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Deed-in-lieu
A deed given by
a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure.
Also called a "voluntary conveyance."
Deed of
Trust
Like a
mortgage, a security instrument whereby real property is given as
security for a debt. However, in a deed of trust there are three
parties to the instrument: the borrower, the trustee, and the lender,
(or beneficiary). In such a transaction, the borrower transfers the
legal title for the property to the trustee who holds the property in
trust as security for the payment of the debt to the lender or
beneficiary. If the borrower pays the debt as agreed, the deed of
trust becomes void. If, however, he defaults in the payment of the
debt, the trustee may sell the property at a public sale, under the
terms of the deed of trust. In most jurisdictions where the deed of
trust is in force, the borrower is subject to having his property
sold without benefit of legal proceedings. A few States have begun in
recent years to treat the deed of trust like a mortgage.
Default
Failure to make
mortgage payments on a timely basis or to comply with other
conditions of a mortgage.
Deficiency
Judgment
A court order
to pay the balance owed on a loan if the proceeds from the sale of
the security are insufficient to pay off the loan. Deficiency
judgments are not allowed in all states.
Delinquency
A loan in which
a payment is overdue but not yet in default.
Deposit
A sum of money
given to bind the sale of real estate, or a sum of money given to
ensure payment or an advance of funds in the processing of a loan.
Depreciation
A decline in
the value of property; the opposite of "appreciation."
Discount
Points
See Points.
Documentary
Stamps
A State tax, in
the forms of stamps, required on deeds and mortgages when real estate
title passes from one owner to another. The amount of stamps required
varies with each State.
Dower
The rights of a
widow in the property of her husband at his death.
Down Payment
The part of the
purchase price, which the buyer pays in cash and does not finance
with a mortgage
Due-on-sale
provision
A provision in
a mortgage that allows the lender to demand repayment in full if the
borrower sells the property that serves as security for the mortgage.
Due-on-transfer
provision
This
terminology is usually used for second mortgages.
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E -
Earnest
Money
The deposit
money given to the seller or his agent by the potential buyer upon
the signing of the agreement of sale to show that he is serious about
buying the house. If the sale goes through, the earnest money is
applied against the down payment. If the sale does not go through,
the earnest money will be forfeited or lost unless the binder or
offer to purchase expressly provides that it is refundable.
Easement
Rights
A right-of-way
granted to a person or company authorizing access to or over the
owner's land. An electric company obtaining a right-of-way across
private property is a common example.
Effective
age
An appraiser’s
estimate of the physical condition of a building. The actual age of a
building may be shorter or longer than its effective age. Effective
gross income
Normal annual
income including overtime that is regular or guaranteed. The income
may be from more than one source. Salary is generally the principal
source, but other income may qualify if it is significant and stable.
Eminent
domain
The right of a
government to take private property for public use upon payment of
its fair market value. Eminent domain is the basis for condemnation
proceedings.
Employer-assisted
housing
A special
Fannie Mae housing initiative that offers several different ways for
employers to work with local lenders to develop plans to assist their
employees in purchasing homes.
Encroachment
An obstruction,
building, or part of a building that intrudes beyond a legal boundary
onto neighbouring private or public land,
or a building extending beyond the building line.
Encumbrance
A legal right
or interest in land that affects a good or clear title, and
diminishes the land's value. It can take numerous forms, such as
zoning ordinances, easement rights, claims, mortgages, liens,
charges, a pending legal action, unpaid taxes, or restrictive
covenants. An encumbrance does not legally prevent transfer of the
property to another. A title search is all that is usually done to
reveal the existence of such encumbrances, and it is up to the buyer
to determine whether he wants to purchase with the encumbrance, or
what can be done to remove it.
Endorser
A person who
signs ownership interest over to another party. Contrast with
co-maker.
Equal Credit
Opportunity Act (ECOA)
A federal law
that requires lenders and other creditors to make credit equally
available without discrimination based on race, color, religion,
national origin, age, sex, marital status, or receipt of income from
public assistance programs.
Equity
The difference
between the market value of a property and the homeowner's
outstanding mortgage balance.
Equity Loan
A loan based on
the borrower's equity in his or her home. Prior to closing; also, an
account held by the lender into which a homeowner pays money for
taxes and insurance.
Escrow
account
The account in
which a mortgage servicer holds the borrower’s escrow payments prior
to paying property expenses. Escrow analysis. The periodic examination
of escrow accounts to determine if current monthly deposits will
provide sufficient funds to pay taxes, insurance, and other bills
when due.
Escrow
collections
Funds collected
by the servicer and set aside in an escrow account to pay the borrower’s
property taxes, mortgage insurance, and hazard insurance. Escrow
disbursements. The
use of escrow funds to pay real estate taxes, hazard insurance,
mortgage insurance, and other property expenses as they become due.
Escrow
payment
The portion of
a mortgagor’s monthly payment that is held by the servicer to pay for
taxes, hazard insurance, mortgage insurance, lease payments, and
other items as they become due. Estate. The ownership interest
of an individual in real property. The sum total of all the real
property and personal property owned by an individual at time of
death.
Eviction
The lawful
expulsion of an occupant from real property.
Examination
of title
The report on
the title of a property from the public records or an abstract of the
title.
Exclusive
listing
A written
contract that gives a licensed real estate agent the exclusive right
to sell a property for a specified time, but reserving the owner’s
right to sell the property alone without the payment of a
commission.
Executor
A person named
in a will to administer an estate
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Fair Credit
Reporting Act
A consumer
protection law that regulates the disclosure of consumer credit
reports by consumer/credit reporting agencies and establishes procedures
for correcting mistakes on one's credit record.
Fair-market-value
The highest
price that a buyer, willing but not compelled to buy would pay, and
the lowest a seller, willing but not compelled to sell, would accept.
FDIC
(Federal
Deposit Insurance Corporation). Provides insurance of accounts for
institutions whose deposits were formerly covered by the Federal
Savings & Loan Insurance Corporation. (FSLIC).
Fee simple
The greatest
possible interest a person can have in real estate.
Fee simple
estate
An
unconditional, unlimited estate of inheritance that represents the
greatest estate and most extensive interest in land that can be
enjoyed. It is of perpetual duration. When the real estate is in a
condominium project, the unit owner is the exclusive owner only of
the air space within his or her portion of the building (the unit)
and is an owner in common with respect to the land and other common
portions of the property.
FHA
(Federal
Housing Administration). A division of the Department of Housing and
Urban Development. The FHA's main activity is the insuring of
residential mortgage loans made by private lenders. It sets standards
for construction and underwriting. FHA neither lends money, nor
plans, nor constructs housing.
FHA Loan
Government
loans are loans that are guaranteed or purchased by government
organizations. Two of the most popular Government Loans are the Federal
Housing Administration (FHA) and the Department of Veterans Affairs
(VA).
FHFB
(Federal
Housing Finance Board). It oversees the credit functions of the
twelve regional Federal Home Loan Banks.
FHLBB
(Federal Home
Loan Bank Board). A regulatory and supervisory agency for federally
charted savings institutions, which oversees the operations of the
FSLIC and FHLMC. This agency was abolished by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989. (See
FIRREA.)
FHLMC
(Federal Home
Loan Mortgage Corporation, Freddie Mac). A private corporation
authorized by Congress, which became an independent,
stockholder-owned government corporation with the passage of FIRREA.
FHLMC promotes the flow of funds into the housing markets by
purchasing conventional mortgages in the secondary market and selling
securities backed by those mortgages in the capital market.
Finance
Charge
The total
dollar amount your loan will cost you. It includes all interest
payments for the life of the loan, any interest paid at closing, your
origination fee and any other charges paid to the lender and/or
broker. Appraisal, credit report and title search fees are not
included in the finance charge calculation.
Finder's fee
A fee or
commission paid to a mortgage broker for finding a mortgage loan for
a prospective borrower.
FIRE
(Financial
Institutions Reform, Recovery and Enforcement Act of 1989). An act
signed into law in August 1989, by President Bush that restructured
the thrift regulatory an insurance system.
Firm
commitment
A lender’s
agreement to make a loan to a specific borrower on a specific
property.
First
Mortgage
The mortgage
that has first claim in the event of default.
Fixed instalment
The monthly
payment due on a mortgage loan.
Fixed-Rate
Mortgage
(FRM) A
mortgage in which the interest rate does not change during the entire
term of the loan.
FNMA
(Federal
National Mortgage Association, Fannie Mae). A government-sponsored
corporation, owned solely by private investors, created to provide
support to the secondary market for FHA and VA mortgages and
conventional mortgages.
Fixture
Personal
property that becomes real property when attached in a permanent
manner to real estate.
Flood
insurance
Insurance that
compensates for physical property damage resulting from flooding. It
is required for properties located in federally designated flood
areas.
Forfeiture
The loss of
money, property, rights, or privileges due to a breach of legal
obligation.
Foreclosure
The process by
which a mortgage property may be sold when a mortgage is in default.
Fully
amortized ARM
An
adjustable-rate mortgage (ARM) with a monthly payment that is
sufficient to amortize the remaining balance, at the interest accrual
rate, over the amortization term.
Full
Recasting
Setting the P&I payments to the level that will fully
amortize the loan's outstanding balance over the remaining term using
the fully indexed accrual rate at the recasting point.
Fully
Indexed Accrual Rate
The interest
(accrual) rate resulting from the index at closing (or at another
point in the loan) plus the lender's full spread, rounded as
prescribed in the loan documents (often to the nearest 1/8th of 1%).
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General
Warranty Deed
A deed which
conveys not only all the grantor's interests in and title to the
property to the grantee, but also warrants that if the title is
defective or has a "cloud" on it (such as mortgage claims,
tax liens, title claims, judgments, or mechanic's liens against it)
the grantee may hold the grantor liable.
Good Faith
Estimate
An estimate of
charges, which a borrower is likely to incur in connection with a
loan closing.
Graduated
Payment Mortgage
(GPM) A
mortgage where the payments are scheduled to increase, usually
annually, for a set number of years, and then level off. GPM can be
used with either a fixed or adjustable interest rate, and usually has
a 30-year term.
Grantee
That party in
the deed who is the buyer or recipient.
Grantor
That party in
the deed who is the seller or giver.
Gross
Monthly Income
The total
amount the borrower earns per month, not counting any taxes or
expenses. Often used in calculations to determine whether a borrower
qualifies for a particular loan.
Growing
Equity Mortgage
(GEM) A fixed
rate, graduated payment mortgage with small initial payments that
increase each year so that the loan pays off in a shortened term, usually
15 years.
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Hazard
Insurance
Insurance to
protect the homeowner and the lender against physical damage to a
property from fire, wind, vandalism, or other hazards.
Homeowner's
Insurance
An insurance
policy that combines liability coverage and hazard insurance.
Homeowner's
Warranty
A type of
insurance that covers repairs to specified parts of a house for a
specific period of time.
Housing
Ratio
The ratio of
the monthly housing payment to total gross monthly income. Also
called Payment-to-Income Ratio or Front-End Ratio.
HUD
(Department of
Housing and Urban Development). A cabinet department responsible for
the implementation and administration of government housing and urban
development programs.
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Income
property
Real estate
developed or improved to produce income.
Index
(Also called
"Rate Index"). A regularly published rate, independent of
the lending institution, that measures the
prevailing cost of funds, and is used periodically with the margin to
set AML accrual rates.
Initial
Borrower Interest Rate
The rate on
which the borrower's first payment is calculated.
Initial
Borrower Payment Rate
The annual
interest rate used to calculate the borrower's initial cash payment.
Inflation
An increase in
the amount of money or credit available in relation to the amount of
goods or services available, which causes an increase in the general
price level of goods and services. Over time, inflation reduces the
purchasing power of a dollar, making it worth less.
Initial
interest rate
The original
interest rate of the mortgage at the time of closing.
Instalment
The regular
periodic payment that a borrower agrees to make to a lender.
Instalment loan
Borrowed money
that is repaid in equal payments, known as instalments.
A furniture loan is often paid for as an instalment
loan.
Insurable
title
A property
title that a title insurance company agrees to insure against defects
and disputes.
Insurance
A contract that
provides compensation for specific losses in exchange for a periodic
payment. An individual contract is known as an insurance policy, and
the periodic payment is known as an insurance premium.
Insurance
binder
A document that
states that insurance is temporarily in effect. Because the coverage
will expire by a specified date, a permanent policy must be obtained
before the expiration date.
Insured
mortgage
A mortgage that
is protected by the Federal Housing Administration (FHA) or by
private mortgage insurance (MI). If the borrower defaults on the
loan, the insurer must pay the lender the lesser of the loss incurred
or the insured amount
Interest
The fee charged
for borrowing money.
Interest
accrual rate
The percentage
rate at which interest accrues on the mortgage. In most cases, it is
also the rate used to calculate the monthly payments, although it is
not used for an adjustable-rate mortgage (ARM) with payment change
limitations.
Interest
Rate
The percentage
of an amount of money, which is paid for its use for a specified
time.
Interest
Rate Cap
A provision of
an ARM limiting how much interest rates may
increase per adjustment period.
Interest
rate ceiling
For an
adjustable-rate mortgage (ARM), the maximum interest rate, as
specified in the mortgage note.
Interest
rate floor
For an
adjustable-rate mortgage (ARM), the minimum interest rate, as
specified in the mortgage note.
Investment
property
A property that
is not occupied by the owner.
IRA
(Individual Retirement Account)
A retirement
account that allows individuals to make tax-deferred contributions to
a personal retirement fund. Individuals can place IRA funds in bank
accounts or in other forms of investment such as stocks, bonds, or
mutual funds.
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Joint
tenancy
A form of
co-ownership that gives each tenant equal interest and equal rights
in the property, including the right of survivorship.
Judgment
A decision made
by a court of law. In judgments that require the repayment of a debt,
the court may place a lien against the debtor's real property as
collateral for the judgment's creditor.
Judgment
lien
A lien on the
property of a debtor resulting from the decree of a court.
Judicial
foreclosure
A type of
foreclosure proceeding used in some states that is handled as a civil
lawsuit and conducted entirely under the auspices of a court.
Jumbo
Loans
Jumbo, or
non-conforming, is a term used to describe a loan that does not
conform to Fannie Mae or Freddie Mac guidelines. The typical Jumbo
loan exceeds the maximum loan amounts described above.
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Late charge
The penalty a
borrower must pay when a payment is made a stated number of days
(usually 15) after the due date.
Lease
A written
agreement between the property owner and a tenant that stipulates the
conditions under which the tenant may possess the real estate for a
specified period of time and rent.
Leasehold
estate
A way of
holding title to a property wherein the mortgagor does not actually
own the property but rather has a recorded long-term lease on it.
Legal
description
A property
description, recognized by law that is sufficient to locate and
identify the property without oral testimony.
Lender
An institution
that makes loans to borrowers on real estate.
Liabilities
A person's
financial obligations. Liabilities include long-term and short-term
debt, as well as any other amounts that are owed to others.
Liability
insurance
Insurance
coverage that offers protection against claims alleging that a
property owner's negligence or inappropriate action resulted in
bodily injury or property damage to another party.
Lien
A legal claim
against a property that must be paid when the property is sold.
Lifetime Cap
A provision of
an ARM that limits the total increase in interest rates over the life
of the loan.
Lifetime
payment cap
For an
adjustable-rate mortgage (ARM), a limit on the amount that payments
can increase or decrease over the life of the mortgage.
Line of
credit
An agreement by
a commercial bank or other financial institution to extend credit up
to a certain amount for a certain time to a specified borrower.
Liquid asset
A cash asset or
an asset that is easily converted into cash.
Loan
A sum of
borrowed money (principal) that is generally repaid with interest.
Loan
Commitment
Formal offer by
a lender stating the terms under which it agrees to loan money to a
homebuyer.
Loan
origination
The process by
which a mortgage lender brings into existence a mortgage secured by
real property.
Loan
Servicing
The collection
of mortgage payments from borrowers and related responsibilities of a
loan servicer.
Loan
-To-Value
(LTV). The
loan-to-value ratio (LTV) is the original loan amount divided by the
lower of the sales price or the appraised value.
Lock
The period,
expressed in days, during which a lender will guarantee a rate.
Lock-in period
The time period
during which the lender has guaranteed an interest rate to a
borrower.
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Marketable
Title
A title that is
free and clear of objectionable liens, clouds, or other title
defects. A title which enables an owner to sell his property freely
to others and which others will accept without objection.
Master
association
A homeowners'
association in a large condominium or planned unit development (PUD)
project that is made up of representatives from associations covering
specific areas within the project. In effect, it is a
"second-level" association that handles matters affecting
the entire development, while the "first-level"
associations handle matters affecting their particular portions of
the project.
Maturity
The date on
which the principal balance of a loan, bond, or other financial
instrument becomes due and payable.
Merged
credit report
A credit report
that contains information from three credit repositories. When the
report is created, the information is compared for duplicate entries.
Any duplicates are combined to provide a summary of a your credit.
Modification
Margin
(Also called
"Spread"). The amount the lender adds to the index to
determine the Fully Indexed Accrual Rate.
Money market
account
A savings
account that provides bank depositors with many of the advantages of
a money market fund. Certain regulatory restrictions apply to the
withdrawal of funds from a money market account.
Money market
fund
A mutual fund
that allows individuals to participate in managed investments in
short-term debt securities, such as certificates of deposit and
Treasury bills.
Monthly
Housing Expense
Total
principal, interest, taxes, and insurance paid by the borrower on a
monthly basis. Used with gross income to determine affordability.
Monthly
payment mortgage
A mortgage that
requires payments to reduce the debt once a month.
Mortgage
A legal
document that pledges a property to the lender as security for a
payment of a debt.
Mortgage
Banker
A company that
originates mortgages exclusively for resale in the secondary market.
Mortgage
Broker
A company that
for a fee matches borrowers with lenders.
Mortgage
Insurance Premium
(MIP). The fee
paid to FHA or a private insurer for mortgage insurance.
Mortgagee
The lender in a
mortgage agreement.
Mortgage
Commitment
A written
notice from the bank or other lending institution saying it will
advance mortgage funds in a specified amount to enable a buyer to
purchase a house.
Mortgage
Insurance Premium
The payment
made by a borrower to the lender for transmittal to HUD to help
defray the cost of the FHA mortgage insurance program and to provide
a reserve fund to protect lenders against loss in insured mortgage
transactions. In FHA insured mortgages this represents an annual rate
of one-half of one percent paid by the mortgagor on a monthly basis.
Mortgage
life insurance
A type of term
life insurance often bought by mortgagors. The amount of coverage
decreases as the principal balance declines. In the event that the
borrower dies while the policy is in force, the debt is automatically
satisfied by insurance proceeds.
Mortgage
Note
A written
agreement to repay a loan. The agreement is secured by a mortgage,
serves as proof of indebtedness, and states the manner in which it
shall be paid. The note states the actual amount of the debt that the
mortgage secures and renders the mortgagor personally responsible for
repayment.
Mortgagor
The borrower in
a mortgage agreement.
Multidwelling units
Properties that
provide separate housing units for more than one family, although
they secure only a single mortgage.
Multifamily
mortgage
A residential
mortgage on a dwelling that is designed to house more than four
families, such as a high-rise apartment complex.
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N -
Negative
Amortization
(Also called
"Deferred Interest"). If the payments are too small to
cover the interest due on a loan, the remaining interest owed is added
to the outstanding loan balance, causing negative amortization.
Net cash
flow
The income that
remains for an investment property after the monthly operating income
is reduced by the monthly housing expense, which includes principal,
interest, taxes, and insurance (PITI) for the mortgage, homeowners'
association dues, leasehold payments, and subordinate financing
payments.
Net
Effective Income
Gross income
less federal income tax.
Negative
amortization
A gradual
increase in mortgage debt that occurs when the monthly payment is not
large enough to cover the entire principal and interest due. The
amount of the shortfall is added to the remaining balance to create
"negative" amortization
Net Worth
The value of
all assets, including cash, less total liabilities.
No cash-out
refinance
A refinance
transaction in which the new mortgage amount is limited to the sum of
the remaining balance of the existing first mortgage, closing costs
(including prepaid items), points, the amount required to satisfy any
mortgage liens that are more than one year old (if the borrower
chooses to satisfy them), and other funds for the borrower's use (as
long as the amount does not exceed 1 percent of the principal amount
of the new mortgage).
Non-liquid
asset
An asset that
cannot easily be converted into cash.
Note
A legal
document that obligates a borrower to repay a mortgage loan at a
stated interest rate during a specified period of time.
Note rate
The interest
rate stated on a mortgage note.
Notice of
Default
A formal
written notice to a borrower that a default has occurred and that
legal action may be taken.
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O -
Original
principal balance
The total
amount of principal owed on a mortgage before any payments are made.
Origination
Fee
A fee paid to a
lender for processing a loan Application.
OTC
(The Office of
Thrift Supervision). Charters federal thrifts, serves as the primary
federal examiner and regulator of federal and state-chartered savings
associations, and administers laws governing savings and loan holding
companies.
Owner
financing
A property
purchase transaction in which the property seller provides all or
part of the financing.
Owner
Occupied
"Owner
Occupied" means the property is the owner's primary residence.
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Payment
Adjustment Period
The length of
time (typically a year) between changes to the AML borrower's P&I
payment.
Payment Buy
down
Payment buy
downs occur when a third party, typically a builder, pays part of the
initial P&I payments for a year or two,
so that the borrower has smaller payments and can qualify for the
loan.
Payment Cap
A limit on the
amount the payment can be changed at the end of each Payment
Adjustment Period.
Payment
Discount
In a payment
discount, the lender reduces the first year's interest rate to make
the mortgagor more attractive to borrowers.
Periodic
payment cap
A limit on the
amount that payments can increase or decrease during any
one-adjustment period.
Periodic
rate cap
A limit on the
amount that the interest rate can increase or decrease during any one
adjustment period, regardless of how high or low the index might be.
Personal
property
Any property that
is not real property.
PITI
Principal,
Interest, Taxes and Insurance are components of a mortgage payment.
Plat
A map or chart
of a lot, subdivision or community drawn by a surveyor showing
boundary lines, buildings, improvements on the land, and easements.
Points
A one-time
charge by the lender to increase the yield of the loan; a point is 1
percent of the amount of the mortgage.
Power of
attorney
A legal
document that authorizes another person to act on one’s behalf. A
power of attorney can grant complete authority or can be limited to
certain acts and/or certain periods of time.
Prepayment
Payment of
mortgage loan, or part of it, before due date.
Pre-qualification
The process of
determining how much money a prospective homebuyer will be eligible
to borrow before application.
Prime rate
The interest
rates that banks charge to their preferred customers.
Principal
The amount
borrowed or remaining unpaid, also, that part of the monthly payment
that reduces the outstanding balance of a mortgage.
Private
Mortgage Insurance
Insurance
provided by nongovernmental insurers that protect lenders against
loss if a borrower defaults.
Promissory
note
A written
promise to repay a specified amount over a specified period of time.
Public
auction
A meeting in an
announced public location to sell property to repay a mortgage that
is in default.
Planned Unit
Development (PUD)
A project or
subdivision that includes common property that is owned and
maintained by a homeowners' association for the benefit and use of
the individual PUD unit owners.
Purchase
Agreement
See Agreement
of Sale.
Purchase
money transaction
The acquisition
of property through the payment of money or its equivalent.
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Q -
Qualifying
Ratios
Guidelines
applied by lenders to determine how large a loan to grant a
homebuyer.
Quitclaim
Deed
A deed, which
transfers whatever interest, the maker of the deed may have in the
particular parcel of land. A quitclaim deed is often given to clear
the title when the grantor's interest in a property is questionable.
By accepting such a deed the buyer assumes all the risks. Such a deed
makes no warranties as to the title, but simply transfers to the
buyer whatever interest the grantor has. (See Deed.)
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Radon
A radioactive
gas found in some homes that in sufficient concentrations could cause
health problems.
Rate Caps
(Also called
"Interest Rate Caps"). A limit on the amount of which the
interest rate charged to the borrower can be changed.
Rate lock
A commitment
issued by a lender to a borrower or other mortgage originator
guaranteeing a specified interest rate for a specified period of
time.
Real Estate
Broker
A middleman or
agent who buys and sells real estate for a company, firm, or
individual on a commission basis. The broker does not have title to
the property, but generally represents the owner.
Real Estate
Owned
(REO). A term
frequently used by lending institution as applied to ownership of
real property acquired for investment or as a result of foreclosure.
RESPA
(Real Estate
Settlement Procedures Act). A Federal law that requires lenders to
provide home mortgage borrowers with information about known or
estimated settlement costs.
Real
property
Land and
appurtenances, including anything of a permanent nature such as
structures, trees, minerals, and the interest, benefits, and inherent
rights thereof.
REALTOR
A real estate
broker or an associate who holds active membership in a local real
estate board that is affiliated with the National Association of
Realtors.
Recission
The
cancellation or annulment of a transaction or contract by the
operation of a law or by mutual consent.
Recorder
The public
official who keeps records of transactions that affects real property
in the area.
Recording
The noting in
the registrar’s office of the details of a properly executed legal
document, such as a deed, a mortgage note, a satisfaction of
mortgage, or an extension of mortgage, thereby making it a part of
the public record. Refinancing
The process of
the same mortgagor paying off one loan with the proceeds from another
loan.
Rehabilitation
mortgage
A mortgage
created to cover the costs of repairing, improving, and sometimes
acquiring an existing property.
Remaining
balance
The amount of
principal that has not yet been repaid.
Remaining
term
The original
amortization term minus the number of payments that
have been applied.
Repayment
plan
An arrangement
made to repay delinquent instalments or
advances. Lenders' formal repayment plans are called "relief
provisions."
Replacement
reserve fund
A fund set
aside for replacement of common property in a condominium, PUD, or
cooperative project -- particularly that which has a short life
expectancy, such as carpeting, furniture, etc.
Restrictive
Covenants
Private
restrictions limiting the use of real property. Restrictive covenants
are created by deed and may "run with the land," binding
all subsequent purchasers of the land, or may be "personal"
and binding only between the original seller and buyer. The
determination whether a covenant runs with the land or is personal is
governed by the language of the covenant, the intent of the parties,
and the law in the State where the land is situated. Restrictive
covenants that run with the land are encumbrances and may affect the
value and marketability of title. Restrictive covenants may limit the
density of buildings per acre, regulate size, style or price range of
buildings to be erected, or prevent particular businesses from
operating or minority groups from owning or occupying homes in a
given area. (This latter discriminatory covenant is unconstitutional
and has been declared unenforceable by the U.S. Supreme Court.)
Revolving
liability
A credit
arrangement, such as a credit card, that allows a customer to borrow
against a pre-approved line of credit when purchasing goods and
services. The borrower is billed for the amount that is actually
borrowed plus any interest due.
Right of
first refusal
A provision in
an agreement that requires the owner of a property to give another
party the first opportunity to purchase or lease the property before
he or she offers it for sale or lease to others.
Right of
ingress or egress
The right to
enter or leave designated premises.
Right of
survivorship
In joint
tenancy, the right of survivors to acquire the interest of a deceased
joint tenant.
RTC
(Resolution
Trust Corporation). Formed to resolve thrift failures over the next
three years and dispose of their assets and liabilities.
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S -
Sales
Agreement
See Agreement
of sale.
Second
Mortgage
A mortgage that
has rights that are subordinate to the
rights of the first mortgage holders.
Secondary
Mortgage Market
The buying and
selling of existing mortgages.
Seller-Provided
Funds
(Also called
"Seller Contributions"). Seller-provided funds include all
transaction cost paid by the seller except the real estate agent's
(or brokers) fee.
Servicer
The party who
has entered into an agreement with the insured to service a loan.
Settlement
Costs
See Closing
Costs.
Single
Premium
A premium,
which provides coverage for more than a year. empty)
Short Sale
Sale typically executed to
prevent a home foreclosure. Negotiation with Lien holder for a payoff
for less what they owed, or rather a sale of a debt, generally on a
piece of real estate, short of the full debt amount.
Special
Assessments
A special tax
imposed on property, individual lots or all property in the immediate
area, for road construction, sidewalks, sewers, streetlights, etc.
Special Lien
A lien that
binds a specified piece of property, unlike a general lien, which is
levied against all one's assets. It creates a right to retain
something of value belonging to another person as compensation for
labor, material, or money expended in that person's behalf. In some
localities it is called "particular" lien or
"specific" lien. (See Lien.)
Special
Warranty Deed
A deed in which
the grantor conveys title to the grantee and agrees to protect the
grantee against title defects or claims asserted by the grantor and
those persons whose right to assert a claim against the title arose
during the period the grantor held title to the property. In a
special warranty deed the grantor guarantees to the grantee that he
has done nothing during the time he held title to the property which
has, or which might in the future, impair the grantee's title.
Survey
A map or plat
made by a licensed surveyor showing the results of measuring the land
with its elevations, improvements, boundaries, and its relationship
to surrounding tracts of land. A survey is often required by the
lender to assure him that a building is actually sited on the land
according to its legal description.
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T -
Tax
As applied to
real estate, an enforced charge imposed on persons, property or
income, to be used to support the State. The governing body in turn
utilizes the funds in the best interest of the general public.
Tax Lien
A claim against
real estate for the amount of its unpaid taxes.
Teaser Rate
Similar to a
Payment Discount, but implies either an unusually large initial rate
discount or an attempt by the lender to lure an otherwise unqualified
borrower into the mortgage.
Tenancy by
the entirety
A type of joint
tenancy of property that provides right of survivorship and is
available only to a husband and wife. Contrast with tenancy in
common.
Tenancy in
common
A type of joint
tenancy in a property without right of survivorship. Contrast with
tenancy by the entirety and with joint tenancy.
Tenant-stockholder
The obligee for a cooperative share loan, who is both
a stockholder in a cooperative corporation and a tenant of the unit
under a proprietary lease or occupancy agreement.
Third-party
origination
A process by
which a lender uses another party to completely or partially
originate, process, underwrite, close, fund, or package the mortgages
it plans to deliver to the secondary mortgage market.
Title
As generally
used, the rights of ownership and possession of particular property.
In real estate usage, title may refer to the instruments or documents
by which a right of ownership is established (title documents), or it
may refer to the ownership interest one has in the real estate.
Title
Company
A company that
specializes in examining and insuring titles to real estate.
Title
Insurance
Protects
lenders or homeowners against loss of their interest in property due
to legal defects in title. Title insurance may be issued to a
"mortgagee's title policy." Insurance benefits will be paid
only to the "named insured" in the title policy, so it is
important that an owner purchase an "owner's title policy",
if he desires the protection of title insurance.
Title Search
or Examination
A check of the
title records, generally at the local courthouse, to make sure the
buyer is purchasing a house from the legal owner and there are no
liens, overdue special assessments, or other claims or outstanding
restrictive covenants filed in the record, which would adversely
affect the marketability or value of title.
Total Debt
Ratio
Monthly debt
and housing payments divided by gross monthly income. Also known as
Back-End Ratio.
Total
expense ratio
Total
obligations as a percentage of gross monthly income. The total
expense ratio includes monthly housing expenses plus other monthly
debts.
Trade equity
Equity that
results from a property purchaser giving his or her existing property
(or an asset other than real estate) as trade as all or part of the
down payment for the property that is being purchased.
Transfer of
ownership
Any means by
which the ownership of a property changes hands. Lenders consider all
of the following situations to be a transfer of ownership: the
purchase of a property "subject to" the mortgage, the
assumption of the mortgage debt by the property purchaser, and any
exchange of possession of the property under a land sales contract or
any other land trust device. In cases in which an inter vivos revocable trust is the borrower, lenders
also consider any transfer of a beneficial interest in the trust to
be a transfer of ownership.
Transfer tax
State or local
tax payable when title passes from one owner to another.
Treasury
index
An index that
is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans.
Trustee
A party who is
given legal responsibility to hold property in the best interest of
or "for the benefit of" another. The trustee is one placed
in a position of responsibility for another, a responsibility
enforceable in a court of law.
Truth-In-Lending
(TIL). A
federal law that requires lenders to fully disclose, in writing, the
terms and conditions of a mortgage, including the APR and other
charges.
Two- to
four-family property
A property that
consists of a structure that provides living space (dwelling units)
for two to four families, although ownership of the structure is
evidenced by a single deed.
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U -
Underwriting
The process of
evaluating a loan application to determine the risk involved for the
lender. Underwriting involves an analysis of the borrower's
creditworthiness and the quality of the property itself.
Unsecured-loan
A loan that is
not backed by collateral.
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V -
Government
Loans FHA / VA
Government
loans are loans that are guaranteed or purchased by government
organizations. Two of the most popular Government Loans are the
Federal Housing Administration (FHA) and the Department of Veterans
Affairs (VA).
Vested
Having the
right to use a portion of a fund such as an individual retirement
fund.
Department
of Veterans Affairs (VA)
An agency of
the federal government that guarantees residential mortgages made to
eligible veterans of the military services. The guarantee protects
the lender against loss and thus encourages lenders to make mortgages
to veterans.
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Wraparound
mortgage
A mortgage that
includes the remaining balance on an existing first mortgage plus an
additional amount requested by the mortgagor. Full payments on both
mortgages are made to the wraparound mortgagee, who then forwards the
payments on the first mortgage to the first mortgagee.
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X -
(empty)
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Y -
(empty)
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Z -
Zoning
Ordinances
The acts of an
authorized local government establishing building codes, and setting
forth
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