|
[A]
[B] [C] [D]
[E] [F] [G]
[H] [I] [J] [K]
[L] [M] [N]
[O] [P] [Q]
[R] [S] [T]
[U] [V]
[W] [X] [Y] [Z] |
|
|
| Adjustable
Rate Mortgage (ARM): |
Mortgage loans under which the
interest rate is periodically adjusted to more closely
coincide are agreed to at the inception of the loan. |
| |
|
| Alternative
Documentation: |
The use of pay stubs, W-2 forms, and bank
statements in lieu of Verifications of Employment (VOE) and
Verifications of Deposit (VOD) to qualify a borrower for a
mortgage. |
| |
|
| Amortization: |
The systematic and continuous payment of an
obligation through installments until the debt has been paid
in full. |
| |
|
| Annual Percentage Rate
(APR): |
A term used in the Truth-in-Lending Act to
present the percentage relationship of the total finance
charge to the amount of the loan. The APR reflects the cost
of the mortgage loan as a yearly rate. It could be higher
than the interest rate stated on the Note because it
includes, in addition to the interest rate, loan discount
points, miscellaneous fees and mortgage insurance. |
| |
|
| Appraisal: |
A report made by a qualified person setting
forth an opinion or estimate of property value. (Appraisal
also refers to the process through which a conclusion on
property value is derived.) |
| |
|
| Appraisal Amount
or Appraised Value: |
The fair market value of a home determined
by an independent appraisal. The appraisal uses local real
estate market sales activity as a major basis for valuation. |
| |
|
| Appreciation: |
An increase in the value of a property due
to market conditions or other causes. The opposite is
depreciation. |
| |
|
| Balloon
Mortgage: |
A fixed-rate mortgage for a set number of
years and then must be paid off in full in a single
"balloon" payment. Balloon loans are popular with
borrowers expecting to sell or refinance their property
within a definite period of time. |
| |
|
| Bankruptcy: |
Legal relief from the payment of all debts
after the surrender of all assets to a court-appointed
trustee. Assets are distributed to creditors as full
satisfaction of debts, with certain priorities and
exemptions. A person, firm or corporation may declare
bankruptcy under one of several chapters of the U. S.
Bankruptcy Code: Chapter 7 covers liquidation of the
debtor's assets; Chapter 11 covers reorganization of
bankrupt businesses; Chapter 13 covers payment of debts by
individuals through a bankruptcy plan. |
| |
|
| Cap: |
The limit placed on adjustments that can be
made to the interest rate or payments such as the annual cap
on an adjustable rate loan (ARM) or the cap on a rate over
the life of the loan. |
| |
|
| Cash-out
Refinance: |
To refinance the mortgage on a property for
more than the principal owed. This allows the borrower to
get cash from the equity in their home. Loan products may
vary on how much can be borrowed on a cash-out refinance. |
| |
|
| Closing: |
Also known as settlement, the finalization
of the process of purchasing or refinancing real estate. The
closing includes the delivery of a Deed, the signing of
Notes and the disbursement of funds |
| |
|
| Closing
Costs: |
Costs that are due at closing, in addition
to the purchase price of the property. These costs normally
include, but are not limited to, origination fee, discount
points, attorney's fees, costs for title insurance, surveys,
recording documents, and prepayment of real estate taxes and
insurance premiums held by the lender. Sometimes the seller
will help the borrower pay some of these costs. |
| |
|
| Closing
Statement: |
An accounting of the debits and credits
incurred at closing. All FHA, VA and Conventional financing
loans use a Uniform Closing or Settlement Statement commonly
referred to as the HUD-1. |
| |
|
| CMT: |
The Constant Maturity Treasury (CMT) is
published by the Federal Reserve Board based on the average
yield of a variety of Treasury securities adjusted to a
one-year maturity. The CMT is offered as an index for
setting rates on adjustable rate mortgage programs. |
| |
|
| Co-Borrower: |
A party who signs the mortgage note along
with the primary borrower, and who also shares title to the
subject real estate. |
| |
|
| Collateral: |
Property pledged as security for a debt.
For example, real estate that secures a mortgage. Collateral
can be repossessed if the loan is not repaid. |
| |
|
| Combined Loan To
Value (CLTV): |
The mathematical relationship between the
total of all loan amounts (first mortgage plus subordinate
liens) and the value of the subject property. |
| |
|
| Community Reinvestment
Act (CRA): |
This act requires financial institutions to
meet the credit needs of their community, including low and
moderate-income sections of the local community. It also
requires banks to make reports concerning their investment
in the areas where they do business. |
| |
|
| Condominium: |
A form of property ownership in which the
homeowner holds title to an individual dwelling unit, an
undivided interest in common areas of a multi-unit project,
and sometimes the exclusive use of certain limited common
areas. All condominiums must meet certain investor
requirements. |
| |
|
| Conforming Loan: |
A loan with a mortgage amount that does not
exceed that which is eligible for purchase by FNMA or FHLMC.
All loans are considered either as conforming or
non-conforming, also known as jumbo. |
| |
|
| Conventional
Loan: |
A mortgage loan not insured or guaranteed
by the federal government. |
| |
|
| Conversion
Option: |
Options to convert an adjustable rate
mortgage or balloon loan to a fixed rate mortgage under
specified conditions. |
| |
|
| Co-Signer: |
A party who signs the mortgage note along
with the borrower, but who does not own or have any interest
in the title to the property. |
| |
|
| Creditor: |
A person to whom debt is owed by another
person who is the "debtor". |
| |
|
| Credit Rating: |
A rating given a person or company to
establish credit-worthiness based upon present financial
condition, experience and past credit history. |
| |
|
| Credit Report: |
A document completed by a credit-reporting
agency providing information about the buyer's credit cards,
previous mortgage history, bank loans and public records
dealing with financial matters. |
| |
|
| Deal
Structure: |
An Underwriters review of certain aspects
of a loan application that do not meet standard guidelines. |
| |
|
| Debt to Income
Ratio: |
Compares the amount of monthly income to
the amount the borrower will owe each month in house payment
(PITI) plus other debts. The other debts may include but not
limited to car payment, credit cards, alimony, child
support, and personal loans. This ratio is commonly used to
see if the borrower has the capacity to repay the debt. |
| |
|
| Deed of Trust: |
A legal document that conveys title to real
estate to a disinterested third party (trustee) who holds
the title until the owner of the property has repaid the
debt. In states where it is used, a Deed of Trust
accomplishes essentially the same purpose as a Mortgage. |
| |
|
| Default: |
Failure to comply with the terms of any
agreement. In real estate, generally used in connection with
a mortgage obligation to refer to the failure to comply with
the terms of the Promissory Note. Most often this default is
a failure to make payments, however, there are other means
by which a borrower may default, such as the failure to pay
real estate taxes. |
| |
|
| Depreciation: |
A decline in the value of property. The
opposite of appreciation. |
| |
|
| Discount Points: |
A percentage of the loan amount which is
charged or credited by the lender upon making a mortgage
loan. Loans that are made at the present market rate, with
no points, are considered to be made at "par."
Because of the lender's ability to charge or credit points
on an individual loan, the lender is able to tailor a loan
program and interest rate to fit the needs of each
individual borrower. Discount points can be negotiated in
the Purchase Contract to be paid by either the seller or the
borrower.
Each point equals 1% of the mortgage loan.
For example, a charge of 1 point on a $50,000 loan would
result in a charge of $500; 1/2 point would be $250 ($50,000
x .50%).
|
| |
|
| Down
Payment: |
The part of the
purchase price which the buyer pays in cash and does not
finance with a mortgage. |
| |
|
| Earnest
Money: |
Deposit made by a purchaser of real estate
as evidence of good faith. |
| |
|
| Equal
Credit Opportunity Act (ECOA): |
Also known as Regulation B. A federal law
that prohibits a lender from discriminating in mortgage
lending on the basis of race, color, religion, national
origin, sex, marital status, age, income derived from public
assistance programs, or previous exercise of Consumer Credit
Protection Act rights. |
| |
|
| Equity: |
The difference between the current market
value of a property and the principal balance of all
outstanding loans. |
| |
|
| Escrow Account: |
An account held by the lending institution
to which the borrower pays monthly installments for property
taxes, insurance, and special assessments, and from which
the lender disburses these sums as they become due. |
| |
|
| Fair
Credit Reporting Act: |
Regulated the
collection and distribution of information by the consumer
credit reporting industry. It also affects how financial
institutions collect and convey credit information about
loan applicants or borrowers. |
| |
|
| Fair Housing
Act: |
Prohibits the denial or variance of the
terms of real estate related transactions based on race,
color, religion, sex, national origin, disability, or
familiar status of the credit applicant. Real estate related
transactions include a mortgage, home improvement, or other
loans secured by a dwelling. |
| |
|
| Federal
Home Loan Mortgage Corporation (FHLMC): |
Also known as
Freddie Mac. A publicly owned corporation created by
Congress to support the secondary mortgage market. It
purchases and sells conventional residential mortgages as
well as residential mortgages insured by the Federal Housing
Administration (FHA) or guaranteed by the Veterans
Administration (VA). |
| |
|
| Federal National
Mortgage Association (FNMA): |
Also known as Fannie Mae. A privately owned
corporation to support the secondary mortgage market. It
adds liquidity to the mortgage market by investing in home
loans through the country. |
| |
|
| FICO Score: |
A credit score given to a person that
establishes creditworthiness based on present financial
condition, experience and past credit history. |
| |
|
| Finance Charge: |
The cost of credit as a dollar amount (i.e.
total amount of interest and specific other loan charges to
be paid over the term of the loan and other loan charges to
be paid by the borrower at closing). Loan charges include
origination fees, discount points, mortgage insurance, and
other applicable charges. If the seller pays any of these
charges, they cannot be included in the finance charge. |
| |
|
| Financial
Statement: |
A summary of facts showing an individual's
or company's financial condition. For individuals, it states
their assets and liabilities as of a given date. For a
company it should include a Profit and Loss Statement
(P&L) for a certain period of time and balance sheet,
stating assets and liabilities as of a given date. |
|
|
| First
Mortgage: |
A real estate loan
that creates a primary lien against real property. |
| |
|
| First
Rate Adjustment -- First rate adjustment after: |
In association with
an Adjustable Rate Mortgage loan, this is the number of
months after which the loan has closed when the first
interest rate adjustment will occur. |
| |
|
| First
Rate Adjustment -- Maximum rate decrease: |
In association with
an Adjustable Rate Mortgage loan, this is the most the
interest rate can decrease during the first adjustment
period. |
| |
|
| First
Rate Adjustment -- Maximum rate increase: |
In association with
an Adjustable Rate Mortgage loan, this is the most the
interest rate can increase during the first adjustment
period. |
| |
|
| Fixed
Rate Mortgage: |
The type of loan
where the interest rate will not change for the entire term
of the loan. |
|
|
| Floating: |
The term used when
a purchaser elects not to lock-in an interest rate at the
time of application. |
|
|
| Flood
Insurance: |
Insurance that
compensates for direct physical damages by or from flood to
the insured property subject to the terms, provisions,
conditions and losses not covered provision of the policy.
It is required for mortgages on properties located in
federally designated flood areas. |
| |
|
| Good
Faith Estimate (GFE): |
An estimate of
settlement charges paid by the borrower at closing. The Real
Estate Settlement Procedures Act (RESPA) requires a Good
Faith Estimate of settlement charges be provided to the
borrower. |
| |
|
| Gift
Letter: |
A letter or
affidavit that indicates that part of a borrower's down
payment is supplied by relatives or friends in the form of a
gift and that the gift does not have to be repaid. |
|
|
| Gross
Income: |
A person's income
before deduction for income taxation. |
| |
|
| Hazard
Insurance: |
Insurance against
losses caused by perils which are commonly covered in
policies described as a "Homeowner Policy". |
| |
|
| Home
Maintenance: |
Costs associated
with maintaining a home. This may include, but not limited
to, general repairs, replacement or repair of furnace, air
conditioning, roof, plumbing and electrical systems. |
| |
|
| Home
Mortgage Disclosure Act (HMDA): |
Also known as
Regulation C. The purpose of HMDA is to provide disclosure
of mortgage lending application activity (home purchase or
improvement) to regulators and the public. Information is
collected on each application, and is recorded on a log that
is compiled to produce a report on application activity by
geographic designation (census tract). |
| |
|
| Homeowners
Association (HOA): |
A non-profit
corporation or association that manages common areas and
services of a Condominium or Planned Unit Development (PUD). |
|
|
| Homeowners
Insurance: |
Insurance that
covers damage to the insureds' residence and liability
claims made against the insured subject to the policy terms,
conditions, provisions, losses not insured provision and
exclusions. |
| |
|
| Housing
Expense Ratio: |
Ratio used to
determine the borrowers capacity to repay a home loan. The
ratio compares monthly income to the house payment
(Principal, Interest, Taxes and Insurance). |
| |
|
| Index: |
In connection with
ARM loans, the external measurement used by a Lender to
determine future changes which are to occur to an adjustable
loan program. These will typically be published rates that
are independent of the Lender's control, such as a Treasury
Bill. |
| |
|
| Initial
Interest Rate: |
The beginning
interest rate at the start of an adjustable rate mortgage
(ARM). It may be lower than the fully indexed rate or
"going market rate" and it will remain constant
until it is adjusted up or down on the adjustment date. |
| |
|
| Interest: |
- The amount paid by a borrower to a
lender for the use of the lender's money for a certain
period of time.
- The amount paid by a bank on some
deposit accounts.
|
| |
|
| Interest
Income: |
The potential
income from funds which would have been used for the down
payment, closing costs, and any difference (increase)
between monthly rental payment and monthly mortgage payment. |
|
|
| Interest
Rate: |
The percentage of
an amount of money that is paid for its use for a specific
time; usually expressed as an annual percentage. |
| |
|
| Judgment: |
Decree of a court
declaring that one individual is indebted to another and
fixing the amount of such indebtedness. |
| |
|
| Jumbo
Loan: |
A loan above the
limit set by the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation
(Freddie Mac). Also referred to as a non-conforming loan. |
| |
|
| Late
Charge: |
An additional
charge a borrower is required to pay as a penalty for
failure to pay a regular mortgage loan installment when due;
a penalty for a delinquent payment. |
| |
|
| LIBOR: |
LIBOR is an abbreviation for
the "London Interbank Offered Rate," and is the
interest rate offered by a specific group of London banks
for U.S. dollar deposits of a stated maturity. LIBOR is used
as a base index for setting rates of some adjustable rate
financial instruments, including Interest only loans and
other adjustable rate mortgage programs. |
| |
|
| Lien: |
A legal claim
against a property that must be paid off when the property
is sold. A lien is created when you borrow money and use
your home as collateral for the loan. |
| |
|
| Life
of Loan -- Maximum rate decrease: |
In association with
an Adjustable Rate Mortgage loan, this is the most the
interest can decrease over the life of the mortgage loan. |
| |
|
| Life
of Loan -- Maximum rate increase: |
In association with
an Adjustable Rate Mortgage loan, this is the most the
interest can increase over the life of the mortgage loan. |
| |
|
| Loan
Application: |
A source of
information on which the lender bases a decision to make or
not make a loan; defines the terms of the loan contract,
gives the names of the borrower(s), place of employment,
salary, bank accounts, credit references, real estate owned,
and describes the property to be mortgaged. |
| |
|
| Loan
Balance: |
The amount of
remaining unpaid principal balance owed by the borrower. |
| |
|
| Loan
Term: |
Number of years a
loan is amortized. Mortgage loan terms are generally 15, 20,
or 30 years. |
| |
|
| Loan-to-Value
(LTV): |
The ratio of the
total amount borrowed on a mortgage against a property,
compared to the appraised value of the property. A LTV ratio
of 90 means that the borrower is borrowing 90% of the value
of the property and paying 10% as a down payment. For
purchases, the value of the property is the lesser of the
purchase price or the appraised value. For refinances the
value is determined by an appraisal. |
| |
|
| Loan-to-Value
Ratio: |
The ratio,
expressed as a percentage, of the amount of the loan
(numerator) to the value or selling price of real property
(denominator). For example, if you have an $80,000 1st
mortgage on a home with an appraised value of $100,000, the
LTV is 80% ($80,000 / $100,000 = 80%). |
| |
|
| Lock-In: |
A written agreement
between the lender and borrower for a specified period of
time in which the lender will hold a specific interest rate,
origination and/or discount point(s). |
| |
|
| Margin: |
Under the terms of
an adjustable rate mortgage (ARM), the margin is a set
adjustment to the index. The particular loan product
determines the amount of the margin. |
| |
|
| Median
Income: |
The middle income
level. Half of the incomes would be higher than the median
income and half of the incomes would be below the median
income. This is not to be confused with an average income. |
| |
|
| Mortgage: |
The written
instrument used to pledge a title to real estate as security
for repayment of a Promissory Note. |
| |
|
| Mortgage
Insurance: |
Insurance written
in connection with a mortgage loan that indemnifies the
lender in the event of borrower default. In connection with
conventional loan transactions, this insurance is commonly
referred to as Private Mortgage Insurance (PMI). |
| |
|
| Mortgage
Note: |
A written promise
to pay a sum of money at a stated interest rate during a
specified term. It is typically secured by a mortgage. |
| |
|
| Mortgage
Servicing: |
Controlling the
necessary duties of a mortgagee, such as collecting
payments, releasing the lien upon payment in full,
foreclosing if in default, and making sure the taxes are
paid, insurance is in force, etc. The lender or a company
acting for the lender, for a servicing fee, may do
servicing. (Also called Loan Servicing.) |
| |
|
| Mortgagee: |
The institution,
group, or individual that lends money on the security of
pledged real estate; the association, the lender. |
| |
|
| Mortgagee
Clause: |
This is the clause
that is typically used for hazard insurance and flood
insurance. For loans originated by the State Farm BankŪ it
will read: State Farm Bank, F.S.B., Its Successor and/or
Assigns, P.O. Box 2583, Ft. Wayne, IN 46801-2583. |
| |
|
| Mortgagor: |
The owner of real
estate who pledges his property as security for the
repayment of a debt; the borrower. |
| |
|
| Net
Income: |
The difference
between effective gross income and expense including taxes
and insurance. The term is qualified as net income before
depreciation and debt. |
| |
|
| Non-Conforming: |
A loan with a
mortgage amount that exceeds that which is eligible for
purchase by FNMA or FHLMC. All other loans above this amount
are considered to be non-conforming or jumbo loans. |
| |
|
| Non-Owner-Occupied
Property: |
Property purchased
by a borrower not for a primary residence but as an
investment with the intent of generating rental income, tax
benefits, and profitable resale. |
| |
|
| Note: |
A written promise
by one party to pay a specific sum of money to a second
party under conditions agreed upon mutually. Also called
"promissory note." |
| |
|
| Note
Rate: |
The interest rate
on the mortgage loan. |
| |
|
| Origination
Fee: |
A fee paid to a
lender for processing a loan application; it is stated as a
percentage of the mortgage amount. |
| |
|
| Origination
Process: |
Process in which a
lender solicits business, gathers required information and
commits to loan money, for the purchase of real estate. |
| |
|
| Owner-Occupied
Property: |
The borrower or a
member of the immediate family lives in the property as a
primary residence. |
| |
|
| PITI: |
Term commonly used
to refer to a mortgage loan payment. Acronym stands for
Principal, Interest, Taxes, and Insurance. |
| |
|
| PITI
Ratio: |
Compares the amount
of the monthly income to the amount the borrower will owe
each month in principal, interest, real estate tax and
insurance on a mortgage. Lenders use it in deciding whether
to give the borrower a loan. Also called
"income-to-debt" ratio. |
| |
|
Planned
Unit
Development (PUD): |
A housing project
that may consist of any combination of homes (one-family to
four-family), condominiums, and various other styles. In a
PUD, often the individual unit and the land upon which it
sits are owned by the unit/homeowner; however, the
homeowner's association owns common facilities. |
| |
|
| Pre-Approval: |
A process in which
a customer provides appropriate information on income, debts
and assets that will be used to make a credit only loan
decision. The customer typically has not identified a
property to be purchased, however, a specific sales price
and loan amount are used to make a loan decision. (The sales
price and loan amount are based on customer assumptions) |
| |
|
| Pre-Qualification: |
A process designed
to assist a customer in determining a maximum sales price,
loan amount and PITI payment they are qualified for. A
pre-qualification is not considered a loan approval. A
customer would provide basic information (income, debts,
assets) to be used to determine the maximum sales price,
etc. |
| |
|
| Prepaid
Expenses or Prepaids: |
The term used to
describe the funds the Lender requires to be deposited to
establish the escrow account for taxes and insurance at the
time of closing (also refers to Prepaid Interest). |
| |
|
| Prepaid
Interest: |
Interest that the
borrower pays the lender before it becomes due. |
| |
|
| Prepayment: |
A loan repayment
made in advance of its contractual due date. |
| |
|
| Prepayment
Penalty: |
A penalty under a
Note, Mortgage or Deed of Trust imposed when the loan is
paid before its maturity date. |
| |
|
| Principal
and Interest: |
Two components of a
monthly mortgage payment. Principal refers to the portion of
the monthly payment that reduces the remaining balance for
the mortgage. Interest is the fee charged for borrowing
money. |
| |
|
| Principal
Balance: |
The outstanding
balance of a mortgage, not counting interest. |
| |
|
| Principal,
Interest, Real Estate Tax, Insurance Payment: |
The total mortgage
payment which includes principal, interest, taxes and
insurance. |
| |
|
| Private
Mortgage Insurance (PMI): |
Insurance against a
loss by a lender in the event of default by a borrower
(mortgagor). A private insurance company issues this
insurance. The premium is paid by the borrower and is
included in the mortgage payment. |
| |
|
| Processing: |
Gathering the loan
application and all required supporting documents (including
the property appraisal, credit report, credit history, and
income and expenses) so that a lender can consider the
borrower for a loan. |
| |
|
| Promissory
Note: |
A document in which
the borrower promises to pay a stated amount on a specific
date. The note normally states the name of the lender, the
terms of payment and any interest rate. |
| |
|
| Property
Taxes: |
Taxes assessed on
real estate. Property taxes are based on valuations by local
and or state governments. |
| |
|
| Purchase
Agreement: |
A written agreement
between a buyer and seller of real property, that states the
price and terms of the sale. |
| |
|
| Purchase
Price: |
The total amount
paid for a home. |
| |
|
| Qualifying
Income Ratios: |
Income analysis
used by lenders in deciding whether to offer the borrower a
loan. One type of analysis compares only the amount of the
proposed monthly mortgage payment to the monthly income.
Another compares the amount of the total monthly payments
(for example car, credit card and proposed mortgage
payments) to the monthly income. |
| |
|
| Rate
Index: |
An index used to
adjust the interest rate of an adjustable mortgage loan. |
| |
|
| Real
Estate Appreciation Rate: |
Percentage increase
in the value of real estate, expressed at an annual rate. |
| |
|
| Real
Estate Settlement Procedures Act (RESPA): |
A consumer
protection law that requires, among other things, lenders to
give borrowers advance notice of closing costs. |
| |
|
| Realtor: |
A person licensed
to negotiate and transact the sale of real estate on behalf
of the property owner. A real estate broker or associate
must hold active membership in a real estate board
affiliated with the National Association of Realtors. |
| |
|
| Recording
Fee: |
The amount paid to
the recorder's office in order to make a document a matter
of public record. |
| |
|
| Regulation
Z: |
Federal Reserve
regulation issued under the Truth-in-Lending Act, which,
among other things, requires that a credit purchaser be
advised in writing of all costs connected with the credit
portion of the loan. |
| |
|
| Rental
Payment: |
A payment made to
use another's property. The amount of the rent is determined
in a contract and is typically paid monthly. |
| |
|
| Renters
Insurance: |
Insurance against
perils which are commonly covered in policies described as a
"Renters Policy". |
| |
|
| Repayment: |
The payment of a
mortgage loan over a period of time established when the
loan is originated. |
|
|
| Rescind: |
To avoid or cancel
in such a way as to treat the contract or other object of
the rescission as if it never existed. |
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| Sales
Contract: |
A written agreement
between parties stating all terms and conditions of a sale. |
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| Savings
Rate: |
The interest rate a
person expects to earn on a savings account or investment
account. |
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| Secondary
Market: |
An informal market
where existing mortgages are bought and sold. It is the
traditional aftermarket for mortgage loans that brings
together lenders that sell mortgages with lenders, investors
and agencies that buy mortgages. |
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| Seller
Contribution: |
The seller may be
paying some or all of the borrower's cost. The amount of the
contribution has limitations. |
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| Selling
Costs: |
The costs incurred
in selling a home. This could include Realtor expenses and
other miscellaneous expenses such as painting or minor
repairs to prepare the home for sale. |
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| Servicing: |
All the management
and operational procedures that the mortgage company handles
for the life of the loan, up through foreclosure if
necessary, including: collecting the mortgage payments,
ensuring that the taxes and insurance charges are paid
promptly, and sending an annual report on the mortgage and
escrow accounts. |
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| Servicing
Released: |
A stipulation in
the agreement for the sale of mortgages in which the Lender
is not responsible for servicing the loan. |
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| Servicing
Retained: |
A loan sale in
which the original lender's servicing department continues
to service the loan after the sale to a secondary
institution or investor. |
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| Settlement
Statement: |
Also referred to as
a HUD-1 Settlement Statement. The complete breakdown of
costs involved in the real estate transaction for both the
seller and buyer. |
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| Single-Family
Attached Home: |
A single-family
dwelling that is attached to other single-family dwellings. |
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| Single-Family
Detached Home: |
A freestanding
dwelling for a single family |
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| Survey: |
A measurement of
land, prepared by a registered land surveyor, showing the
location of the land with reference to known points, its
dimensions and the location and dimensions of any
improvements. |
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| Subordinate
Financing: |
An additional lien
against the real estate securing borrowers first mortgage.
This lien takes second priority to the first mortgage. |
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| Subsequent
Rate Adjustment -- Maximum rate decrease: |
In association with
an Adjustable Rate Mortgage loan, this is the most the
interest rate can decrease when it is scheduled for
reevaluation and possible adjustment. |
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| Subsequent
Rate Adjustment -- Maximum rate increase: |
In association with
an Adjustable Rate Mortgage loan, this is the most the
interest rate can increase when it is scheduled for
reevaluation and possible adjustment. |
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| Subsequent
Rate Adjustment -- Next ARM Adjustment Date: |
In association with
an Adjustable Rate Mortgage loan, this is the date scheduled
for the next possible payment adjustment. |
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| Subsequent
Rate Adjustment -- Rate Change Frequency: |
In association with
an Adjustable Rate Mortgage loan, this is the frequency in
which possible adjustments may be made to the interest rate
amount for Adjustable Rate Mortgages after the initial
adjustment. |
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| Tax
Rates: |
Tax levied by the
federal government and some states based on a person's
income. Federal income tax rates vary depending on a
person's adjusted gross income. |
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| Tax
Savings: |
The amount saved on
taxes by itemizing deductions on income tax returns. |
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| Title: |
The evidence to the
right to or ownership in property. In the case of real
estate, the documentary evidence of ownership is the title
deed, which specifies in whom the legal state is vested and
the history of ownership and transfers. Title may be
acquired through purchase, inheritance, devise, gift or
through the foreclosure of a mortgage. |
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| Title
Insurance Policy: |
A contract by which
the insurer, usually a title company, indicates who has
legal title and agrees to pay the insured a specific amount
of any loss caused by clouds, claims or defects of title to
real estate, which the insured has an interest as owner,
mortgagee or otherwise.
(a) Owner's Title Policy: Usually issued to the landowner
himself. The owner's title insurance policy is bought and
paid for only once and then continues in force without any
further payment. Owner's Title Insurance policies are not
assignable.
(b) Mortgagee's Title Policy: Issued to the mortgagee and
terminates when the mortgage debt is paid. In the event of
foreclosure, or if the mortgagee acquires title from the
mortgagor in lieu of foreclosure, the policy continues in
force, giving continued protection against any defects of
title which existed at, or prior to, the date of the policy. |
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| Treasury
Bills: |
Interest bearing
U.S. Government obligations sold at a weekly sale. The
change in interest rates paid on these obligations is
frequently used as the Rate Index for Adjustable Mortgage
Loans. |
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| Truth
in Lending (TIL): |
The name given to
the federal statues and regulations (Regulation Z) which are
designed primarily to insure that prospective Borrowers of
credit received credit and cost information before
concluding a loan transaction. |
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| Underwriting
(Mortgage Loans): |
The process of
evaluating a loan application to determine the risk involved
for the lender. It involves an analysis of the borrower's
creditworthiness and the quality of the property itself. |
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| Verification
of Deposit (VOD): |
Form used in
mortgage lending to verify the deposits or assets of a
prospective borrower when monthly statements are unavailable
or unusable. |
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| Verification
of Employment (VOE): |
Form used in
mortgage lending to verify the employment and income of a
prospective borrower when pay stubs and W2 forms are
unavailable or unusable. |
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| Verification
of Mortgage (VOM): |
Form used in
mortgage lending to verify the existing mortgage balance,
monthly payments and late payments, if any. |
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| Verification
of Rent: |
Form used in
mortgage lending to verify monthly rents paid and late
payments, if any. |
