| 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. |
|
|
|
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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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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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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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 |
