term
A real estate installment selling arrangement where the buyer may occupy the property but the seller retains the title until the agreed upon sales price has been paid. Also known as an installment land contract.Example: John sells Mary a house. Mary has to put $10,000 and pay $1,000 per month for 24 months, after which time she will receive title to the property.Same as the Agreement of Sale.
Conventional Loan search for term
Any mortgage loan other than a VA or an FHA loan. A convention loan may be conforming or non-conforming.
Conventional Mortgage search for term
Any mortgage that is not insured or guaranteed by the federal government.
Conversion Clause search for term
A provision in some Adjustable Rate Mortgages that permit converting the ARM to a fixed rate loan under specified conditions at a predetermined time. Sometimes available for an additional cost.
Convertible ARMs search for term
Some variable loans come with options to convert them to a fixed loan based on a pre-determined formula, during a given time period. For example the 1 yr T bill adjustable may be converted to a fixed during the first five years on the adjustment date. The means that you could convert during the 13th, 25th, 37th, 49th and 61st months of the loan.
Conveyance search for term
The transfer of title of real from one party to another.
Covenant search for term
A clause in a mortgage that obligates or restricts the borrower and which, if violated, can result in foreclosure.
Credit Limit search for term
The maximum amount you can borrow under a home equity plan.
Credit Report search for term
A report detailing a borrower’s credit history including payment history on revolving accounts (e.g. credit cards) and installment accounts (e.g. car loan). A credit report also includes information found from public records including tax liens and judgments

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D

Debt Consolidation search for term
Combining all your debt payments into one payment through a loan.
Debt Service search for term
The total amount of credit card, auto, mortgage or other debt upon which you must pay.
Debt-to-Income Ratio search for term
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 net effective income (FHA/VA loans) or gross monthly income (conventional loans).
Deed search for term
A written document by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the buyer at closing.
Deed in Lieu search for term
A deed given by a mortgagor to a mortgagee to satisfy a debt and avoid foreclosure.
Deed of Trust search for term
Used in many states in lieu of a mortgage to secure the payment of a note. In a deed of trust there are three parties: the borrower, the trustee, and the lender, (or beneficiary). In such a transaction, the borrower transfers the legal title for the property to the trustee who holds the property in trust as security for the payment of the debt to the lender or beneficiary. If the borrower pays the debt as agreed, the deed of trust becomes void. If, however, he/she defaults in the payment of the debt, the trustee may sell the property without a court proceeding.
Deed Restriction search for term
A clause in a deed that limits the use of land.Example: A deed might require that a road cannot be built on the land.
Default search for term
Failure to meet legal obligations in a contract – such as the failure to make the monthly mortgage payment.
Defective Title search for term
Any recorded instrument that would prevent a grantor/seller from giving a clear title.Example: The seller has a contractor lien on the property that was filed when he/she failed to pay the contractor for the kitchen remodel. The seller may obtain clear title by paying the contractor and removing the lien.
Deficiency Judgment search for term
Personal claim against the debtor when the sale of foreclosed property does not yield sufficient proceeds to pay off the mortgages, accrued interest, legal fees, etc.
Delinquency search for term
Failure to make payments on time. Can lead to foreclosure.
Delivery search for term
The final, unconditional and absolute transfer of a deed to the Grantee so that the Grantor may not revoke it. A Deed, signed but held by the Grantor, does not pass title.
Department of Veterans Affairs search for term
An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans.
Deposit search for term
Cash paid to the seller when a formal sales contract is signed.
Depreciation search for term
Decline in the value of a house due to wear and tear, obsolescence, adverse changes in the neighborhood, or any other reason.
Discount search for term
The difference between face value of an installment note and mortgage or deed of trust, and the present cash value.
Discount Points search for term
Fees paid to a lender to reduce the interest rate.
Documentary Tax Stamps search for term
Stamps affixed to a deed showing the amount of transfer tax.
Dower search for term
The rights of a widow or child to part of a deceased husband’s or father’s property.
Down Payment search for term
The amount paid for the purchase of a property in addition to the mortgage, but not including any closing costs.Example: John buys a house for $100,000 and obtains a loan for $80,000. His down payment is $20,000.
Dragnet Clause search for term
A provision in a mortgage that pledges several properties as collateral. A default in the mortgage could lead to foreclosure proceedings on any of the properties in the dragnet.
Due on Interest search for term
A clause inserted in a mortgage that allows the lender to call the loan due and payable at its option upon the transfer of the property also known as paragraph “17” in FNMA/ FHLMC Mortgage
Due on Sale Clause search for term
A clause in the Deed of Trust or Mortgage that states that the entire loan is due upon the sale of the property.

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E

Earnest Money search for term
A deposit made by a buyer of real estate towards the down payment to evidence good faith. This money is typically held by the real estate brokers or the escrow company.
Easement search for term
The right to use the land of another for a specific purpose. Easements may be temporary or permanent.Example: The utility company may need an easement to run electric lines.
Effective Interest Rate search for term
The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points.
Eminent Domain search for term
The right of the government or a public utility to acquire property for necessary public use by condemnation, with proper compensation to the owner.
Encroachment search for term
A building, a part of a building, or an obstruction (e.g. a fence or a wall) that physically intrudes upon or overlaps into the property of another.
Encumbrance search for term
A legal right or interest in land that affects a good or clear title, and diminishes the land’s value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance does not legally prevent transfer of the property to another. A title search is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether he wants to purchase with the encumbrance, or what can be done to remove it.
Entitlement search for term
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) search for term
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 search for term
Equity = Property Value – Loans/Liens Against the property.
Equity Loan search for term
A loan based on the borrower’s equity in his or her home.
Equity Sharing search for term
Joint ownership of a property between the owner/occupant and the owner/investor, that results in tax advantages for both parties. Upon sale of the property the joint owners split profits based on the percentage they own.
Escheat search for term
The reversion of property to the state in the event that the owner dies without leaving a will and has no legal heirs.
Escrow search for term
  1. Neutral third party that handles all funds in a real estate transaction. The buyer puts his deposit into escrow; the lender funds the loan into escrow. Escrow pays the real estate brokers commission, pays off any loans/liens against the property, pays real estate taxes and any other fees associated with the transaction and sends the balance of the money to the seller.
  2. Escrow payment – see impound account.
Executor (Executrix – feminine for Executor) search for term
A person named in a will to carry out its provisions for the disposition of the estate.

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F

Fair Credit Reporting Act search for term
A consumer protection law that sets up a procedure for correcting mistakes on one’s credit record.
Fannie Mae search for term
See Federal National Mortgage Association.
Farmer’s Home Administration (FmHA) search for term
An agency, within the U.S. Department of Agriculture, that administers assistance programs for purchasers of homes and farms in small towns and rural areas.
Federal Home Loan Bank Board (FHLBB) search for term
Provides financing to farmers.
Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac) search for term
Purchase loans from members of the Federal Reserve and the Federal Home Loan Bank Systems, securitizes them and sells FHLMC mortgage backed securities on wall street.
Federal Housing Administration (FHA) search for term
An agency within the U.S. Department of Housing and Urban Development (HUD) that administers loan programs, issues loan guarantees to make more housing available.
Federal National Mortgage Association (FNMA, Fannie Mae) search for term
Purchases loans from lenders, securitizes them and sells FNMA mortgage backed securities on wall street.
Federal Reserve System search for term
The central federal banking system that regulates and provides services to member commercial banks. Also has the responsibility for conducting federal monetary policy.
Fee Simple (Fee Absolute or Fee Simple Absolute) search for term
Absolute ownership of real property; owner is entitled to the entire property with unconditional power of disposition during the owners life and upon his death the property descends to the owner’s designated heirs.
FHA Loan search for term
a loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately-priced homes almost anywhere in the country.
FHA Mortgage Insurance search for term
Two mortgage insurance premiums are required on all FHA loans.  The upfront premium is paid when the loan closes and funds.  It can be financed as part of the loan amount.  The second is called the annual premium, although it is paid monthly.  It varies based on the length of the loan, the amount borrowed and the initial loan-to-value ratio, or LTV.
Fidelity Bond search for term
An assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds.Example: A landlord employs a clerk who collects rents. To safeguard these funds during the collection process, the landlord purchases a fidelity bond the clerk.
Fiduciary search for term
A person in a position of trust or responsibility with specific duties to act in the best interest of a client. A real estate broker is a fiduciary for his/her clients.
Finance Charge search for term
Interest charged by a lender.
Firm Commitment search for term
A promise by FHA to insure a mortgage loan for a specified property and borrower. A promise from a lender to make a mortgage loan.
First Mortgage search for term
A mortgage that has priority as a lien over all other mortgages. In the case of a foreclosure the first mortgage will be satisfied before other mortgages. See also second mortgage.
Fixed Rate Mortgage search for term
The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.
Fixture search for term
Improvements or personal property attached to the land so as to become a part of the real estate. Fixtures are transferred to the buyer upon sale of the property. To determine whether an item is a fixture include:
Flood Insurance search for term
An insurance policy that covers property damage due to natural flooding. Flood insurance may be required on properties in a flood zone.
Forbearance search for term
The lender’s postponement of foreclosure to give the borrower time to catch up on overdue payments.
Foreclosure (Repossession) search for term
A legal process by which the lender forces a sale of a property because the borrower has not met the terms of the mortgage.
Freddie Mac search for term
See Federal Home Loan Mortgage Corporation.
Free and clear search for term
A property that has no liens.
FSBO search for term
For sale by owner. A property for sale that is not listed with a real estate broker.
Fully Indexed Rate search for term
The fully indexed rate = value of the index + margin.

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G

General Warranty Deed search for term
A deed in which the grantor (seller) agrees to protect the grantee (buyer) against any other claim to title of the property. See also warranty deed.
Ginnie Mae search for term
See Government National Mortgage Association.
Good Faith Estimate search for term
A written estimate of closing costs which a lender must provide you within three days of submitting an application on certain types of mortgage loan applications.
Government National Mortgage Association (GNMA) search for term
A government agency part of HUD that buys VA and FHA loans from lenders, securitizes them and sells Ginnie Mae securities to investors
Grace Period search for term
A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report.
Graduated Payment Mortgage (GPM) search for term
A mortgage that has lower payments initially (with potential negative amortization) which increase each year until the loan is fully amortized.
Grandfather Clause search for term
The clause in a law permitting the continuation of a use, business, etc., which was permissible but because of a change in the law is now no longer permissible.
Grantee search for term
That party in the deed who is the buyer or recipient.
Grantor search for term
That party who is the seller or the giver.
Gross Income search for term
For qualifying purposes, the income of the borrower before taxes or expenses is deducted.
Guaranteed Mortgage search for term
A land loan that has a third party added to provide added assurance that the obligations under the loan will be met
Guaranty search for term
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.

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H

Hazard Insurance (Fire Insurance, Homeowners insurance) search for term
Insurance on a property against fire and other risks. A homeowners policy may have additional coverage for theft, liability, etc that a fire insurance policy may not cover.
Home Equity Line of Credit (HELOC) search for term
A loan allowing you to borrow funds as needed and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Simple interest (interest-only payments on the outstanding balance) is usually tax-deductible. Often used for home improvements, major purchases or expenses, and debt consolidation.
Home Equity Loan search for term
A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax-deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Intended to replace or substitute for consumer loans where interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and student loans.
Home Purchase Loan search for term
A home purchase loan is a loan received to acquire a home, or to repay debt incurred to acquire a home, by an employee or a person related to the employee. If the employer loans the money without any charge for interest or at a low interest rate a taxable benefit arises. The taxable benefit is equal to the amount of the principal outstanding times the quarterly determined prescribed rate of interest, less interest paid during the year or within 30 days of the year end. The benefit cannot exceed the amount of interest prescribed at the time the loan is taken out. Furthermore, if the prescribed rate is lowered after the loan is acquired, the taxable benefit is reduced. Synonyms: home purchase loans
Home Warranty Plan search for term
Insurance that covers appliances, heating systems, etc. Typically purchased at the time of closing.
Homeowner’s warranty search for term
A type of insurance that covers repairs to specified parts of a house for a specific period of time.
Homeowners Association search for term
An association of homeowners in a particular subdivision, planned unit development (PUD), or condominium organized to manage the common area of the development and to enforce the association rules and regulations.
Homestead search for term
Status provided to a homeowner’s principal residence in some states that protects the home against judgments up to specified amounts.
Homestead Exemption search for term
Available in some states – this causes the assessed value of a principal residence to be reduced by the amount of the exemption for the purposes of calculating property tax.Example: John’s principal residence is assessed at $100,000 and the homestead exemption is $7,000. His property taxes will be based on $93,000.
Housing and Urban Development search for term
A U.S. government agency established to implement certain federal housing and community development programs.
Housing Code search for term
A local government ordinance that sets minimum standards of safety and sanitation for existing residential buildings.
Housing Expenses to Income Ratio search for term
The ratio, expressed as a percentage, which results when a borrower’s housing expenses are divided by his/her net effective income (FHA/VA loans) or gross monthly income (conventional loans).
HUD 1 search for term
A closing document required by HUD that outlines the settlement cost of a loan. The closing agent prepares this document and sends it to the buyer upon closing.
Hypothecate search for term
To pledge a property as security without having to give up possession of it.

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I

Impound Account search for term
That portion of a borrower’s monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.
Improvements search for term
Additions to raw land such as buildings, streets, etc that add value to the land.
Income Approach search for term
A method used by an appraiser to estimate the value of a property based on the income it generates.
Income Property search for term
Real estate that generates rental income. Examples: apartment buildings, office buildings and shopping centers.
Index search for term
A statistic that indicates some current economic of financial condition. Indexes are used to make adjustments in variable rate loans.
Ingress and Egress search for term
The right to go in and out over a piece of property but not the right to park on it. See also easement.
Installment Sale search for term
See land contract.
Insured Mortgage search for term
A mortgage insured against loss to the mortgagee in the event of default and a failure of the mortgaged property to satisfy the balance owing plus costs of foreclosure.
Interest Rate search for term
The periodic charge, expressed as a percentage, for use of credit.
Interest rate cap search for term
A provision of an ARM limiting how much interest rates my increase in a given adjustment period. See also lifetime cap.
Interim Financing search for term
A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion
Investor search for term
A money source for a lender.

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J

Joint and Several Liability search for term
A creditor can demand full repayment from any and all of those who have borrowed. Each borrower is liable for the full debt, not just the prorated share.
Joint Ownership Agreement search for term
An agreement between owners defining their rights, ownership, monetary obligations and responsibilities. This could be between and investor and an occupant or the occupants. If an investor is involved, the investor does not take depreciation deductions and none of the occupant’s payment is deemed rent for tax purposes.
Joint Tenancy search for term
Ownership of a property by two or more people, each of whom has an undivided interest with the right of survivorship.Example: John and Mary own a house in joint tenancy. Each owns half of the entire (undivided) property. If John dies, Mary will own the entire property and vice versa.
Judgment search for term
The decision of a court of law stating that one individual is indebted to another and fixing the amount of indebtedness. Judgments, when recorded, become a lien on real property owned by the defendant.
Judgment Lien search for term
The claim on the property of a debtor resulting from a judgment.
Jumbo Loan search for term
Loan size that is larger than the limit established by Fannie Mae or Freddie Mac.
Junior Mortgage search for term
A mortgage subordinate to another mortgage. In the case of a foreclosure a senior mortgage will be paid prior to a junior mortgage.

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K

Kicker search for term
A payment required by a mortgage in addition to normal principal and interest. Sometimes known as a participation loan.

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L

Land Contract search for term
A real estate installment selling arrangement whereby the buyer may use and occupy land, but no deed is given by seller until the sales price has been paid.
Late Charge search for term
The penalty a borrower must pay when a payment is made after the due date.
Lease with Option to Purchase search for term
A lease under which the lessee has the right to purchase the property. The option may run for a portion or for the full length of the lease.
Lease-Purchase Mortgage Loan search for term
An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy, and with each month’s rent payments consisting of “PITI” payments on the first mortgage, plus an extra amount that is earmarked for a savings account in which money for a down payment accumulates.
Leasehold Estate search for term
Tenant’s right of possession for a specific period of time under a lease agreement.
Legal Description search for term
Legally acceptable identification of real estate by one of the following:

  • the government rectangular survey
  • metes and bounds
  • recorded plat (lot and block number)
Lessee search for term
A person to whom property is rented under a lease. (Tenant)
Lessor search for term
A person who rents property to another under a lease. (Landlord)
Lien search for term
A claim against the property for the payment of a debt, judgment, mortgage or taxes.Example: Unpaid contractors may file a mechanic’s lien.
Life Estate search for term
An estate in real property for the life of a living person. The estate then reverts back to the grantor or to a third party.
Lifetime Cap search for term
A provision of an ARM that limits the total increase in interest rates over the life of the loan.
Lis Pendens search for term
Latin for “lawsuit pending.” Recorded notice that litigation is pending on a property. Most lenders will require the clearance of the Lis Pendens prior to closing.
Loan Application search for term
A document required by a lender prior to loan approval. The application includes detailed information about the borrower and the property.
Loan Commitment search for term
See Commitment (Letter).
Loan Estimate search for term
Provided to borrowers within three business days of placing certain types of mortgage loan applications. This is a new disclosure that combines the old good faith estimate and truth-in-lending disclosure effective October 2015 for most mortgage loan types.
Loan Origination Fee or Points search for term
Charge by a lender or broker connected with originating a loan. This is different from discount points which are used to buy down the rate of interest.
Loan Servicing search for term
The act of collecting loan payments, handling property tax and insurance escrows, foreclosing on defaulted loans and remitting payments to the investors.
Loan-to-Value Ratio (LTV) search for term
The loan amount divided by the value of the property.
Lock or Lock In search for term
A commitment you obtain from a lender assuring you a particular interest rate or feature for a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.

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M

Margin search for term
A fixed number the lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.
Market Value search for term
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.
Marketable Title search for term
Title that is free of liens, clouds and other legal defects and hence is readily acceptable by a buyer.
Maturity search for term
The termination or due date of a note, time, draft, acceptance, bill of exchange, or bond. The date a time instrument or indebtedness becomes due and payable.
Mechanics Lien search for term
The right of an unpaid contractor or subcontractor to file a lien against property to recover the amount due to him/her.
Minimum Payment search for term
The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be “interest only,” (simple interest). In other plans, the minimum payment may include principal and interest (amortized).
Mortgage search for term
A written instrument that creates a lien upon real estate as security for the payment of a specified debt.
Mortgage Backed Security (MBS) search for term
A bond or other financial obligation secured by a pool of mortgage loans.
Mortgage Banker search for term
Specializes in originating and servicing loans. They generally sell their loans to investors, but may continue to service them.Arranges financing for a borrower by placing loans with lenders.
Mortgage Banking search for term
The packaging or mortgage loans secured by real property to be sold to a permanent investor with servicing retained for the life of the loan for a fee. The origination, sale, and servicing of mortgage loans by a firm or individual. The investor-correspondent system is the foundation of the mortgage banking industry and the Secondary Market.
Mortgage Broker search for term
Like mortgage bankers, mortgage brokers take loan applications and process the necessary paperwork. Unlike a mortgage banker, brokers do not fund the loan with their own money, but work on behalf of several investors, such as mortgage bankers, S and L’s, banks, or investment bankers.
Mortgage Insurance search for term
Money paid to insure the mortgage when the down payment is less than 20 percent.
Mortgage Life Insurance search for term
Term life insurance designed to pay off the mortgage balance if the insured person dies.
Mortgage Note search for term
A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.
Mortgagee search for term
The lender.
Mortgagor search for term
The borrower.See also: Borrower (Mortgagor)

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Negative Amortization search for term
An increase in principal balance which occurs when the monthly payments do not cover all of the interest cost. The interest cost which is not covered by the payment is added to the unpaid principal balance.
Negotiable Rate Mortgage (RBM) search for term
Loan in which the interest rate is adjusted periodically.
Net Effective Income search for term
The borrowers gross income minus federal income tax.
Net worth search for term
The value of all assets, including cash, less total liabilities. It is often used as an underwriting guideline to indicate an individual’s creditworthiness and financial strength.
Non-assumption Clause search for term
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 search for term
Loans that do not comply with Fannie Mae or Freddie Mac guidelines.
Notary Public search for term
One authorized to take acknowledgments of certain types of documents, such as deeds, contracts, and mortgages.
Note search for term
A written instrument that acknowledges a debt and promises to pay.
Notice of Default search for term
A letter sent to the defaulting party as a reminder of the default.

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O

Offer (to Purchase) search for term
An expression of willingness to purchase a property at a specified price.
Offeree search for term
One who receives the offer. When the buyer makes an offer to the seller the seller is an offeree.
Offeror search for term
One who makes the offer. When the buyer makes an offer to the seller the buyer is an offeror.
Office of Comptroller Currency search for term
The oldest federal financial regulatory body that oversees the nation’s federally chartered banks.
Office of Thrift Supervision search for term
The OTS charters federal thrift institutions and is the primary regulator of all federal and many state-chartered thrift institutions.
Open End Mortgage search for term
A mortgage permitting the mortgagor to borrow additional money under the same mortgage, with certain conditions.
Open House search for term
A method of showing a home for sale to prospective buyers where the home is left open for inspection by those who may be interested in making a purchase.
Optionee search for term
One who receives or purchases an option.
Optionor search for term
One who gives or sells an option.
Oral Contract search for term
A verbal agreement. Verbal agreements for the sale or use of real estate are normally unenforceable.
Origination Fee search for term
See Loan Origination Fee.
Owner Financing search for term
A purchase in which the seller provides all or part of the financing.
Owner Occupant search for term
A tenant of a residence who also owns the property.
Owner of Record search for term
The individual named on a deed that has been recorded at the county recorders office.

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Package Mortgage search for term
Mortgage covering both real and personal property.
Paper search for term
A mortgage, deed of trust or land contract provided in lieu of cash.
Partial Release search for term
A provision in a mortgage that allows some of the property secured to be freed from serving as collateral.
Participation Mortgage search for term
A mortgage that allows the lender to share in part of the income or resale proceeds.
Pass Through Certificates search for term
Interests in a pool of mortgages sold by mortgage bankers to investors. Money collected as monthly mortgage payments is distributed to those who own certificates.
Payment Cap search for term
See Cap (payment).
Permanent Loan or Mortgage search for term
A mortgage for a long period of time. Often referred to as the mortgage that pays off a construction loan on a completed property.
Permit search for term
A document issued by a government regulatory authority that allows the bearer to take some specific action.
PITI search for term
Abbreviation for principal, interest, taxes and insurance, which may be combined in a single monthly mortgage payment.
Planned Unit Development (PUD) search for term
A zoning classification that allows flexibility in the design of a subdivision. PUD’s include individually owned units as well as some common space that is jointly owned.
Plat search for term
A plan or map of a specific land area.
Plat Book search for term
A public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels.
Pledged Account Mortgage (PAM) search for term
Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments.
PMI search for term
See Private Mortgage Insurance.
Points search for term
Fees paid to lenders. 1 point = 1% of the loan amount. On a $100,000 loan 1 point is $1000. Points may be further classified into origination points or discount points.
Portfolio Loan search for term
A loan that is held as an investment by a bank or savings and loan, and NOT sold on the secondary market to investors.
Power of Attorney search for term
A written document authorizing a person to act on the behalf of another person. That person does not have to be an attorney. See Attorney-in-fact.
Prepaid Expenses search for term
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.
Prepaid Interest search for term
Prepaid interest is the interest charged to borrowers at closing to pay for the cost of borrowing for a balance of the month. For example, if a loan closes on the 19th of the month and the first payment is due on the 1st of the following month, the lender will charge 12 days of prepaid interest.
Prepayment search for term
Full or partial payment of the principal before the due date. This might occur if the borrower makes extra payments, sells the property, or refinances the existing loan.
Prepayment Penalty search for term
Fees paid by the borrower if they pay the loan before its due date.
Prequalification search for term
The process of determining how much money a prospective home buyer may be eligible to borrow before a loan is applied for.
Primary Mortgage Market search for term
Companies that originate and service mortgage loans (banks, savings & loans, credit union, mortgage bankers, institutional lenders) make up the primary mortgage market. See also secondary mortgage market.
Prime Rate search for term
The lowest commercial interest rate charge by a bank on short term loans to their most credit worthy customers. View current prime rate.
Principal search for term
Amount of debt, not including interest. The face value of a note, mortgage, etc.
Private Mortgage Insurance (PMI) search for term
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment – as low as 2 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance payments are normally made annual or monthly. An impound account may be required.
Probate search for term
Court process to establish the validity of the will of a deceased person.
Property Tax search for term
A government levy based on the market value (as assessed by the county assessor’s office) of the property.
Prorate search for term
To divide in proportionate shares, such as taxes, insurance, rent, or other items which the buyer and seller share as of the time of closing, or other agreed upon time.
Public Sale search for term
An auction of property with notice to the general public.
Purchase Agreement search for term
See Agreement of Sale.
Purchase Money Mortgage search for term
A mortgage used to finance the purchase of a property.

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Qualifying Ratios search for term
Comparisons of a borrower’s debts and gross monthly income.
Quiet Title (Action) search for term
A court action to settle a title dispute.
Quit Claim Deed search for term
A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor’s interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has.

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Radon search for term
A radioactive gas found in some homes that in sufficient concentrations can cause health problems. Your lender may require a radon check on your home.
Rate Lock search for term
See Lock.
Real Estate search for term
Land and anything permanently affixed to the land, and those things attached to the building.
Real Estate Agent search for term
A person licensed to negotiate and transact the sale of real estate on behalf of either the borrower or seller, or in some cases both partied.
Real Estate Broker search for term
An individual who often owns a real estate company or is in a management position, and who is licensed to represent a buyer or a seller in a real estate transaction.
Real Estate Investment Trusts (REIT) search for term
A trust that uses investors’ money to purchase and manage real estate. Investors realize some of the tax advantages in owning real estate.
Real Estate Settlement Procedure Act (RESPA) search for term
A law that states how mortgage lenders must treat those who apply for real estate loans on property with 1-4 units.
Realtor search for term
A real estate professional who is a member of the National Association of Realtors.
Reconveyance search for term
When a mortgage is paid off in full, the lender conveys the property back to the owner.
Recording search for term
The act of entering into a book of public records instruments affecting title to the real property. A lender requires that a deed of trust or a mortgage be recorded to evidence the debt against the property.
Recording Fees search for term
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.
Recourse search for term
The right of the holder of a note secured by a mortgage or deed of trust to claim money from the borrower in default in addition to the property pledged as collateral.
Redlining search for term
The practice of refusing to provide loans or insurance in a certain neighborhood.
Refinancing search for term
Repaying an existing loan from the proceeds of a new loan on the same property.
Regulation Z (Reg Z) search for term
A federal regulation requiring creditors to provide full disclosure of the terms of a loan including the terms of the loan and the annual percentage rate (APR).
Reissue Rate search for term
A charge for a title insurance policy if previous policy on the same property was issued within a specified period. Reissue is less than the original charge.
Rent with Option to Buy search for term
See Lease-Purchase Mortgage Loans.
Rescission search for term
The cancellation of a contract. When refinancing a mortgage on a principal residence the law gives the homeowner three days to cancel the contract
RESPA search for term
See Real Estate Settlement Procedure Act.
Restrictive Covenants search for term
Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may “run with the land,” binding all subsequent purchasers of the land, or may be “personal” and binding only between the original seller and buyer.
Reverse Annuity Mortgage search for term
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.”
Reverse Mortgage search for term
A mortgage used by the elderly that provides income as long as they live in exchange. Payments made cause the loan principal to increase.
Right of survivorship search for term
The right of a surviving joint tenant to acquire the interest of a deceased joint owner.
Rollover Loan search for term
A loan that is amortized over a long period of time (e.g. 30 yrs) but the interest rate is fixed for a short period (e.g. 5 yrs). The loan may be extended or rolled over, at the end of the shorter term, based on the terms of the loan.

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Sales Agreement or Sales Contract search for term
See Agreement of Sale.
Savings & Loan search for term
Depository institutions that specialize in originating, servicing and holding mortgage loans primarily on owner occupied residential property.
Second Home search for term
Also known as a vacation home. This home is different from an investment property as it is not rented, but used occasionally by the owners.
Second Mortgage search for term
A subordinated lien, created by a mortgage loan, over the amount of a first mortgage. Second mortgages generally carry a higher rate than a first mortgage since they represent a higher risk for an investor.
Secondary Mortgage Market search for term
The market where banks, savings & loans and mortgage bankers can sell mortgages to investors like Fannie Mae or Freddie Mac.
Section 8 Housing search for term
Privately owned rental units participating in the low-income rental assistance program. Landlords receive subsidies on behalf of qualified low-income tenants, allowing the tenants to pay a limited proportion of their incomes toward the rent.
Securities and Exchange Commission (SEC) search for term
The federal agency which regulates securities and the securities business. It is involved in real estate and mortgage lending when MBS are issued.
Security search for term
Property that serves as collateral for a debt.
Seller Take-Back search for term
An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage.
Servicing search for term
The act of billing, collecting payment, filing reports, managing impound accounts and handling defaults on a mortgage.
Settlement search for term
See Closing.
Settlement Cost (HUD guide) search for term
A booklet that provides an overview of the lending process and is required to be given to consumers after the loan application is completed.
Settlement Statement search for term
See HUD 1
Shared Appreciation Mortgage search for term
A residential loan with a fixed interest rate that is below market, with the lender entitled to a specified share of appreciation of the property over an agreed upon time interval.
Sheriff’s Deed search for term
A deed given at the sheriff’s sale in the foreclosure of a mortgage.
Single Family Housing (SFR) search for term
A type of residential structure designed to include one dwelling.
Spec House search for term
A single family dwelling constructed by a builder in anticipation of finding a buyer.
Special Assessment search for term
A special tax imposed on property, individual lots or all property in the neighborhood to pay for improvements – street lights, sidewalks, etc.
Special Warranty Deed search for term
The grantor does not warrant against title defects arising from conditions that existed before he/she owned the property. The seller warrants that he/she has done nothing to impair title.
Specific Performance search for term
A legal action in which the court requires a party to a contract to perform the terms of the contract when the party has refused to fulfill its obligations.
Standard Uniform Loan Application (Form 1003) search for term
A standard loan application widely used in the mortgage industry.
Subdivision search for term
A tract of land divided into lots suitable for home building purposes.
Subject To (Purchasing subject to a mortgage) search for term
The buyer agrees to make payments on the existing mortgage, without notifying the lender. The seller remains liable for making payments on the loan if the buyer does not make the mortgage payment. The buyer is not personally liable for mortgage payments, but must make payments to keep the property.
Subordination search for term
A loan in a lower priority, for example a second mortgage is subordinate to a first.
Subsidized Second Mortgage search for term
An alternative financing option for low- and moderate- income households that also includes a down payment and a first mortgage, with funds for the second mortgage provided by city, county, or state housing agencies, foundations, or nonprofit corporations. Payment on the second mortgage is often deferred, carries no or low interest rates, and part of the debt may be forgiven for each year the family remains in the home.
Survey search for term
Map made by a licensed surveyor who measures land and charts its boundaries, improvements and relationship to the property surrounding it.
Sweat Equity search for term
Value added to a property due to improvements made personally by the owner.

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Takeout Financing search for term
A commitment to provide permanent financing upon completion of construction. The take out loan normally pays off the construction loan.
Tax Lien search for term
Lien for nonpayment of taxes.
Tax Sale search for term
Public sale of a property at an auction by a government authority as a result of non-payment of taxes.
Teaser Rate search for term
A low initial interest rate on a mortgage.
Tenancy at Sufferance search for term
Tenancy established when a person who had been a lawful tenant wrongfully remains in possession of property after expiration of a lease.
Tenancy at Will search for term
A license to use or occupy land and buildings at the will of the owner. The tenant may decide to leave the property at any time or must leave at the landlords will.
Tenancy by the Entirety search for term
A form of ownership by husband and wife whereby each owns the entire property. In event of the death of one, the survivor owns the property without probate.
Tenancy for Years search for term
Created by a lease for a fixed term, such as 6 months, 2 years, etc.
Tenancy in Common search for term
Ownership of a property by 2 or more persons, each of whom has an undivided interest, without the right of survivorship. Upon the death of one of the owners, the ownership share of the deceased is inherited by the beneficiary designated on the owner’s will.
Tenancy in Severalty search for term
Ownership of property by one person.
Term search for term
The period of time between the commencement date and termination date of a note, mortgage, legal document, or other contract.
Time is of the Essence search for term
Legal phrase in a contract requiring all references to specific dates and times noted in the contract be interpreted exactly.
Time Share search for term
A form of property ownership under which a property is held by a number of people, each with the right of possession for a specified time interval. Time sharing is used mostly for vacation properties.
Title search for term
Evidence that the owner of the property is in lawful possession. Evidence of ownership.
Title Company search for term
A company that specializes in title searches and insuring title to property.
Title Insurance search for term
An insurance policy which protects the insured against loss arising from defects in title. Title insurance policies are typically obtained for the buyer and the lender.
Title Report search for term
A document indicating the current state of title. The report includes information on the current ownership, outstanding deeds of trust or mortgages, liens, easements, covenants, restrictions, and any defects.
Title Search search for term
An examination of the public records to determine the ownership and encumbrances affecting the property.
Town House search for term
Residence which normally has 2 or more floors and is attached to other similar units. Town houses are commonly found in planned unit developments (PUDs) and condominiums.
Tract search for term
A parcel of land, generally held for subdividing.
Transaction Fee search for term
A fee which may be charged each time you draw on a home equity credit line.
Transfer Tax search for term
Tax paid to the city, county, state or other government entity upon sale of a property.
Triple-Net Lease search for term
One in which the tenant pays all operating expense of the property. The landlord receives the net rent.
Trust Account search for term
A separate bank account maintained by a broker or escrow company to handle all money collected for clients. A broker may not commingle these funds with his/her own funds.
Trust Deed search for term
See Deed of Trust.
Trustee search for term
A party who is given legal responsibility to hold property in the best interest of or “for the benefit of” another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law.
Truth in Lending search for term
See Regulation Z.
Two-Step Mortgage search for term
A mortgage in which the borrower receives a fixed rate for a specified number of years (most often 5 or 7), and then receives a new interest rate based on the terms in the note.

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U

Underwriting search for term
The decision whether to make a loan to a potential home buyer based on credit, income, employment history, assets, etc.
Undivided Interest search for term
An ownership right to use and possess a property that is shared among co-owners, with no one co-owner having exclusive rights to any portion of the property.
Unencumbered Property search for term
Real estate with free and clear title.
Unimproved Property search for term
Land that has received no development.
Unrecorded Deed search for term
A document that transfers title from the grantor to the grantee without recording (i.e. providing public notice).
Usury search for term
Charging a rate of interest greater than that permitted by law.

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V

VA Loan search for term
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 Funding Fee search for term
A one-time fee paid directly to the Department of Veterans Affairs (VA) for every VA loan. The money is used to offset the few loans that go into default. Borrowers have the option to pay the fee upfront or include the fee in the mortgage loan.  Borrowers with service-connected disabilities may be able to secure an exemption from the VA Funding Fee.
Vacation Home search for term
See second home.
Variable Rate search for term
An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.
Variable Rate Mortgage search for term
See Adjustable Rate Mortgage
Verification of Deposit (VOD) search for term
A document signed by the borrower’s bank or other financial institution verifying the account balance and history.
Verification of Employment search for term
A document signed by the borrower’s employer verifying his/her starting date, job title, salary and probability of continued employment.

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W

Waiver search for term
The voluntary renunciation, abandonment, or surrender of some claim, right, or privilege.
Warehouse Fee search for term
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 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.
Warehousing search for term
Mortgage bankers and other financial institutions make loans that are then periodically sold on the secondary market. After the loan is made but before it is sold – the loan is said to be in the lenders warehouse.
Warranty Deed search for term
A deed conveying the title to a property with a warranty of a clear marketable title.
Wraparound Mortgage search for term
A loan arrangement whereby the existing loan is retained and a new loan is added to the property.

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Y

Yield search for term
Ratio of income from an investment to the total cost of the investment over the period of the investment.

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Z

Zero Lot Line search for term
A form of housing where individual units are on separate lots, but are attached to one another. Example: PUD, townhouse.
Zoning search for term
Areas may be zoned to specify use of a property i.e. residential, commercial, agricultural. These zoning ordinances are normally enforced by the city or the county.

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