| 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 Bank® 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. |
|
|
| Savings
Rate: |
The interest rate a person
expects to earn on a savings account or investment
account. |
|
|
| 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. |
|
|
| 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 |
