| 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. |
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| 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. |
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| Recording
Fee: |
The amount
paid to the recorder's office in order
to make a document a matter of public
record. |
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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. |
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| 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. |
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| Renters
Insurance: |
Insurance
against perils which are commonly
covered in policies described as a
"Renters Policy". |
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Repayment: |
The payment
of a mortgage loan over a period of time
established when the loan is originated. |
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| Rescind: |
To avoid or
cancel in such a way as to treat the
contract or other object of the
rescission as if it never existed. |
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| Sales
Contract: |
A written
agreement between parties stating all
terms and conditions of a sale. |
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| Savings
Rate: |
The interest
rate a person expects to earn on a
savings account or investment account. |
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| Secondary
Market: |
An informal
market where existing mortgages are
bought and sold. It is the traditional
aftermarket for mortgage loans that
brings together lenders that sell
mortgages with lenders, investors and
agencies that buy mortgages. |
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| Seller
Contribution: |
The seller
may be paying some or all of the
borrower's cost. The amount of the
contribution has limitations. |
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| Selling
Costs: |
The costs
incurred in selling a home. This could
include Realtor expenses and other
miscellaneous expenses such as painting
or minor repairs to prepare the home for
sale. |
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Servicing: |
All the
management and operational procedures
that the mortgage company handles for
the life of the loan, up through
foreclosure if necessary, including:
collecting the mortgage payments,
ensuring that the taxes and insurance
charges are paid promptly, and sending
an annual report on the mortgage and
escrow accounts. |
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| Servicing
Released: |
A
stipulation in the agreement for the
sale of mortgages in which the Lender is
not responsible for servicing the loan. |
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| Servicing
Retained: |
A loan sale
in which the original lender's servicing
department continues to service the loan
after the sale to a secondary
institution or investor. |
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Settlement Statement: |
Also
referred to as a HUD-1 Settlement
Statement. The complete breakdown of
costs involved in the real estate
transaction for both the seller and
buyer. |
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Single-Family Attached Home: |
A
single-family dwelling that is attached
to other single-family dwellings. |
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Single-Family Detached Home: |
A
freestanding dwelling for a single
family |
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| Survey: |
A
measurement of land, prepared by a
registered land surveyor, showing the
location of the land with reference to
known points, its dimensions and the
location and dimensions of any
improvements. |
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Subordinate Financing: |
An
additional lien against the real estate
securing borrowers first mortgage. This
lien takes second priority to the first
mortgage. |
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Subsequent Rate Adjustment --
Maximum rate decrease: |
In
association with an Adjustable Rate
Mortgage loan, this is the most the
interest rate can decrease when it is
scheduled for reevaluation and possible
adjustment. |
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Subsequent Rate Adjustment --
Maximum rate increase: |
In
association with an Adjustable Rate
Mortgage loan, this is the most the
interest rate can increase when it is
scheduled for reevaluation and possible
adjustment. |
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Subsequent Rate Adjustment -- Next
ARM Adjustment Date: |
In
association with an Adjustable Rate
Mortgage loan, this is the date
scheduled for the next possible payment
adjustment. |
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Subsequent Rate Adjustment -- Rate
Change Frequency: |
In
association with an Adjustable Rate
Mortgage loan, this is the frequency in
which possible adjustments may be made
to the interest rate amount for
Adjustable Rate Mortgages after the
initial adjustment. |
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| Tax
Rates: |
Tax levied
by the federal government and some
states based on a person's income.
Federal income tax rates vary depending
on a person's adjusted gross income. |
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| Tax
Savings: |
The amount
saved on taxes by itemizing deductions
on income tax returns. |
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| Title: |
The evidence
to the right to or ownership in
property. In the case of real estate,
the documentary evidence of ownership is
the title deed, which specifies in whom
the legal state is vested and the
history of ownership and transfers.
Title may be acquired through purchase,
inheritance, devise, gift or through the
foreclosure of a mortgage. |
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| Title
Insurance Policy: |
A contract
by which the insurer, usually a title
company, indicates who has legal title
and agrees to pay the insured a specific
amount of any loss caused by clouds,
claims or defects of title to real
estate, which the insured has an
interest as owner, mortgagee or
otherwise.
(a) Owner's Title Policy: Usually issued
to the landowner himself. The owner's
title insurance policy is bought and
paid for only once and then continues in
force without any further payment.
Owner's Title Insurance policies are not
assignable.
(b) Mortgagee's Title Policy: Issued to
the mortgagee and terminates when the
mortgage debt is paid. In the event of
foreclosure, or if the mortgagee
acquires title from the mortgagor in
lieu of foreclosure, the policy
continues in force, giving continued
protection against any defects of title
which existed at, or prior to, the date
of the policy. |
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| Treasury
Bills: |
Interest
bearing U.S. Government obligations sold
at a weekly sale. The change in interest
rates paid on these obligations is
frequently used as the Rate Index for
Adjustable Mortgage Loans. |
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| Truth in
Lending (TIL): |
The name
given to the federal statues and
regulations (Regulation Z) which are
designed primarily to insure that
prospective Borrowers of credit received
credit and cost information before
concluding a loan transaction. |
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Underwriting (Mortgage Loans): |
The process
of evaluating a loan application to
determine the risk involved for the
lender. It involves an analysis of the
borrower's creditworthiness and the
quality of the property itself. |
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Verification of Deposit (VOD): |
Form used in
mortgage lending to verify the deposits
or assets of a prospective borrower when
monthly statements are unavailable or
unusable. |
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Verification of Employment (VOE): |
Form used in
mortgage lending to verify the
employment and income of a prospective
borrower when pay stubs and W2 forms are
unavailable or unusable. |
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Verification of Mortgage (VOM): |
Form used in
mortgage lending to verify the existing
mortgage balance, monthly payments and
late payments, if any. |
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Verification of Rent: |
Form used in
mortgage lending to verify monthly rents
paid and late payments, if any |
