Mortgage Glossary
Mortgage & Real Estate Glossary
The mortgage and real estate glossary is an extensive range of terms and definitions related to mortgage broking and real estate buying and selling – with references and examples.
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- 100% Loan:
- A loan with no down payment.
- 12 MTA:
- An interest rate index that is used on some ARMs.
- 12 MTA Pay Option ARM:
- Same as Flexible Payment ARM.
- 125% Loan:
- A loan for 125% of property value.
- 3.95% ARM:
- A monthly ARM on which the initial rate is 3.95%.
- 3/2 Downpayment:
- Schemes offered by some lenders in which a borrower who is able to secure a grant or gift equal to 2% of the down payment will only have to provide a 3% down payment from their own funds.
- References:
- Ref-1
- 40-Year Mortgage:
- A mortgage with a term of 40 years.
- References:
- Ref-1
- 80/10/10, 80/15/5, and 80/20/0 Loan Plans:
- Combination first mortgages for 80% of sale price and second mortgages for 10%, 15%, or 20%.
- References:
- Ref-1
- Abstract of Title:
- A condensed history or summary of all transactions affecting a particular tract of land.
- References:
- Ref-1
- Acceleration Clause:
- A clause in a mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons.
- References:
- Ref-1
- Accrued Interest:
- Interest that is earned but not paid, adding to the amount owed.
- References:
- Ref-1
- Acknowledgment:
- Formal announcement prior to a public official that one has signed a document.
- Acre:
- A measure of land equal to 43,560 square feet.
- A-Credit:
- A customer with the best credit rating, deserving of the lowest prices that lenders offer.
- Action to Quiet Title:
- A legal proceeding begun for the purpose of settling competing claims to property and establishing clear legal title in one party.
- References:
- Ref-1
- Ad Valorem:
- A method of imposing a tax on the ownership of real property. Literally, according to value; based on the “ability to pay” theory.
- References:
- Ref-1
- Adjustable Rate Mortgage (ARM):
- A type of mortgage loan program in which the interest rate and payments are adjusted as frequently as every month. This program allows mortgage interest rates to change with market conditions.
- Adjustment Interval:
- On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment. The time depends on the index.
- Adverse Possession:
- A method of acquiring title by possession under certain conditions.
- Affordability:
- A customer’s ability to afford a house.
- Agency:
- An agreement by which the agent assumes to represent the principal in business transactions.
- Agent:
- An individual authorized to act on behalf of another in dealings with third parties.
- Agreement of Sale:
- An agreement signed by the purchaser and seller stating the terms and conditions under which a property will be sold.
- References:
- Ref-1
- Alienation Clause:
- A clause that calls for debt under a mortgage or deed of trust to be due in its entirety, upon transfer of ownership of the property.
- Alt-A:
- A mortgage risk classification that falls between prime and sub-prime, but is closer to prime.
- References:
- Ref-1
- Alternative Documentation:
- Expedited and simpler certification requirements needed to accelerate the loan approval process.
- Amenities:
- The qualities and state of being pleasant and agreeable.
- American Land Title Association:
- Organization composed of title insurance firms, which set standards for the industry.
- Amortization:
- Regular payment of a debt through regular installments that cover both interest and principal.
- Amortization Schedule:
- A table or chart which shows the mortgage payment schedule. The schedule is divided according to interest and amortization, the loan balance, tax and insurance payments if made by the lender, etc.
- References:
- Ref-1
- Amount Financed:
- On the Truth in Lending form, the loan amount minus any prepaid fees and points.
- Annual Percentage Rate (APR):
- The cost of credit as a yearly rate. The percentage results from an equation considering the total amount financed, the finance charges, and the term of the loan. Usually not the same as the interest rate.
- References:
- Ref-1
- Application:
- A request for a loan that includes the data about the potential borrower, the property and the requested loan.
- Application Fee:
- A fee that many lenders charge to accept an application.
- Appraisal:
- A written estimate of a property’s current market worth prepared by an appraiser.
- Appraisal and Credit Report Fees:
- These fees are collected by the lender and paid to outside firms performing the services.
- Appraisal Fee:
- A fee charged by an appraiser for the assessment of a particular property.
- References:
- Ref-1
- Appraisal Report:
- Estimation of real estate worth by an expert.
- Appraised Value:
- An expert opinion of the worth of a property or asset.
- Appraiser:
- An expert who uses his or her experience and knowledge to prepare the appraisal estimate.
- Appreciation:
- Increase in value or worth of property.
- Approval:
- Acceptance of the borrower’s loan application. Approval means that the borrower meets the lender’s qualification requirements.
- Arrears:
- Money which is overdue and unpaid.
- As is:
- A clause used in the transfer of property, meaning that the current property is being passed on with no guarantee provided by the seller.
- Assessed Valuation:
- An evaluation of property by an agency of government for taxation purposes.
- Assessment Base:
- The total assessed worth of all assets in a given assessment district.
- Assignment:
- Transfer of an agreement from one party to another.
- Assumable Mortgage:
- A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must qualify to assume the loan.
- Assumption:
- New owner takes on the responsibility for repaying an existing mortgage.
- Attached Homes:
- A house that has one or more common walls adjoining another home.
- Auction Site:
- See Lead-Generation Site.
- Authorized User:
- Someone credited by the original credit card holder to use the holder’s card.
- Automated Underwriting:
- Technology that assesses mortgage risk based on an individual borrower’s profile.
- Automated Underwriting System:
- A particular computerized system for doing automated underwriting.
- Balance:
- The amount of the original loan remaining to be paid.
- Balloon:
- The loan balance remaining at the time the loan contract calls for full repayment.
- Balloon Loan:
- A mortgage in which the monthly payment is not intended to repay the entire loan. The final payment is a large amount of the remaining principal.
- References:
- Ref-1
- Balloon Mortgage:
- A mortgage that has level monthly payments that are insufficient to fully amortize the principal and interest within the term of the loan. With this type of mortgage, a lump sum payment is due at maturity.
- Balloon Payment:
- The lump sum payment of the unpaid principal remaining at the end of the term of a balloon loan.
- Bankruptcies:
- A court action to restructure debt.
- Basis:
- Original worth of a property plus the worth of any improvements put on by the seller.
- Beneficiary:
- The lender named on the mortgage note.
- Bill of Sale:
- Written contract transferring personal property from one person to another.
- References:
- Ref-1
- Bimonthly Mortgage:
- A mortgage on which the borrower pays half the monthly payment on the first day of the month, and the other half on the 15th.
- Binder:
- Preliminary agreement of sale.
- Biweekly Mortgage:
- A mortgage with payments due every two weeks, totaling 26 payments a year.
- Blanket Mortgage:
- A mortgage covering more than one property of the mortgage.
- References:
- Ref-1
- Bond:
- A debt instrument in the capital markets.
- Bridge Financing:
- A loan made for a short term, to cover the time gap between completing the purchase of one property and finalizing arrangements to pay for it.
- References:
- Ref-1
- Bridge Loan:
- A type of mortgage financing between the termination of one loan and the start of another loan.
- Broker:
- A person that represents another for a fee in real estate transactions.
- Builder-Financed Construction:
- Having the builder finance the construction.
- References:
- Ref-1
- Building Code:
- Government regulations specifying minimum construction standards.
- Building Line or Setback:
- A line fixed at a certain distance from the front and/or sides of a lot, beyond which no building can project.
- References:
- Ref-1
- Buy Down:
- A payment to the lender from the seller, causing the lender to reduce the interest rate during the early years of the loan.
- Buyer’s Broker:
- A real estate broker who represents the buyer.
- Buy-Up:
- Paying a higher interest rate in exchange for a refund by the lender which lowers upfront costs.
- Capital:
- Accumulated wealth.
- Capital Gain:
- Taxable profit on the sale of an appreciated asset.
- Caps:
- Consumer safeguards that limit the amount monthly payments on an adjustable rate mortgage if there are any changes.
- Cash Flow Option Loan:
- Same as Flexible Payment ARM.
- References:
- Ref-1
- Cash-Out Refi:
- Refinancing for a sum over the balance on the old loan, plus the settlement costs.
- Caveat Emptor:
- A legal term meaning “let buyer beware”.
- References:
- Ref-1
- Certificate of Eligibility:
- Document issued by the Veterans Administration that certifies a veteran’s eligibility for a VA loan.
- Certificate of Occupancy:
- A document which states that a home or other building has met all building codes and is suitable for habitation.
- Certificate of Reasonable Value (CRV):
- A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
- Certificate of Title:
- A written statement furnished by an abstract or title company, or an attorney stating that the title to a piece of property is legally vested in the present owner.
- Certified Copy:
- A true copy, attested to be true by the officer holding the original.
- Cestui Que Trust:
- The beneficiary of a trust, the person who is the beneficial owner of the property held in trust for which the trustee holds legal title.
- References:
- Ref-1
- Chain of Title:
- The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
- Chattel:
- Personal property.
- Client:
- An individual who employs the agent.
- Closing:
- Closing of a real estate sale where the title of the property is transferred to the new owners and funds are transferred to the appropriate parties.
- Closing Agent:
- A neutral third party that looks after the closing of a real estate transaction.
- Closing Costs:
- Expenses incurred by the buyer/borrower and the seller in a transaction.
- Closing Date:
- The date on which the closing occurs.
- Closing Day:
- The day on which a real estate deal is closed, completing all the formalities.
- Closing Statement:
- Statement prepared for the buyer and seller itemizing all of the costs of a real estate transaction.
- Cloud on Title:
- An outstanding claim or encumbrance which, if valid, adversely affects the marketability of title.
- References:
- Ref-1
- CMG Plan:
- A process for reimbursing a loan early that uses the mortgage as a substitute for a checking account.
- Co-Borrowers:
- One or more people who have signed the note, and are equally responsible for repaying the loan.
- Code of Ethics:
- Standards subscribed to by members of the National Association of Realtors.
- COFI:
- Abbreviation for cost of funds index. An index that is used to determine interest rate changes for certain ARM plans.
- Co-Maker:
- Equally responsible for repayment as the borrower.
- Commercial Property:
- Business property, such as office buildings, medical centers, hotels, stores, etc., which are intended to operate with a profit.
- Commission:
- Fee paid to a broker or other entity for services rendered.
- Commitment:
- A written promise to insure a loan for a specified amount and on specified items.
- Common Law:
- Rules based on practice as demonstrated by decrees and judgments from the courts.
- Community Property:
- Property owned jointly by husband and wife.
- Comparables:
- Properties used as comparisons to determine the value of a specified property.
- Condemnation:
- The legal process by which the government takes private land for public use, paying the owners a fair price.
- Conditional Commitment:
- A written document provided by a lender agreeing to make a loan provided certain conditions are met prior to closing.
- References:
- Ref-1
- Conditional Offer:
- Purchase offer in which the buyer proposes to purchase property only after the occurrence of certain events.
- Condominium:
- A structure of two or more units, the interior space of which are individually owned.
- Conforming Mortgage:
- A loan appropriate for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac.
- Consideration:
- Anything of value given to induce another to enter into a contract.
- Construction Financing:
- The process of financing used when a borrower contracts to have a house built, rather than buying an already built house.
- Construction Loan:
- Short-term loan for property construction.
- Contingency:
- A provision in a contract stating that some of all of the terms of the contract will be altered or voided by the occurrence of a specific event.
- Contract Knavery:
- Introducing provisions into a loan agreement that severely disadvantages the borrower, without the borrower’s knowledge.
- Contract of Purchase:
- An agreement between parties for the sale of real estate.
- Contract of Sale:
- A deal in which the buyer receives possession of the property, but the seller retains the title.
- Contract Sales Price:
- The full purchase price as stated in the contract.
- Conventional Loan:
- A mortgage not insured by FHA or guaranteed by the VA or Farmers Home Administration (FMHA).
- Conventional Mortgage:
- A loan neither insured by the FHA nor guaranteed by the VA.
- References:
- Ref-1
- Conversion Option:
- The option to switch an ARM loan to a fixed rate of interest for the remaining term of the loan.
- Convertible ARMs:
- ARMs that have a condition which allows the borrower to change the mortgage to a fixed rate term.
- Cooperative Housing:
- An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings.
- Correspondent:
- A lender who distributes loans to a wholesale lender against prior price commitments.
- COSI:
- Abbreviation for Cost of Savings Index, this is an index which determines changes to the interest rate on ARMs.
- Co-Signing a Note:
- Assuming liability for someone else’s loan in case that party fails to pay.
- Cost Basis:
- An amount attributed to an asset for income tax purposes; used to determine gain or loss on a life insurance contract to determine the value of a gift.
- Cost Plus Contract:
- A building agreement setting the builder’s profit at a set percentage of actual cost of labor and materials.
- Counteroffer:
- A new offer made as a result of another offer.
- County:
- A division within a state, usually encompassing one or more cities or towns.
- Covenant:
- A clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation.
- Credit Report:
- A report from a credit bureau containing information bearing on credit-worthiness.
- Credit Score:
- A statistical summary of the information contained in a consumer’s credit report. The most well known type is the Fair Isaac or FICO score.
- Cumulative Interest:
- The total amount charged as interest on a loan or mortgage to a certain date.
- Current Index Value:
- The most recently published value of the index used to adjust the interest rate on an indexed ARM.
- Customer:
- Typically, the buyer, as opposed to the seller.
- Debt Consolidation:
- The replacement of multiple loans with a single loan. This type of loan often has a lower monthly payment and a longer repayment period.
- Debt Elimination:
- Tricks and scams which are designed to fleece you of your money by promising to eliminate your mortgage debt.
- References:
- Ref-1
- Debtaholic:
- A borrower who is addicted to taking debts.
- Declaration of Restrictions:
- A set of restrictions filed by a sub divider to cover an entire tract or subdivision.
- References:
- Ref-1
- Dedication:
- The voluntary giving of private property to some public use by the owner.
- Deed:
- The document prepared by a lawyer or notary containing a detailed description of the property which transfers ownership from the vendor to the purchaser.
- Deed in lieu of Foreclosure:
- Deed given from the owner/borrower of the property to the lender as an alternative to having the lender foreclose on the property.
- References:
- Ref-1
- Deed of Trust:
- Document creating a lien on a property as security for the payment of a debt.
- Deed of Trust Rider:
- The document required by the lender to be recorded along with the security instrument for an ARM.
- Deed Restriction:
- Limitations placed on the use of real property by writing in a deed to control use and occupancy of the property by future owners.
- Default:
- Failure to make mortgage payments.
- Defective Title:
- Ownership of property which is subject to some competing claim.
- Deferred Interest:
- Same as Negative Amortization.
- References:
- Ref-1
- Deficiency Judgment:
- A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
- Delinquency:
- Failure to make monthly loan payments when due.
- Demand Clause:
- A clause in the contract which permits the lender to as for repayment at any time.
- Deposit:
- Money given to the seller or his agent by the potential buyer upon the signing of the sales agreement to indicate that the buyer is indeed buying the property.
- Depreciation:
- A decrease in the value of property.
- Devise:
- Real estate left by will.
- Devisee:
- One to whom real estate is given by will.
- Devisor:
- A testator who leaves real estate.
- Direct Endorsement:
- A lender that can finish the processing and closing of an FHA loan without prior approval from FHA.
- Direct Lender:
- Same as Lender.
- Direct Reduction Mortgage:
- A type of mortgage where the principal and interest to be paid are based on the principal remaining.
- References:
- Ref-1
- Disbursements:
- Payments made during the course of an escrow or at closing.
- Discount:
- A loan funded below par (100%).
- Discount Mortgage Broker:
- A mortgage broker who is paid completely by the lender and not by the borrower.
- Discount Points:
- Same as Points.
- References:
- Ref-1
- Discretionary ARM:
- An ARM on which the lender has the claim to alter the interest rate at any time subject only to advance notice.
- Documentary Tax Stamps:
- Stamps affixed to a deed showing the amount of transfer tax.
- Documentation Requirements:
- The documents which a lender requires that state how information about a loan applicant’s income and assets must be provided, and how it will be used by the lender.
- Dower:
- The rights of a widow to a portion of her deceased husband’s property.
- References:
- Ref-1
- Down Payment:
- Cash to be paid by the purchaser at closing to consummate a real estate transaction.
- Dragnet Clause:
- A clause in a mortgage or deed of trust which places the real estate as security for existing debts between the parties.
- References:
- Ref-1
- Dual Apper:
- A borrower who presents applications through two loan providers.
- Dual Index Mortgage:
- A mortgage on which the interest rate is changeable based on an interest rate index.
- Due-on-Sale Clause:
- A provision in a mortgage or deed of trust which requires the loan to be paid in full if a property is sold or transferred.
- Easement:
- A right held by a person to make limited use of another’s real property.
- Economic Obsolescence:
- Loss in value of a property that stems from factors external to the property.
- Effective Rate:
- A term used in two ways. (1) A measure of interest cost to the borrower that is identical to the APR except that it is calculated over the time specified by the borrower. (2) In finance, the “effective rate” is the quoted rate adjusted for intra-year comp
- Eminent Domain:
- A government right to acquire private property for public use by condemnation and the payment of just compensation.
- References:
- Ref-1
- Encroachment:
- A property improvement or obstruction that physically intrudes upon the property of another.
- Encumbrance:
- A claim, right, or lien upon the title to real estate held by someone other than the real estate owner.
- References:
- Ref-1
- Equity:
- The market value of the property less the homeowner’s unpaid mortgage balance and any outstanding liens or other debts against the property.
- Equity Grabbing:
- A form of lending where the lender beforehand itself wants the borrower to default, so that he/she can grab the borrower’s equity.
- Escheat:
- A reversion of property to the state in the absence of an individual owner.
- References:
- Ref-1
- Escrow:
- An account in which a neutral third party holds the documents and money in a real-estate transfer until all conditions of a sale are met.
- Escrow Payment:
- The portion of a homeowner’s monthly mortgage payment that is held by the loan servicer to pay for taxes and insurance.
- Escrow Reimbursement:
- The buyer reimburses the seller for the current balance of his escrow funds.
- Estate at Will:
- Possession of property at the discretion of the owner.
- Estate for Years:
- Tenant has rights in real property for a designated number of years.
- Estimated Closing Costs Statement:
- The statement which lists the financial settlement between buyer and seller and the costs each must pay.
- Estoppels:
- A barrier to a law of action which forbids a person to contradict or deny one’s own previous statement or act.
- Exclusive Agency:
- Listing agreement in which only the listing office may sell the property and earn the commission.
- Exclusive Right-to-Sell:
- Sales contract in which sellers owe commission to the listing regardless of who finds the buyer.
- Fallout:
- Loan applications that are withdrawn by borrowers, primarily because they got a better deal.
- Federal Home Board:
- The board which oversees the Federal Home Loan Bank systems.
- Federal Home Loan Bank:
- Provides liquidity to supervised financial service companies, such as savings and loans and credit unions.
- Federal Home Loan Board:
- The board which charters and forbids discrimination in the sale.
- Federal Home Loan Mortgage Corporation (Freddie Mac/FHLMC):
- A corporation established to purchase primarily conventional mortgage loans in the secondary market.
- Federal Housing Administration:
- A federal agency which insures first mortgages, enabling lenders to loan a very high percentage of the sale price.
- Federal Reserve Bank:
- The regulatory agency for certain commercial banks and bank holding companies.
- Federal Tax Lien:
- A lien attached to property for nonpayment of a federal tax.
- Federal Tax Return:
- The US government’s method to identify individual and company’s annual tax responsibility.
- Fee Simple:
- Highest possible degree of ownership of land.
- Fees:
- The sum of all upfront cash payments required by the lender as part of the charge for the loan.
- FHA Mortgage:
- A mortgage that is insured by the Federal Housing Administration (FHA). This is also known as a government mortgage.
- FICO Score:
- See Credit Score.
- Fiduciary:
- A person in a position of great trust and confidence, as the relationship between principal and broker.
- References:
- Ref-1
- Financial Depositor Institutions:
- Banks, savings and loans or credit unions.
- Financing Points:
- Including points in the loan amount.
- First Mortgage:
- A real estate mortgage that has priority over all other mortgages on a specified piece of real estate.
- First Mortgage:
- A mortgage that is registered first against the property. This mortgage has to be paid first in the event of sale or default.
- References:
- Ref-1
- Fixture:
- An article of personal property which has been installed in or attached to land or a building thereon, in such a manner, that it is now considered to be a part of the real estate.
- Flexible Payment ARM:
- Same as Option ARM.
- Float:
- Varying rate and points with changes in market conditions.
- Float-Down:
- A rate lock, plus an option to lower the rate if market interest rates decline during the lock period.
- Forbearance Agreement:
- A contract by the lender not to use the legal option to foreclose in exchange for an agreement by the borrower to a payment plan that will take care of the borrower’s delinquency.
- Foreclosure:
- Legal process by which a mortgagor of real property is deprived of his interest in that property due to failure to comply with terms and conditions of the mortgage.
- Freddie Mac:
- One of two Federal agencies that purchase home loans from lenders, the other being Fannie Mae.
- References:
- Ref-1
- Front-End Fee:
- Mortgage broker income paid by the borrower.
- Full Disclosure:
- Revealing all known facts which may affect the decision of a buyer or tenant.
- Fully Amortizing Payment:
- A periodic mortgage payment which, if paid consistently throughout the amortization period of the mortgage, will result in the total principal and interest owing on the loan being retired at the end of the amortization period.
- Fully Indexed Interest Rate:
- The interest rate as set out in the variable or adjustable rate mortgage, equaling the index rate plus the float of the mortgage.
- Functional Obsolescence:
- Impairment of functional capacity or efficiency.
- References:
- Ref-1
- General Warranty Deed:
- A deed containing a covenant whereby the seller agrees to protect the buyer against being dispossessed because of any adverse claim against the land.
- Generic Prices:
- Prices that have a uniform set of transaction characteristics that generally command the lowest prices.
- Gift of Equity:
- This is a down payment that is gifted to the buyer from the seller based on the property’s equity.
- Good Fairy Syndrome:
- A concept that a good fairy will solve all our financial problems.
- Good Faith Estimate:
- A disclosure required under the Real Estate Settlement Procedures Act (RESPA) that needs to be given to all mortgage loan applicants at the time of application.
- Government National Mortgage Association (GNMA/Ginnie Mae):
- A government owned agency that acts as a secondary market conduit for FHA and VA loans.
- Grace Period:
- The period after the payment due date during which the borrower can pay without being charged for late fees.
- Graduated Payment Mortgage (GPM):
- A loan that starts with small monthly payments which increase at a predetermined rate over a period of time.
- Graduation Period:
- The percentage increase in the payment on a GPM.
- References:
- Ref-1
- Graduation Rate:
- The interval at which the payment rises on a GPM.
- Grandfather Clause:
- 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:
- The buyer, who receives a deed.
- Grantor:
- The seller, who gives a deed.
- Ground Rent:
- Rent paid for vacant land.
- Guaranteed Mortgage Price Agreement:
- A proposal by HUD in 2002 to allow lenders and others to offer packages of loans and settlement services at a single price.
- Heirs and Assigns:
- A person who inherits an interest in a property under the rules of law applicable when a property owner dies.
- References:
- Ref-1
- Historical Scenario:
- An attempt to forecast the interest rate variations of a variable or adjustable rate mortgage on the basis of the behavior of interest rates in a previous period.
- Holographic Will:
- Will written in the testator’s handwriting and not witnessed.
- Home Equity Conversion Mortgage (HECM):
- A reverse mortgage program administered by FHA.
- References:
- Ref-1
- Home Equity Line of Credit (HELOC):
- A mortgage loan that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.
- Home Equity Loan:
- Same as Second Mortgage.
- Home Keeper:
- A reverse mortgage program administered by Fannie Mae.
- Home Owners Loan Corporation:
- A federal agency established by Congress in 1933 to help families avoid having their homes foreclosed.
- Homebuyer Protection Plan:
- A plan claiming to protect FHA homebuyers against property defects.
- References:
- Ref-1
- Homeowners Association:
- An organization of homeowners whose major purpose is to maintain and provide community facilities and services for the common enjoyment of the residents.
- Homeowner’s Equity:
- See Equity.
- Homeowners Insurance:
- Insurance bought by the borrower, and required by the lender, to protect the property against loss from fire and other hazards.
- Homeowner’s or Maintenance Fees:
- Payments made by property owners of a condominium or a unit in PUD to the homeowners’ association for expenses incurred in upkeep of the common areas.
- Homeowner’s Policy:
- Policy which expands the insurance for a homeowner.
- Homestead:
- Tract of land occupied as a family home.
- Housing and Urban Development (HUD):
- The government agency that oversees FHA.
- References:
- Ref-1
- Housing Bank:
- A government-owned or affiliated housing lender.
- Housing Bubble:
- A sharp increase in house prices due to expectations that prices will continue to rise.
- Housing Expense:
- The sum of mortgage payment, hazard insurance, property taxes, and homeowner association fees.
- Housing Expense Ratio:
- The ratio of housing expense to borrower income, which is used in qualifying borrowers.
- Housing Investment:
- The amount invested in a property, equal to the sale price less the loan amount.
- HUD1 Form:
- The form a borrower gets at closing that details all the payments and receipts among the parties in a real estate transaction.
- Hybrid ARM:
- An ARM on which the initial rate holds for some period, during which it is “fixed-rate”, after which it becomes adjustable rate.
- Improvement:
- Valuable additions to property which raise the value of the property.
- In testate:
- Someone who has died without leaving a valid will.
- Incidental Recording, Delivery, Wire, etc., Fees:
- Other costs that are incurred when a real estate loan is closed.
- Index:
- A published rate of current interest rate levels used to measure changes in rates charged on adjustable rate mortgages.
- Indexed ARM:
- An ARM on which the interest rate adjusts mechanically based on changes in an interest rate index.
- Initial Interest Rate:
- The original interest rate of the mortgage at the time of closing.
- Initial Rate Period:
- The number of months for which the initial rate holds, ranging from 1 month to 10 years.
- Installment Sale:
- A transaction that has a set contract price and is usually paid in monthly installments over a specified period.
- Insured Mortgage:
- A loan secured against land for which an insurance policy exists promising to compensate the lender for all losses and costs resulting from the borrower’s failure to meet her obligations under the loan agreement.
- Interest Accrual Period:
- The period over which the interest due the lender is calculated.
- Interest Cost:
- A time-adjusted measure of cost to a mortgage borrower.
- Interest Due:
- The amount of interest calculated by multiplying the loan balance at the end of the preceding period times the annual interest rate divided by the interest accrual period.
- Interest Payment:
- The portion of each periodic payment on a loan, expressed in dollars, which is allocated toward accrued interest.
- Interest Payment Notification (1098):
- A federal tax form that lenders use at year end to notify borrowers of the interest that was paid on their mortgage over the last year.
- Interest Rate:
- The rate at which the borrower pays interest to the lender.
- Interest Rate Adjustment Period:
- The length of time between changes in interest rate on an adjustable or variable rate mortgage.
- Interest Rate Ceiling:
- The highest rate of interest chargeable under a variable or adjustable rate mortgage. This is generally mentioned in the mortgage contract.
- Interest Rate Decrease Cap:
- The maximum permissible decrease in the interest rate on an ARM each time the rate is adjusted.
- Interest Rate Floor:
- The lowest interest rate possible under an ARM contract.
- References:
- Ref-1
- Interest Rate Increase Cap:
- The maximum permissible increase in the interest rate on an ARM each time the rate is adjusted.
- Interest Rate Index:
- The detailed interest rate series to which the interest rate on an ARM is tied.
- Interest-Only Mortgage:
- A mortgage on which for a certain time, the monthly mortgage payment consists of interest only.
- Interim Refinance:
- A misguided plan to avoid a prepayment penalty by refinancing twice instead of once.
- Internet Mortgages:
- Mortgages delivered using the internet.
- Investment Property:
- Property that is not occupied by the owner.
- Investor:
- In real estate, a borrower who owns or purchases a property as an investment rather than as a residence.
- Joint Tenancy:
- A form of ownership by two or more parties who share equal rights in and control of property.
- Judgment:
- The decision of a court of law.
- Jumbo Mortgage:
- Mortgage which is larger than the purchase limits of Fannie Mae and Freddie Mac (currently $240,000).
- References:
- Ref-1
- Junior Mortgage:
- A mortgage subordinate to another mortgage.
- Junk Fees:
- Slang term for extra fees charged by a lender on a mortgage loan.
- Land Contract:
- Installment plan for buying a house.
- Late Charge:
- A penalty for failure to pay an installment on time.
- Late Fees:
- Fees that lenders are allowed to collect from borrowers who do not pay inside the grace period.
- Late Payment:
- A payment received after the grace period mentioned in the contract.
- Latent Defect:
- Hidden structural defect.
- Lead-Generation Site:
- A mortgage web site which provides leads (potential customers) to lenders.
- Lease with Option to Purchase:
- Lease, which contains the right of the lessee to buy the property at the end of the lease term.
- References:
- Ref-1
- Lease-to-Own Purchase:
- A deal in which a potential home buyer rents a home with a plan to purchase it within a certain period of time.
- References:
- Ref-1
- Legal Description:
- A formal description of real property.
- Lender:
- A general term encompassing all mortgages, and beneficiaries under deeds of trust.
- Lender’s Instructions:
- A document that lenders prepare for the closing agent that outlines the necessities for loan closing.
- Lessee:
- A person to whom a lease is granted.
- Lessor:
- One who leases property to a lessee.
- Letter of Intent:
- A formal statement that the buyer intends to purchase the property for a certain price on a certain date.
- Lien:
- A legal claim or attachment against property as security for payment of an obligation.
- Life Estate:
- An estate in real property for the life of a living person.
- Limited Partnership:
- A partnership in which the general partner manages the partnership’s activities and is solely liable for them. The limited partners are liable only to the extent of their contributions.
- Lis Pen Dens:
- A public notice that litigation is pending on a property.
- References:
- Ref-1
- Listing:
- A record of property for sale by a broker who has been authorized by the owner to sell.
- Listing Agreement:
- The contract between the listing broker and an owner, authorizing the realtor to facilitate the sale or lease of a property.
- Loan “Churning”:
- A scam method developed by mortgage brokers for raising cash through successive cash-out refinancing.
- Loan Amount:
- The amount of money that a borrower intends on borrowing from a financial institution for the purchase of property.
- Loan Discount Fee:
- The term used to describe points on the Good Faith Estimate.
- References:
- Ref-1
- Loan Discount/Premium Fees:
- Fees that a borrower pays to adjust the yield requirement of the investor.
- Loan Lock:
- Assurance from a lender that a borrower will obtain the interest rate in effect at the time of loan application.
- References:
- Ref-1
- Loan Modification:
- A difference in the terms of a loan, generally the interest rate and/or term. This is carried out due to the inability of the borrower to make the payments under the existing term.
- Loan Officer:
- A person that helps borrowers through the loan selection, processing, and closing of a mortgage loan.
- Loan Origination Fees:
- The price to get a loan that is paid to the originating lender.
- Loan Package:
- The information given to the lender regarding the borrower and the property necessary to decide to give or not to give the loan.
- Loan Provider:
- A lender or a mortgage broker.
- Loan Ratio:
- The amount of a loan to the value or selling price of real property.
- Loan Servicing:
- The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
- Loan-to-Value Ratio:
- The ratio of the mortgage loan amount to the property’s appraised worth or selling price.
- Lock:
- An option used by the borrower, at the time of the loan application or later, to “lock in” the rates and points prevailing in the market at that time.
- Lock Commitment Letter:
- A written declaration from a lender confirming that the cost and other terms of a loan have been locked.
- Lock Failure:
- The inability of a lender to respect a mortgage price that was said to be guaranteed.
- Lock Jumper:
- A borrower, usually refinancing rather than purchasing a home, who permits a lock to end when interest rates are lowered in order to lock again at the reduced rate.
- Lock Period:
- The number of days for which any lock or float-down holds.
- Manufactured Housing:
- A housing unit constructed in a plant or factory before transporting it to the lot where it is set. Manufactured housing can be delivered in various stages of production which offers the purchaser the flexibility of buying the “shell” up to and including
- Margin:
- Percentage points added to the index and used to determine the interest rate of an adjustable rate mortgage loan.
- Market Niche:
- A particular combination of loan, borrower and property characteristics that lenders utilize in setting costs and underwriting requirements.
- Market Price:
- The actual open market price paid in a transaction where real estate is traded.
- Market Value:
- The most probable sale price of a property in terms of money in a competitive and open market.
- Marketable Title:
- A title that is free and clear of objectionable liens, clouds or other title defects.
- Marketing:
- The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to satisfy customers.
- Maturity:
- The period until the last payment is due.
- Maximum Loan Amount:
- The maximum amount that can be borrowed based on an applicants’ disposable income, deposit, and the purchase price of the property.
- Maximum Loan-to-Value Ratio:
- The maximum allowable loan-to-value ratio on the selected loan program.
- References:
- Ref-1
- Maximum Lock:
- The longest duration for which the lender will lock the rate and points on any program.
- Mechanics Lien:
- A lien allowed by statute to contractors, laborers and material-men on buildings, or other structures upon which work has been performed or materials supplied.
- References:
- Ref-1
- Minimum Down Payment:
- The minimum allowable ratio of down payment to sale price on any program.
- Misrepresentation:
- False statement made to or concealment of knowledge from another party with the intent to provoke action from that party.
- Monthly Debt Service:
- Monthly payments periodic payments required to remain current on all outstanding loans.
- Monthly Housing Expense:
- Same as Housing Expense.
- Monthly Total Expenses:
- Same as Total Housing Expense.
- Mortgage:
- A claim against real property given as security for a loan.
- Mortgage:
- A legal document by which real property is pledged as security for the repayment of a loan; the undertaking is canceled when the debt is paid in full.
- Mortgage Auction Site:
- See Lead Generation Site.
- Mortgage Bank:
- Same as Mortgage Company.
- Mortgage Banker:
- A company that originates mortgages exclusively for resale in the secondary market.
- Mortgage Broker:
- An individual or company that for a fee acts as an intermediary between borrowers and lenders.
- Mortgage Commitment:
- A formal written communication by a lender, agreeing to make a mortgage loan on specific property, specifying the loan’s amount, length of time and conditions.
- Mortgage Company:
- Equations used to derive common measures used in the mortgage market, such as monthly payment, balance, and APR.
- Mortgage Formulas:
- A mortgage lender who sells all loans in the secondary market.
- References:
- Ref-1
- Mortgage Insurance:
- Insurance required for a loan-to-value ratio above 80.01%.
- References:
- Ref-1
- Mortgage Insurance Cancellation:
- Canceling a mortgage insurance policy.
- Mortgage Insurance Disclosure:
- Read Disclosure Rules About Mortgage Insurance.
- References:
- Ref-1
- Mortgage Insurance Premium:
- The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance company.
- Mortgage Lender:
- Financial institutions that lend money to people so they can buy a property that they cannot yet afford, but should be able to by the end of a mortgage term.
- Mortgage Note:
- A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time; the agreement is secured by a mortgage.
- Mortgage Payment:
- The monthly payment of interest and principal made by the borrower.
- Mortgage Price:
- The interest rate, points and fees paid to the lender and/or mortgage broker.
- Mortgage Program:
- Mortgage characteristics that lenders see fit to distinguish as a distinct instrument. These include whether it is an FRM, ARM, or Balloon.
- Mortgage Referrals:
- Advice on where to go to get a mortgage.
- Mortgage Scams:
- Deceptive and exploitative schemes by lenders, brokers, home sellers and sometimes even borrowers.
- References:
- Ref-1
- Mortgage Shopping:
- Trying to find the best deal on a mortgage.
- Mortgage Spam:
- Offers for great mortgage deals that appear unbidden in your email.
- Mortgage Warehousing:
- A funding facility that is used by mortgage firms to fund loans which are sold to an investor shortly thereafter.
- References:
- Ref-1
- Mortgagee:
- The lender of money or the receiver of the mortgage document.
- Mortgagor:
- The borrower of money or the giver of the mortgage document.
- Multiple Listing Service:
- A means of making possible the orderly dissemination and correlations of listing information to its members so that REALTORS may better serve the buying and selling public.
- References:
- Ref-1
- Negative Amortization:
- A gradual increase in the mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due.
- Negative Amortization Cap:
- A limit, expressed as a percentage of the principal, of the negative amortization allowed under a variable or adjustable rate mortgage.
- Negative Points:
- Points paid by a lender for a loan with a rate above the rate on a zero point loan.
- Net Branch:
- A service offered by some lenders to mortgage dealers where de jure the brokers become employees of the lender but de facto they retain their independence as brokers.
- Net Jumping:
- Using a dealer’s time and expertise to become informed and creditworthy, and then logging on to the Internet to get the loan.
- References:
- Ref-1
- Net Listing:
- An arrangement whereby the Broker receives as commission all monies received above a minimum sales price agreed to by the owners and the Broker.
- Niche:
- See Market Niche.
- Nichification:
- Proliferation in the number of loan, borrower and property characteristics used by lenders to set mortgage prices and underwriting requirements.
- No Asset Loan:
- A documentation requirement where the applicant’s assets are not disclosed.
- No Change Scenario:
- A method of calculating the future payments required under a variable or adjustable rate mortgage on the assumption that the index will not change.
- No Income Loan:
- A documentation requirement where the applicant’s income is not disclosed.
- No Ratio Loan:
- This is a type of loan which does not require documentation.
- No-Cost Mortgage:
- A credit on which all settlement prices except per diem interest, escrows, homeowners insurance and transfer taxes are paid by the lender and/or the home seller.
- Nominal Interest Rate:
- A quoted interest rate that is not adjusted for either intra-year compounding, or for inflation.
- Non-conforming Loan:
- Loans that are above the loan limits set by FNMA and FHLMC.
- Non-Conforming Mortgage:
- A mortgage that does not meet the purchase requirements of Fannie Mae and Freddie Mac. This is generally so because the mortgage is too large or for other reasons such as poor credit or inadequate documentation.
- Nonconforming Use:
- A property which does not conform to the zoning of an area.
- Non-Permanent Resident Alien:
- A category of person who lives and works in the US, but is expected to return to their country of origin in the future. The person may face restrictions when qualifying for a mortgage.
- Non-Warrantable Condo:
- A condominium that does not meet lender requirements.
- No-Surprise Adjustable Rate Mortgage:
- An ARM with a predetermined graduated payment along with variable term.
- References:
- Ref-1
- Note:
- A document that evidences a debt and a promise to repay.
- Offer:
- A promise by one party to do a specified deed as the other party in turn performs a specific deed.
- Office of Comptroller Currency:
- A federal government regulatory agency that oversees some commercial banks.
- References:
- Ref-1
- Office of Thrift Supervision:
- A federal government regulatory agency that oversees savings and loans.
- References:
- Ref-1
- Open End Mortgage:
- A mortgage permitting the mortgagor to borrow additional money under the same mortgage.
- Open Listing:
- A property given to a number of brokers to market at the same time.
- Option ARM:
- An adjustable rate mortgage with adaptable payment options, monthly interest rate adjustments, and low minimum payments in the early years.
- Origination Fee:
- A fee charged by the federal government and deducted from the proceeds of a loan before disbursement.
- Overage:
- The difference between the price posted to its loan officers by a lender or mortgage broker, and the price charged the borrower.
- Owner of Record:
- The individual (s) named on a deed that has been recorded at the local municipality.
- Owners Policy:
- Title insurance for the owner of property, rather than a lien holder.
- Ownership:
- The right to possess and use property to the exclusion of others.
- Paper:
- A mortgage, deed of trust or land contract which is given instead of cash.
- References:
- Ref-1
- Parole Evidence:
- The legal rule which prevents previous oral or written negotiations to a signed contract from changing the contract.
- Partial Prepayment:
- Making a payment larger than the scheduled payment as a way of paying off the loan earlier.
- Partial Release:
- A release of a portion of property covered by a mortgage.
- References:
- Ref-1
- Paydown Magic:
- Belief that there is a special way to pay down the balance of a home mortgage faster, if you know the secret.
- Payment Adjustment Interval:
- The period of time between changes in the amount of each periodic payment on a variable or adjustable rate mortgage.
- Payment Decrease Cap:
- The maximum percentage decrease in the payment on an ARM at a payment adjustment date.
- Payment Increase Cap:
- A contractual limit on the amount of each periodic payment may rise at any one payment change date. This is expressed as a percentage.
- References:
- Ref-1
- Payment Period:
- The period over which the borrower is obliged to make payments.
- Payment Power:
- A program started by Fannie Mae in 2003 that permits a borrower to skip up to two mortgage payments in any 12 month period, and up to 10 over the life of a loan.
- Payment Rate:
- The interest rate used to compute the mortgage payment, which is usually but not essentially the interest rate.
- Payment Shock:
- A large increase in the payment on an ARM that may shock the borrower.
- Payoff Month:
- The month in which the loan balance is paid down to zero. It does not necessarily have to be the term.
- Per Diem Interest:
- Interest that is charged daily from the day of closing to the first day of the following month.
- References:
- Ref-1
- Periodic Refinancing:
- A risky scheme to tap into equity for cash advances through periodic refinancing.
- Permanent Buydown:
- Paying points as a way of lowering the interest rate.
- Permanent Mortgage:
- A mortgage on completed construction for a long period of time.
- Perorations:
- The allocation of expenses between buyer and seller at closing.
- Personality:
- Property which is movable.
- Physical Depreciation:
- A property’s loss of value resulting from wear and tear, disintegration, or action of the elements.
- Pick a Payment ARM:
- Same as Flexible Payment ARM.
- Piggyback Mortgage:
- A combination of a first mortgage for 80% of property value, and a second for 5%, 10%, 15%, or 20% of value. Piggybacks are a substitute for mortgage insurance for borrowers who cannot put down 20%.
- Pipeline Risk:
- A slang term describing the possibility that a lender will lose money as a result of committing to a loan at a given interest rate only to see interest rates rise in the interim before the loan transaction is closed.
- PITI:
- Abbreviation for principal, interest, taxes and insurance, often combined in a single monthly mortgage payment.
- Planned Unit Development (PUD):
- A housing development which is owned by an association of which the owners of all the parcels are members.
- Plat:
- A map or chart of a lot, subdivision or community, showing boundary lines, buildings and easements.
- References:
- Ref-1
- PMI:
- Abbreviation for private mortgage insurance: insurance to protect the lender in case the borrower defaults on his/her loan.
- Points:
- Origination fees charged by the originating lender or broker.
- Portable Mortgage:
- A mortgage that can be moved from one property to another.
- Portfolio Lender:
- A lender who holds loans in their portfolio and does not sell in the secondary market.
- Portfolio Loan:
- Loans held as an investment by a bank, savings and loan or credit union.
- Power of Attorney:
- Authority given one person or corporation to act for and obligate another, to the extent laid down in the instrument creating the power.
- Pre-Approval:
- A commitment by a lender to make a mortgage loan to a specified borrower, prior to the identification of a specific property. It can also be defined as a process used to assess a prospective borrower’s ability to pay back a loan.
- Predatory Lending:
- A variety of unpleasant lender practices which take advantage of naive borrowers.
- Prepaid Interest:
- Prepaid interest is the interest charged to borrowers at loan closing to pay for the cost of borrowing for a partial month.
- Prepaid Items of Expense:
- Perorations of prepaid items of expense which are credited to the seller in the closing statement.
- Prepayment:
- Complete payment of the principal before the due date.
- Prepayment Penalty:
- Money charged for an early repayment of debt.
- Pre-Qualification:
- Same as qualification.
- Price-Gouging:
- Charging interest rates and/or fees that are excessive relative to what the same borrowers could have found had they shopped the market.
- Primary Mortgage Market:
- The market in which loans are made directly to the borrowers.
- References:
- Ref-1
- Primary Residence:
- A residence which the borrower intends to occupy as the principal residence.
- Principal:
- 1) The outstanding balance of a loan. 2) A party to a real estate transaction. 3) The head of a real estate firm.
- Principal Limit:
- The present worth of a house or property, given the elderly owner’s right to live there until death or voluntary move-out.
- Private Mortgage Insurance (PMI):
- See PMI.
- Processing:
- The preparation of a mortgage loan application and supporting documents for consideration by a lender.
- Processing, Underwriting and Document Fees:
- Charges for the lender’s services associated with making the loan.
- Property:
- The rights of ownership. The right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights.
- Property Flipping:
- Consecutive fraud home sales at higher prices as part of a scheme to deceive the FHA.
- Property Tax:
- A tax levied by the local municipality or county on real and personal property.
- Prorate:
- To divide in proportionate shares.
- Purchase Money Mortgage:
- A mortgage used to finance the purchase of real property.
- References:
- Ref-1
- Qualification Rate:
- The interest rate used in calculating the initial mortgage payment in qualifying a borrower.
- Qualification Ratios:
- Requirements fixed by the lender that the ratio of housing expense to borrower income, and housing cost plus other debt service to borrower income, cannot exceed specified maximums.
- Qualification Requirements:
- Standards imposed by lenders as conditions for giving loans.
- Quit Claim Deed:
- A deed which conveys whatever right, title, or interest the grantor may have in property at the time of conveyance. There is no guarantee implied in a quit claim deed.
- Rate Protection:
- Protection for a borrower against the danger that rates will increase from the time the borrower applies for a loan and the time the loan is finalized.
- Rate Sheets:
- Tables and charts of interest rates and points that lenders give out to their loan officer employees or mortgage brokers.
- Rate/Point Breakeven:
- See Interest Rate.
- Rate/Point Options:
- All the combinations of interest rate and points that are accessible on a particular loan program.
- Real Estate:
- Land and anything permanently affixed to the land and those things attached to the building.
- Real Estate Broker:
- A person, corporation, or partnership licensed by a state to represent a buyer or seller in a real estate transaction in exchange for a commission.
- Real Estate Tax:
- A pecuniary charge laid upon real property for public purposes.
- REALTOR:
- Registered name for a member of the National Association of Realtors.
- REALTOR Associate:
- Salesperson associated with a broker who is a member of a the National Association of Realtors.
- Realty:
- A synonym for real estate.
- Rebate:
- Same as Negative Points.
- Recast Payment:
- Increasing the mortgage payment to the fully amortizing payment.
- References:
- Ref-1
- Recession of Contract:
- Annulling a contract and placing the parties to it in a position as if there had not been a contract.
- Recital:
- Setting forth in a deed or other writing some explanation for the transaction.
- Recording:
- The act of writing or entering an instrument in a book or public record.
- Recourse:
- The right of the holder of a note secured by a mortgage to look personally to the borrower for payment.
- Redlining:
- The practice of refusing to provide loans or insurance in a certain neighborhood.
- References:
- Ref-1
- Referral Fees:
- Payments made by service providers to other parties as quid pro quo for referring customers.
- Referral Power:
- The ability to direct a customer to a specific vendor.
- Referral Site:
- A mortgage web site that introduces customers to participating lenders.
- Refinance:
- Replacing an existing loan with a new one to get a lower rate, switch from one loan type to another or convert equity to cash.
- Refinancing:
- The repayment of a debt from the proceeds of a new loan using the same property as security.
- Reissue Rate:
- A reduced rate of title insurance premium applicable in cases where the owner of the land has been previously insured in an owner’s policy by the insurer within a certain time.
- REIT (Real Estate Investment Trusts):
- A method in investing real estate in a group, with certain tax advantages.
- References:
- Ref-1
- Release:
- An instrument releasing property from the lien of the mortgage, judgment, etc.
- Required Cash:
- The total cash required of the home buyer to close the transaction. This includes down payment, points and fixed dollar charges, etc.
- RESPA:
- Abbreviation for the Real Estate Settlement Procedures Act, which is a federal consumer protection law designed to protect home purchasers and owners shopping for settlement services by mandating certain disclosures, and restricting referral fees and kick
- References:
- Ref-1
- Restrictive Covenants:
- Private restrictions limiting the use of real property.
- Retail Lender:
- A lender who offers mortgage loans directly to the public.
- Revenue Stamps:
- Formerly, federal tax on a sale of real property. Canceled and replaced by state tax stamps.
- Reverse Mortgage:
- A special program for the elderly that provides income until death.
- Right of Rescission:
- The right of refinancing borrowers, under the Truth in Lending Act, to cancel the transaction at no cost to themselves within three days of closing.
- Riparian:
- Pertaining to the banks of a river, stream, waterway, etc.
- References:
- Ref-1
- Satisfaction of Mortgage:
- Document issued by mortgagee when the mortgage is paid off.
- Scenario Analysis:
- A quantitative modeling technique that involves entering different sets of data into a model and then determining how interest rate changes and payment on an ARM in the input data affect the model’s output.
- Scheduled Mortgage Payment:
- The amount the borrower is to pay each period, including interest, principal, and mortgage insurance, under the terms of the mortgage agreement.
- References:
- Ref-1
- Second Home:
- Commonly known as a vacation home.
- Second Mortgage:
- A loan with a second-priority claim against a property in the event that the borrower defaults.
- Secondary Financing:
- Loans secured by the property, but subordinated to the first mortgage.
- Secondary Market:
- A market that provides for the purchase or sale of previously sold or bought options through closing transactions.
- Secondary Market Investor:
- An entity that buys mortgage loans for investment or sells them again to another secondary market investor.
- Secondary Markets:
- Markets in which mortgages or mortgage-backed securities are bought and sold.
- Secondary Mortgage Market:
- A market of packaged home loans that are resold as securities to investors.
- Security:
- Real or personal property pledged by a borrower as additional protection for the lender’s interest.
- Self-Employed Borrower:
- A borrower who needs to file income using tax returns rather than information provided by an employer.
- Seller Contribution:
- A donation to a borrower’s down payment made by a home seller, as an alternative to a price reduction.
- Seller Financing:
- A property purchase that is partly or wholly financed by the seller.
- Seller’s Broker:
- Agent who takes the seller as a client.
- Septic Tank:
- An underground tank in which the sewage is reduced to liquid by bacterial action and drained off.
- Servicing:
- Administering loans between the time of disbursement and the time the loan is completely settled.
- Servicing Agent:
- The party who pays off a loan.
- References:
- Ref-1
- Servicing Release Premium:
- An amount made by the buyer of a mortgage to the seller for the release of the servicing on the mortgage.
- Servicing Transfer:
- Replacing one servicing agent with another.
- Set Back Ordinance:
- Regulates the distance from the lot line to the point where improvements may be constructed.
- Settlement:
- See Closing.
- Settlement Cost, a HUD Guide:
- HUD booklet that gives an overview of the lending process and is given to consumers after completing their loan application.
- Settlement Costs:
- Amount that the borrower has to pay at the time of closing, along with the down payment.
- Settlement Statement:
- A document that details who has paid what to whom.
- Shared Appreciation Mortgage:
- A mortgage in which a borrower receives a below-market interest rate in return for which the lender receives a portion of the future appreciation in the value of the property.
- References:
- Ref-1
- Sheriff’s Deed:
- A deed given at the sheriff’s sale in foreclosure of a mortgage.
- References:
- Ref-1
- Shopping Site:
- A multi-lender web site that allows borrowers to shop from several competing lenders.
- Short Sale:
- A contract a mortgage borrower makes in distress with the lender that allows the borrower to sell the house and pay the proceeds to the lender.
- Silent Second:
- A second mortgage offered at subsidized terms to those who are eligible.
- Simple Interest Biweekly Mortgage:
- A biweekly mortgage on which the biweekly payment is applied to the balance every two weeks.
- References:
- Ref-1
- Simple Interest Mortgage:
- A mortgage on which interest is calculated daily based on the balance of the last payment.
- Single Family Detached Home:
- A residential home that is not attached physically to another home.
- Single File Mortgage Insurance:
- A type of mortgage insurance on which the lender pays the premium and prices it in the interest rate.
- Single-Lender Web Site:
- A web site of an individual lender or mortgage broker who are selling loans from the site.
- Special Assessments:
- A variety of the property tax that requires that the rate of assessment be uniform for all property within a particular special benefit classification.
- Special Lien:
- A lien that binds a specified piece of property.
- Special Warranty Deed:
- A deed in which the seller guarantees the property title is clear for all of his tenure and that he has done nothing during this time that might in the future affect the title.
- Specific Performance:
- Lawsuit requesting that the precise terms agreed upon in a contract be carried out.
- Standard Uniform Application:
- An application developed by FNMA and FHLMC that is widely used in the mortgage industry.
- References:
- Ref-1
- State and Local Housing Programs:
- Housing finance programs to help first time home buyers and low to moderate housing groups.
- Stated Assets:
- In a stated asset loan program, the borrowers are only required by the lender to “state” their assets without providing supporting documentation.
- Stated Income:
- A certification necessity where the lender verifies the source of the income but not the amount.
- Statute of Frauds:
- The law requires certain contracts to be in writing in order to be enforceable.
- References:
- Ref-1
- Statutory Lien:
- An involuntary lien, includes tax liens, judgment liens, mechanic liens, etc.
- Streamlined Refinancing:
- Refinancing that excludes some of the standard risk control measures. It is quicker and cheaper.
- Subordinate Financing:
- A second mortgage on a property that is not paid off when the first mortgage is refinanced.
- Subordination Policy:
- The policy of a second mortgage lender for allowing a borrower to refinance the first mortgage while leaving the second in place.
- Sub-Prime Borrower:
- A borrower with poor credit, who can borrow only from sub-prime lenders who deal with borrowers who have poor credit.
- Sub-Prime Lender:
- A lender who specializes in lending to sub-prime borrowers.
- References:
- Ref-1
- Substitute of Trustee:
- A document which is recorded to change the trustee under the deed of trust.
- Survey:
- The process of measuring land to determine its size, location and physical description and the resulting drawing or map.
- Survivorship:
- All rights of a joint tenant passes to the surviving joint tenant.
- Sweat Equity:
- Equity created by the labor of the purchaser or borrower that increases the value of the property.
- Swing Loan:
- Same as Bridge Loan.
- Tax:
- An enforced charge imposed on persons, property, or income to be used to support the State.
- Tax Lien:
- Lien for nonpayment of taxes.
- References:
- Ref-1
- Tax Sale:
- The public sale of a property by the government for nonpayment of taxes.
- Teaser Rate:
- The initial interest rate on an ARM, when it is below the fully indexed rate.
- Temporary Buydown:
- Money, usually equal to a percentage of the loan amount, advanced by an individual to subsidize the monthly payments for a home mortgage for a set period of time.
- Temporary Lender:
- A lender that sells the loans it originates.
- Tenancy:
- The holding of property either by ownership or by lease.
- Tenancy at Sufferance:
- A tenancy which arises when a tenant holds over after expiration of his lease.
- Tenancy at Will:
- A tenancy which may be terminated at the will of either the Lessor or lessee.
- Tenancy by the Entirety:
- A form of ownership by husband and wife whereby each owns the entire property.
- Tenant:
- Any person in possession of real property with the permission of the owner.
- Term:
- The period used to calculate the monthly mortgage payment.
- Testate:
- Having made a will before death.
- References:
- Ref-1
- Time is of the Essence:
- Legal phrase in a contract requiring punctual performance of all obligations.
- Title:
- Often used interchangeably with the word ownership.
- Title Insurance:
- A policy that protects a buyer against errors or omissions or defects in the title of the property.
- Title Search:
- A review of all recorded documents affecting a specific piece of property to determine the present condition of title.
- Title, Escrow and Closing Agent Fees:
- These companies charge various fees for their services.
- Total Expense Ratio:
- The ratio of total housing expense to borrower income.
- Total Housing Expense:
- Housing expense plus Monthly Debt Service.
- Total Interest Payments:
- The sum of all interest payments over the life of the loan.
- Trustee:
- A party who is given legal responsibility to hold property in the best interest of another.
- Truth in Lending (TIL):
- A federal law that specifies the information that needs to be provided to borrowers on different types of loans.
- Truth in Lending Statement (Regulation Z):
- A federal government regulation that provides details of the cost of obtaining a mortgage loan.
- References:
- Ref-1
- Underwriting:
- The process of evaluating a loan application to determine the risk involved for the lender.
- References:
- Ref-1
- Underwriting Requirements:
- The standards imposed by lenders in determining whether a borrower qualifies for a loan.
- Upfront Mortgage Broker (UMB):
- A mortgage broker who charges a set fee for services provided and acts as the borrower’s agent in finding the best deal.
- References:
- Ref-1
- Upfront Mortgage Lender:
- A lender who offers loans on the internet for mortgage shoppers. He also provides the information they need to make an decision before applying for a mortgage and guarantees them fair treatment during the period after they apply through to closing.
- Usury:
- On a loan, claiming a rate of interest greater than permitted by law.
- References:
- Ref-1
- Valuation:
- The act or process of estimating value; the amount of estimated value.
- Waive Escrows:
- The act of the lender in allowing the borrower to retain responsibility for paying taxes and insurance.
- References:
- Ref-1
- Warrantable Condos:
- A condominium project with features that lenders view as protections against hazards that would threaten the value of condo units.
- References:
- Ref-1
- Warranty Deed:
- Most valuable type of deed in which the grantor makes formal assurance of title.
- References:
- Ref-1
- Wholesale Lender:
- A lender who provides loans through mortgage brokers or correspondents.
- Workout Assumption:
- The acceptance of a mortgage, with permission of the lender, from a borrower unable to continue making the payments.
- Worst Case Scenario:
- The belief that the interest rate on an ARM increases to the maximum extent allowed in the note.
- Wrap-Around Mortgage:
- A new mortgage that includes the remaining balance on an old mortgage, plus a new amount.
- References:
- Ref-1
- Yield-Spread Premium:
- Same as Negative Points.
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