Property Rights and Real Estate Law Glossary
Trying to decipher an acronym? Attempting to understand legal jargon? The Property Rights and Real Estate Law glossary gives you access to definitions for the Property Rights and Real Estate legal terminology commonly used in documents and court proceedings. This Property Rights and Real Estate Law glossary will help you understand the legal terms and phrases which are relevant to buying a home, landlord issues, and other areas of Property Rights and Real Estate Law.
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FHA's single family program which provides mortgage insurance to lenders to protect against the borrower defaulting; 203(b) is used to finance the purchase of new or existing one to four family ...
this FHA mortgage insurance program enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan.
- a loan or a paper
a credit rating where the FICO score is 660 or above. There have been no late mortgage payments within a 12-month period. This is the best credit rating to have when entering into a new loan.
- abstract of title
:a summary statement of the successive conveyances and other facts on which a title to a piece of land rests
the right of the lender to demand payment on the outstanding balance of a loan.
the written approval of the buyer's offer by the seller.
- additional principal payment
money paid to the lender in addition to the established payment amount used directly against the loan principal to shorten the length of the loan.
- adjustable-rate mortgage (arm)
a mortgage loan that does not have a fixed interest rate. During the life of the loan the interest rate will change based on the index rate. Also referred to as adjustable mortgage loans (AMLs) or ...
- adjustment date
the actual date that the interest rate is changed for an ARM.
- adjustment index
the published market index used to calculate the interest rate of an ARM at the time of origination or adjustment.
- adjustment interval
the time between the interest rate change and the monthly payment for an ARM. The interval is usually every one, three or five years depending on the index.
[Medieval Latin, he/she has pledged faith, third singular perfect of affidare see affiant ] : a sworn statement in writing made esp. under oath or on affirmation before an authorized magistrate or ...
a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, woods, water) or man-made (like a swimming pool or garden).
- american society of home inspectors
the American Society of Home Inspectors is a professional association of independent home inspectors. Phone: (800) 743-2744
- annual mortgagor statement
yearly statement to borrowers detailing the remaining principal and amounts paid for taxes and interest.
- annual percentage rate (apr)
a measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders, by federal law, follow the same rules to ensure the accuracy of the ...
: a request for action or relief [most s request bail…or an extension of time to file "W. J. Brennan, Jr."] ;also : a form used to make such a request [an insurance ]
- application fee
a fee charged by lenders to process a loan application.
: a valuation of property by the estimate of an authorized person: as a : the determination of the fair value of a corporation's stock by a judicial proceeding that a dissenting shareholder is ...
- appraisal fee
fee charged by an appraiser to estimate the market value of a property.
- appraised value
an estimation of the current market value of a property.
a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.
an increase in property value.
[Latin arbitratio, from arbitrari to judge, arbitrate, from arbiter onlooker, arbitrator] : the process of resolving a dispute (as between labor and management) or a grievance outside of the court ...
Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the change in ...
- as-is condition
the purchase or sale of a property in its existing condition without repairs.
- asking price
a seller's stated price for a property.
- assessed value
the value that a public official has placed on any asset (used to determine taxes).
the method of placing value on an asset for taxation purposes.
1 : one appointed or elected to assist a judge or magistrate ;esp : one with special knowledge of the subject to be decided see also master 2 : one that assesses ;specif : one that is authorized ...
any item with measurable value.
- assumable mortgage
when a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and may ...
- assumption clause
a provision in the terms of a loan that allows the buyer to take legal responsibility for the mortgage from the seller.
- automated underwriting
loan processing completed through a computer-based system that evaluates past credit history to determine if a loan should be approved. This system removes the possibility of personal bias against the ...
- average price
determining the cost of a home by totaling the cost of all houses sold in one area and dividing by the number of homes sold.
- b loan or b paper
FICO scores from 620 - 659. Factors include two 30 day late mortgage payments and two to three 30 day late installment loan payments in the last 12 months. No delinquencies over 60 days are allowed. ...
- back end ratio (debt ratio)
a ratio that compares the total of all monthly debt payments (mortgage, real estate taxes and insurance, car loans, and other consumer loans) to gross monthly income.
- back to back escrow
arrangements that an owner makes to oversee the sale of one property and the purchase of another at the same time.
- balance sheet
: a statement of financial condition at a given date
- balloon loan or mortgage
a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower.
- balloon payment
the final lump sum payment due at the end of a balloon mortgage.
- biweekly payment mortgage
a mortgage paid twice a month instead of once a month, reducing the amount of interest to be paid on the loan.
a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.
- bridge loan
: an agent who negotiates contracts of sale (as of real estate or securities) or other agreements (as insurance contracts or mortgages) between the parties for a fee or commission compare dealer, ...
a detailed record of all income earned and spent during a specific period of time.
- building code
based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.
- buy down
the seller pays an amount to the lender so the lender provides a lower rate and lower payments many times for an ARM. The seller may increase the sales price to cover the cost of the buy down.
- c loan or c paper
FICO scores typically from 580 to 619. Factors include three to four 30 day late mortgage payments and four to six 30 day late installment loan payments or two to four 60 day late payments. Should be ...
- callable debt
a debt security whose issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity.
a limit, such as one placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease, either at each adjustment period or during the life of the ...
pl: -ties 1 : a qualification, power, or ability (as to give consent or make a testament) created by operation of law 2 : an individual's ability or aptitude ;esp : mental ability as it relates to ...
- capital gain
- capital improvements
property improvements that either will enhance the property value or will increase the useful life of the property.
- capital or cash reserves
an individual's savings, investments, or assets.
- cash reserves
a cash amount sometimes required of the buyer to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.
- cash-out refinance
when a borrower refinances a mortgage at a higher principal amount to get additional money. Usually this occurs when the property has appreciated in value. For example, if a home has a current value ...
- casualty protection
property insurance that covers any damage to the home and personal property either inside or outside the home.
- certificate of title
1 : a certificate of ownership stating that the title to the specified property is free and clear except for any encumbrance (as a mortgage) listed on it: as a : a certificate issued by a motor ...
- chapter 13 bankruptcy
this type of bankruptcy sets a payment plan between the borrower and the creditor monitored by the court. The homeowner can keep the property, but must make payments according to the court's terms ...
- chapter 7 bankruptcy
a bankruptcy that requires assets be liquidated in exchange for the cancellation of debt.
the portion of principal and interest due on a loan that is written off when deemed to be uncollectible.
- clear title
: the fulfillment or performance of a contract esp. for the sale of real estate ;also : a meeting at which the closing of a contract takes place [represented us at the ] NOTE: At the closing for the ...
- closing costs
fees for final property transfer not included in the price of the property. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, ...
- cloud on the title
any condition which affects the clear title to real property.
an additional person that is responsible for loan repayment and is listed on the title.
- co-signed account
an account signed by someone in addition to the primary borrower, making both people responsible for the amount borrowed.
a person that signs a credit application with another person, agreeing to be equally responsible for the repayment of the loan.
1 a : accompanying as a secondary fact, activity, or agency but subordinate to a main consideration b : not directly relevant or material [a evidentiary matter] [a issue] 2 : belonging to the same ...
- collection account
an unpaid debt referred to a collection agency to collect on the bad debt. This type of account is reported to the credit bureau and will show on the borrower's credit report.
1 : a formal written authorization to perform various acts and duties [a notary's ] 2 a : authority to act for, in behalf of, or in place of another b : a task or matter entrusted to one as the ...
- common stock
- comparative market analysis (comps)
a property evaluation that determines property value by comparing similar properties sold within the last year.
- compensating factors
factors that show the ability to repay a loan based on less traditional criteria, such as employment, rent, and utility payment history.
pl: -ums [New Latin, joint dominion, from Latin com- with, together + dominium rule, ownership] 1 : ownership of real property that is characterized by separate ownership of portions of the property ...
- conforming loan
is a loan that does not exceed Fannie Mae's and Freddie Mac's loan limits. Freddie Mac and Fannie Mae loans are referred to as conforming loans.
: something (as an act or forbearance or the promise thereof) done or given by one party for the act or promise of another see also contract compare motive NOTE: Except in Louisiana, consideration is ...
- construction loan
a short-term, to finance the cost of building a new home. The lender pays the builder based on milestones accomplished during the building process. For example, once a sub-contractor pours the ...
pl: -cies 1 : the quality or state of being contingent 2 : a contingent event or condition: as a : an event that may but is not certain to occur [a that made performance under the contract ...
- conventional loan
- conversion clause
a provision in some ARMs allowing it to change to a fixed-rate loan at some point during the term. Usually conversions are allowed at the end of the first adjustment period. At the time of the ...
- convertible arm
an adjustable-rate mortgage that provides the borrower the ability to convert to a fixed-rate within a specified time.
- cooperative (co-op)
residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of ...
- cost of funds index (cofi)
an index used to determine interest rate changes for some adjustable-rate mortgages.
- counter offer
a rejection to all or part of a purchase offer that negotiates different terms to reach an acceptable sales contract.
legally enforceable terms that govern the use of property. These terms are transferred with the property deed. Discriminatory covenants are illegal and unenforceable. Also known as a condition, ...
1 : recognition see also full faith and credit 2 a : the balance in an account which may be drawn upon and repaid later compare loan b : the use of resources (as money) in the present obtained by ...
- credit bureau
: a private business that compiles information on consumers' creditworthiness and provides this information to lenders
- credit counseling
education on how to improve bad credit and how to avoid having more debt than can be repaid.
- credit enhancement
a method used by a lender to reduce default of a loan by requiring collateral, mortgage insurance, or other agreements.
- credit grantor
the lender that provides a loan or credit.
- credit history
a record of an individual that lists all debts and the payment history for each. The report that is generated from the history is called a credit report. Lenders use this information to gauge a ...
- credit loss ratio
the ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.
- credit related expenses
foreclosed property expenses plus the provision for losses.
- credit related losses
foreclosed property expenses combined with charge-offs.
- credit repair companies
Private, for-profit businesses that claim to offer consumers credit and debt repayment difficulties assistance with their credit problems and a bad credit report.
- credit report
a report generated by the credit bureau that contains the borrower's credit history for the past seven years. Lenders use this information to determine if a loan will be granted.
- credit risk
a term used to describe the possibility of default on a loan by a borrower.
- credit score
a score calculated by using a person's credit report to determine the likelihood of a loan being repaid on time. Scores range from about 360 - 840: a lower score meaning a person is a higher risk, ...
- credit union
: a cooperative association that makes small loans to its members at low interest rates and offers other banking services (as savings and checking accounts)
the way a lender measures the ability of a person to qualify and repay a loan.
- debt security
- debt-to-income ratio
a comparison or ratio of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage ...
1 : something done : act [my free act and ] 2 : a written instrument by which a person transfers ownership of real property to another see also deliver, grantee, grantor, recording act, registry, ...
to avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process does not allow the borrower to remain in the house but helps ...
pl: -cies 1 a : the quality or state of being delinquent b : juvenile delinquency [contributing to the of a minor] 2 : a debt on which payment is overdue [consumer loan delinquencies]
- deposit (earnest money)
money put down by a potential buyer to show that they are serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is ...
: a contract or security that derives its value from that of an underlying asset (as another security) or from the value of a rate (as of interest or currency exchange) or index of asset value (as a ...
the release of relevant information about a property that may influence the final sale, especially if it represents defects or problems. "Full disclosure" usually refers to the responsibility of the ...
- discount point
normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan. In an ARM with an initial rate ...
- document recording
after closing on a loan, certain documents are filed and made public record. Discharges for the prior mortgage holder are filed first. Then the deed is filed with the new owner's and mortgage ...
- down payment
the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale ...
- due on sale clause
a provision of a loan allowing the lender to demand full repayment of the loan if the property is sold.
the number of years it will take to receive the present value of all future payments on a security to include both principal and interest.
- earnest money (deposit)
money put down by a potential buyer to show that they are serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is ...
- earnings per share (eps)
a corporation's profit that is divided among each share of common stock. It is determined by taking the net earnings divided by the number of outstanding common stocks held. This is a way that a ...
the legal rights that give someone other than the owner access to use property for a specific purpose. Easements may affect property values and are sometimes a part of the deed.
Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part ...
- eminent domain
: the right of the government to take property from a private owner for public use by virtue of the superior dominion of its sovereignty over all lands within its jurisdiction see also condemn, ...
a structure that extends over the legal property line on to another individual's property. The property surveyor will note any encroachment on the lot survey done before property transfer. The person ...
also in·cum·brance [in-kəm-brəns] n : a claim (as a lien) against property ;specif : an interest or right (as an easement or a lease) in real property that may diminish the ...
- equal credit opportunity act (ecoa)
a federal law requiring lenders to make credit available equally without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public ...
- escape clause
: a clause in a contract that allows a party to avoid liability under the contract for specified reasons ;esp : a provision in an insurance policy that denies coverage when other insurance covers ...
[Anglo-French escroue deed delivered on condition, literally, scroll, strip of parchment, from Old French escroe] 1 : an instrument and esp. a deed or money or property held by a third party to be ...
- escrow account
a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, ...
[Anglo-French estat, literally, state, condition, from Old French, from Latin status, from stare to stand] 1 : the interest of a particular degree, nature, quality, or extent that one has in land or ...
- exclusive listing
a written contract giving a real estate agent the exclusive right to sell a property for a specific timeframe.
- fair credit reporting act
federal act to ensure that credit bureaus are fair and accurate protecting the individual's privacy rights enacted in 1971 and revised in October 1997.
- fair housing act
a law that prohibits discrimination in all facets of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability.
- fair market value
: a price at which buyers and sellers both having reasonable knowledge of the property and being under no compulsion are willing to do business
- familial status
HUD uses this term to describe a single person, a pregnant woman or a household with children under 18 living with parents or legal custodians who might experience housing discrimination.
- fannie mae
Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to ...
- fee simple
pl: fees simple [simple without limitation (as to heirs) and unrestricted (as to transfer of ownership)] : a fee that is alienable (as by deed, will, or intestacy) and of potentially indefinite ...
Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that ...
- fico score
FICO is an abbreviation for Fair Isaac Corporation and refers to a person's credit score based on credit history. Lenders and credit card companies use the number to decide if the person is likely to ...
- first mortgage
- fixed expenses
payments that do not vary from month to month.
- fixed-rate mortgage
a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
: an item of movable property so incorporated into a real property that it may be regarded as legally a part of it
1 : an amount of money represented by checks outstanding and in process of collection 2 : the time between a transaction (as the writing of a check or a purchase on credit) and the actual withdrawal ...
- flood insurance
insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.
also fore·bear·ance [fȯr-bar-əns] n : a refraining from the enforcement of something (as a debt, right, or obligation) that is due
1 : a legal proceeding that bars or extinguishes a mortgagor's equity of redemption in mortgaged real property see also deficiency judgment at judgment, redeem, right of redemption, statutory ...
- freddie mac
Federal Home Loan Mortgage Corporation (FHLM); a federally chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders with funds ...
- front end ratio
a percentage comparing a borrower's total monthly cost to buy a house (mortgage principal and interest, insurance, and real estate taxes) to monthly income before deductions.
- fsbo (for sale by owner)
a home that is offered for sale by the owner without the benefit of a real estate professional.
- ginnie mae
Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans ...
- global debt facility
designed to allow investors all over the world to purchase debt (loans) of U.S. dollar and foreign currency through a variety of clearing systems.
- good faith estimate
an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.
- graduated payment mortgages
mortgages that begin with lower monthly payments that get slowly larger over a period of years, eventually reaching a fixed level and remaining there for the life of the loan. Graduated payment loans ...
: one to whom a grant is made ;specif : one to whom a grant by deed is made
: one that makes a grant: as a : one that conveys property or a right in property by deed b : settlor c : one (as an organization) that provides aid in the form of grants (as for education)
- gross income
: all income derived from any source except for items specifically excluded by law NOTE: Section 61 of the Internal Revenue Code lists fifteen nonexclusive items that should be included in gross ...
abbreviation for government sponsored enterprises; a collection of financial services corporations formed by the United States Congress to reduce interest rates for farmers and homeowners. Examples ...
- guaranty fee
payment to FannieMae from a lender for the assurance of timely principal and interest payments to MBS (Mortgage Backed Security) security holders.
- hazard insurance
protection against a specific loss, such as fire, wind etc., over a period of time that is secured by the payment of a regularly scheduled premium.
- hecm (reverse mortgage)
the reverse mortgage is used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy ...
Homebuyer Education Learning Program; an educational program from the FHA that counsels people about the home buying process; HELP covers topics like budgeting, finding a home, getting a loan, and ...
- home equity line of credit
:home equity loan at loan
- home equity loan
- home inspection
an examination of the structure and mechanical systems to determine a home's quality, soundness and safety; makes the potential homebuyer aware of any repairs that may be needed. The homebuyer ...
- home warranty
offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner's insurance; coverage extends over a specific time period and does not cover the ...
- homeowner's insurance
: insurance that covers primarily a person's residence and that also covers the owner for liability resulting from his or her personal acts
- homeownership education classes
classes that stress the need to develop a strong credit history and offer information about how to get a mortgage approved, qualify for a loan, choose an affordable home, go through financing and ...
- homestead credit
property tax credit program, offered by some state governments, that provides reductions in property taxes to eligible households.
- housing counseling agency
provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and home buying.
the U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing ...
- hud1 statement
also known as the "settlement sheet," or "closing statement" it itemizes all closing costs; must be given to the borrower at or before closing. Items that appear on the statement include real estate ...
Heating, Ventilation and Air Conditioning; a home's heating and cooling system.
1 a : the action of indemnifying b : the condition of being indemnified 2 : indemnity
: a numerical measure or indicator (as of inflation or economic performance) see also consumer price index
the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar's value.
- inflation coverage
endorsement to a homeowner's policy that automatically adjusts the amount of insurance to compensate for inflationary rises in the home's value. This type of coverage does not adjust for increases in ...
pl: -ries 1 : a request for information [such doubt as would cause a reasonable person to make an ] 2 : a systematic official investigation often of a matter of public interest esp. by a body (as a ...
1 : the action, process, or means of insuring or the state of being insured usually against loss or damage by a contingent event (as death, fire, accident, or sickness) 2 a : the business of ...
[probably alteration of earlier interesse, from Anglo-French, from Medieval Latin, from Latin, to be between, make a difference, concern, from inter- between, among + esse to be] 1 : a right, title, ...
- interest rate
the amount of interest charged on a monthly loan payment, expressed as a percentage.
- interest rate swap
a transaction between two parties where each agrees to exchange payments tied to different interest rates for a specified period of time, generally based on a notional principal amount.
- intermediate term mortgage
a mortgage loan with a contractual maturity from the time of purchase equal to or less than 20 years.
- joint tenancy (with rights of survivorship)
two or more owners share equal ownership and rights to the property. If a joint owner dies, his or her share of the property passes to the other owners, without probate. In joint tenancy, ownership of ...
- joint tenants
A tenancy with two or more co-owners who take identical interests. Joint tenants have a right of survivorship to the other's share.
- jumbo loan
or non-conforming loan, is a loan that exceeds Fannie Mae's and Freddie Mac's loan limits. Freddie Mac and Fannie Mae loans are referred to as conforming loans.
- late payment charges
the penalty the homeowner must pay when a mortgage payment is made after the due date grace period.
[Anglo-French les, from lesser to grant by lease, from Old French laisser to let go, from Latin laxare to loosen, from laxus slack] 1 a : a contract by which an owner of property conveys exclusive ...
- lease purchase (lease option)
assists low to moderate income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional ...
A term referring to an person or company that makes loans for real estate purchases. Sometimes referred to as a loan officer or lender.
- lender option commitments
an agreement giving a lender the option to deliver loans or securities by a certain date at agreed upon terms.
a person's financial obligations such as long-term / short-term debt, and other financial obligations to be paid.
- lien waiver
A document that releases a consumer (homeowner) from any further obligation for payment of a debt once it has been paid in full. Lien waivers typically are used by homeowners who hire a contractor to ...
- life cap
a limit on the range interest rates can increase or decrease over the life of an adjustable-rate mortgage (ARM).
- life estate
- line of credit
:an agreement specifying the maximum amount of credit allowed a borrower
- liquid asset
a cash asset or an asset that is easily converted into cash.
- listing agreement
1 a : money lent at interest b : something lent usually for the borrower's temporary use 2 : a transfer or delivery of money from one party to another with the express or implied agreement that the ...
- loan acceleration
an acceleration clause in a loan document is a statement in a mortgage that gives the lender the right to demand payment of the entire outstanding balance if a monthly payment is missed.
- loan fraud
purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.
- loan officer
a representative of a lending or mortgage company who is responsible for soliciting homebuyers, qualifying and processing of loans. They may also be called lender, loan representative, account ...
- loan origination fee
a charge by the lender to cover the administrative costs of making the mortgage. This charge is paid at the closing and varies with the lender and type of loan. A loan origination fee of 1 to 2 ...
- loan servicer
the company that collects monthly mortgage payments and disperses property taxes and insurance payments. Loan servicers also monitor nonperforming loans, contact delinquent borrowers, and notify ...
- loan to value (ltv) ratio
a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.
since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.
- lock-in period
the length of time that the lender has guaranteed a specific interest rate to a borrower.
- loss mitigation
a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan
- mandatory delivery commitment
an agreement that a lender will deliver loans or securities by a certain date at agreed-upon terms.
1 : the difference between net sales and the cost of the merchandise sold from which expenses are usually met or profits derived 2 : the amount by which the market value of collateral is greater ...
- market value
1 : the price at which a buyer is ready and willing to buy and a seller is ready and willing to sell 2 : market price
: termination of the period that a note or other obligation has to run : state or condition of having become due
- median price
the price of the house that falls in the middle of the total number of homes for sale in that area.
- medium term notes
unsecured general obligations of Fannie Mae with maturities of one day or more and with principal and interest payable in U.S. dollars.
- merged credit report
raw data pulled from two or more of the major credit-reporting firms.
term usually used to refer to various changes or improvements made in a home; for instance, to reduce the average level of radon.
when a lender agrees to modify the terms of a mortgage without refinancing the loan.
[Anglo-French, from Old French, from mort dead (from Latin mortuus) + gage security] 1 a : a conveyance of title to property that is given to secure an obligation (as a debt) and that is defeated ...
- mortgage acceleration clause
a clause allowing a lender, under certain circumstances, demand the entire balance of a loan is repaid in a lump sum. The acceleration clause is usually triggered if the home is sold, title to the ...
- mortgage banker
a company that originates loans and resells them to secondary mortgage lenders like Fannie Mae or Freddie Mac.
- mortgage broker
a firm that originates and processes loans for a number of lenders.
- mortgage insurance
a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment ...
- mortgage insurance premium (mip)
a monthly payment -usually part of the mortgage payment - paid by a borrower for mortgage insurance.
- mortgage interest deduction
the interest cost of a mortgage, which is a tax - deductible expense. The interest reduces the taxable income of taxpayers.
- mortgage life and disability insurance
term life insurance bought by borrowers to pay off a mortgage in the event of death or make monthly payments in the case of disability. The amount of coverage decreases as the principal balance ...
- mortgage modification
a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.
- mortgage note
a legal document obligating a borrower to repay a loan at a stated interest rate during a specified period; the agreement is secured by a mortgage that is recorded in the public records along with the ...
- mortgage qualifying ratio
Used to calculate the maximum amount of funds that an individual traditionally may be able to afford. A typical mortgage qualifying ratio is 28
- mortgage score
a score based on a combination of information about the borrower that is obtained from the loan application, the credit report, and property value information. The score is a comprehensive analysis of ...
- mortgage-backed security (mbs)
a Fannie Mae security that represents an undivided interest in a group of mortgages. Principal and interest payments from the individual mortgage loans are grouped and paid out to the MBS holders.
: a party (as a business or individual) to whom or in whose favor property is mortgaged
: a person who mortgages property
- multifamily housing
a building with more than four residential rental units.
- multiple listing service (mls)
within the Metro Columbus area, Realtors submit listings and agree to attempt to sell all properties in the MLS. The MLS is a service of the local Columbus Board of Realtors. The local MLS has a ...
- national credit repositories
currently, there are three companies that maintain national credit - reporting databases. These are Equifax, Experian, and Trans Union, referred to as Credit Bureaus.
- negative amortization
amortization means that monthly payments are large enough to pay the interest and reduce the principal on your mortgage. Negative amortization occurs when the monthly payments do not cover all of the ...
- net income
: the balance of gross income remaining after all allowable deductions and exemptions are taken
- no cash out refinance
a refinance of an existing loan only for the amount remaining on the mortgage. The borrower does not get any cash against the equity of the home. Also called a "rate and term refinance."
- no cost loan
there are many variations of a no cost loan. Generally, it is a loan that does not charge for items such as title insurance, escrow fees, settlement fees, appraisal, recording fees or notary fees. It ...
- non-conforming loan
is a loan that exceeds Fannie Mae's and Freddie Mac's loan limits. Freddie Mac and Fannie Mae loans are referred to as conforming loans.
- nonperforming asset
an asset such as a mortgage that is not currently accruing interest or which interest is not being paid.
- notary public
pl: no·ta·ries public or: notary publics [Latin notarius stenographer, from nota note, shorthand character] : a public officer who certifies and attests to the authenticity of writings (as ...
1 a : a written promise to pay a debt ;specif : promissory note in this entry bank note : a promissory note issued by a bank payable to bearer on demand but without interest and circulating as ...
- note rate
the interest rate stated on a mortgage note.
- notice of default
a formal written notice to a borrower that there is a default on a loan and that legal action is possible.
- notional principal amount
the proposed amount which interest rate swap payments are based but generally not paid or received by either party.
1 : a proposal, promise, or other manifestation of willingness to make and fulfill a contract or to bargain under proposed terms with another party that has the power to accept it upon receiving it ...
- original principal balance
the total principal owed on a mortgage prior to any payments being made.
the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.
- origination fee
- owner financing
a home purchase where the seller provides all or part of the financing, acting as a lender.
- owner's policy
the insurance policy that protects the buyer from title defects.
: the state, relation, or fact of being an owner ;also : the rights or interests of an owner [reduced their by one third] absolute ownership : ownership esp. by a single person that is free of any ...
- partial claim
a loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date.
- partial payment
a payment that is less than the total amount owed on a monthly mortgage payment. Normally, lenders do not accept partial payments. The lender may make exceptions during times of difficulty. Contact ...
- payment cap
a limit on how much an ARM's payment may increase, regardless of how much the interest rate increases.
- payment change date
the date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately ...
- payment due date
Contract language specifying when payments are due on money borrowed. The due date is always indicated and means that the payment must be received on or before the specified date. Grace periods prior ...
for homeowner's insurance, an event that can damage the property. Homeowner's insurance may cover the property for a wide variety of perils caused by accidents, nature, or people.
- personal property
Principal, Interest, Taxes, and Insurance
- piti reserves
a cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must ...
- planned unit development (pud)
a development that is planned, and constructed as one entity. Generally, there are common features in the homes or lots governed by covenants attached to the deed. Most planned developments have ...
Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase ...
a point is equal to one percent of the principal amount of your mortgage. For example, if you get a mortgage for $95,000, one point means you pay $950 to the lender. Lenders frequently charge points ...
- power of attorney
:an instrument containing an authorization for one to act as the agent of the principal that terminates esp. upon revocation by the principal or death of the principal or agent called also letter of ...
a lender commits to lend to a potential borrower a fixed loan amount based on a completed loan application, credit reports, debt, savings and has been reviewed by an underwriter. The commitment ...
- pre-foreclosure sale
allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.
a lender informally determines the maximum amount an individual is eligible to borrow. This is not a guaranty of a loan.
- predatory lending
abusive lending practices that include a mortgage loan to someone who does not have the ability to repay. It also pertains to repeated refinancing of a loan charging high interest and fees each time.
- predictive variables
The variables that are part of the formula comprising elements of a credit-scoring model. These variables are used to predict a borrower's future credit performance.
- preferred stock
payment of the mortgage loan before the scheduled due date; may be Subject to a prepayment penalty.
- prepayment penalty
a fee charged to a homeowner who pays one or more monthly payments before the due date. It can also apply to principal reduction payments.
- prepayment penalty mortgage (ppm)
a type of mortgage that requires the borrower to pay a penalty for prepayment, partial payment of principal or for repaying the entire loan within a certain time period. A partial payment is generally ...
- price range
the high and low amount a buyer is willing to pay for a home.
- prime rate
: an interest rate formally announced by a bank to be the lowest available at a particular time to its most creditworthy customers called also prime prime interest rate
1 : being the main or most important, consequential, or influential [their place of business] [the obligor] 2 : of, relating to, or constituting principal or a principal [the amount of the loan]
- principal, interest, taxes, and insurance (piti)
the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, ...
- private mortgage insurance (pmi)
insurance purchased by a buyer to protect the lender in the event of default. The cost of mortgage insurance is usually added to the monthly payment. Mortgage insurance is generally maintained until ...
- promissory note
- property (fixture and non-fixture)
in a real estate contract, the property is the land within the legally described boundaries and all permanent structures and fixtures. Ownership of the property confers the legal right to use the ...
- property tax
: a tax levied on real or personal property (as by a municipality) compare excise, income tax
- property tax deduction
the U.S. tax code allows homeowners to deduct the amount they have paid in property taxes from there total income.
- public record information
Court records of events that are a matter of public interest such as credit, bankruptcy, foreclosure and tax liens. The presence of public record information on a credit report is regarded negatively ...
- punch list
a list of items that have not been completed at the time of the final walk through of a newly constructed home.
- purchase offer
A detailed, written document that makes an offer to purchase a property, and that may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the ...
- qualifying ratios
guidelines utilized by lenders to determine how much money a homebuyer is qualified to borrow. Lending guidelines typically include a maximum housing expense to income ratio and a maximum monthly ...
- quitclaim deed
a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.
- rate cap
a limit on an ARM on how much the interest rate or mortgage payment may change. Rate caps limit how much the interest rates can rise or fall on the adjustment dates and over the life of the loan.
- rate lock
a commitment by a lender to a borrower guaranteeing a specific interest rate over a period of time at a set cost.
- real estate agent
an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.
- real estate mortgage investment conduit (remic)
a security representing an interest in a trust having multiple classes of securities. The securities of each class entitle investors to cash payments structured differently from the payments on the ...
- real estate property tax deduction
a tax deductible expense reducing a taxpayer's taxable income.
- real estate settlement procedures act (respa)
a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships
- real property
a real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and its local and state associations.
1 : a judge of a municipal court 2 : a public officer charged with making a record of writings or transactions (as conveyances) [a of deeds]
the recording in a registrar's office of an executed legal document. These include deeds, mortgages, satisfaction of a mortgage, or an extension of a mortgage making it a part of the public record.
- recording fees
charges for recording a deed with the appropriate government agency.
paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).
- rehabilitation mortgage
a mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHA's 203(k) - allow a borrower to roll the costs of rehabilitation and ...
- reinstatement period
a phase of the foreclosure process where the homeowner has an opportunity to stop the foreclosure by paying money that is owed to the lender.
- 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 agreement between a lender and a delinquent borrower where the borrower agrees to make additional payments to pay down past due amounts while making regularly scheduled payments.
Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, ...
- return on average common equity
net income available to common stockholders, as a percentage of average common stockholder equity.
- reverse mortgage (hecm)
the reverse mortgage is used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy ...
- right of first refusal
- right of way
1 : an easement or servitude over another's land conferring a right of passage 2 a : the area over which a right of way exists b : the strip of land over which is built a public road c : the land ...
- risk based capital
an amount of capital needed to offset losses during a ten-year period with adverse circumstances.
- risk based pricing
Fee structure used by creditors based on risks of granting credit to a borrower with a poor credit history.
- risk scoring
an automated way to analyze a credit report verses a manual review. It takes into account late payments, outstanding debt, credit experience, and number of inquiries in an unbiased manner.
- sale leaseback
when a seller deeds property to a buyer for a payment, and the buyer simultaneously leases the property back to the seller.
- second mortgage
- secondary mortgage market
the buying and selling of mortgage loans. Investors purchase residential mortgages originated by lenders, which in turn provides the lenders with capital for additional lending.
- secured loan
a loan backed by collateral such as property.
pl: -ties 1 a : something (as a mortgage or collateral) that is provided to make certain the fulfillment of an obligation [used his property as for a loan] b : surety see also security for costs 2 ...
- seller take back
an agreement where the owner of a property provides second mortgage financing. These are often combined with an assumed mortgage instead of a portion of the seller's equity.
- serious delinquency
a mortgage that is 90 days or more past due.
a business that collects mortgage payments from borrowers and manages the borrower's escrow accounts.
the collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
the distance between a property line and the area where building can take place. Setbacks are used to assure space between buildings and from roads for a many of purposes including drainage and ...
- settlement statement
a document required by the Real Estate Settlement Procedures Act (RESPA). It is an itemized statement of services and charges relating to the closing of a property transfer. The buyer has the right to ...
- special forbearance
a loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.
- stockholders' equity
the sum of proceeds from the issuance of stock and retained earnings less amounts paid to repurchase common shares.
- stripped mbs (smbs)
securities created by "stripping" or separating the principal and interest payments from the underlying pool of mortgages into two classes of securities, with each receiving a different proportion of ...
- sub-prime loan
"B" Loan or "B" paper with FICO scores from 620 - 659. "C" Loan or "C" Paper with FICO scores typically from 580 to 619. An industry term to used to describe loans with less stringent lending and ...
1 : placed in or occupying a lower rank, class, or position 2 : submissive to or controlled by authority
a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. Surveys are conducted by licensed surveyors and are normally required by the ...
- sweat equity
using labor to build or improve a property as part of the down payment
- tenants by the entirety
A joint tenancy between husband and wife. At the death of one spouse, the property passes to the other spouse.
- tenants in common
A tenancy by two or more persons, in divided shares. At the death of one tenant, the property passes to his/her estate.
The period of time and the interest rate agreed upon by the lender and the borrower to repay a loan.
- 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.
[Anglo-French, inscription, legal right, from Old French, from Latin titulum inscription, chapter heading, part of the law that sanctions an action] 1 a : the means or right by which one owns or ...
- title 1
an FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs) to their home; Title I loans less than $7,500 don't require a property lien.
- title company
a company that specializes in examining and insuring titles to real estate.
- title defect
an outstanding claim on a property that limits the ability to sell the property. Also referred to as a cloud on the title.
- title insurance
: insurance that compensates for loss from title defects or encumbrances (as liens) that were unknown but should have been discovered at the time the policy was issued
- title search
: a search of public records to determine the condition of title to real property usually that is the subject of a transaction (as a purchase or mortgage) [the borrower was required to pay for a ...
- transfer agent
- transfer of ownership
any means by which ownership of a property changes hands. These include purchase of a property, assumption of mortgage debt, exchange of possession of a property via a land sales contract or any other ...
- transfer taxes
State and local taxes charged for the transfer of real estate. Usually equal to a percentage of the sales price.
- treasury index
can be used as the basis for adjustable rate mortgages (ARMs) It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities.
a federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of ...
- two step mortgage
an adjustable-rate mortgage (ARM) that has one interest rate for the first five to seven years of its term and a different interest rate for the remainder of the term.
the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property ...
- up front charges
the fees charged to homeowners by the lender at the time of closing a mortgage loan. This includes points, broker's fees, insurance, and other charges.
- va (department of veterans affairs)
a federal agency, which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default.
- va mortgage
a mortgage guaranteed by the Department of Veterans Affairs (VA).
- variable expenses
Costs or payments that may vary from month to month, for example, gasoline or food.
1 : a disagreement between two documents or positions ;esp : a disagreement between allegations (as in an indictment or complaint) and proof offered at trial that warrants an appropriate remedy (as ...
1 : fully and absolutely established as a right, benefit, or privilege : not dependent on any contingency or condition ;specif : not subject to forfeiture if employment terminates before retirement ...
- walk through
the final inspection of a property being sold by the buyer to confirm that any contingencies specified in the purchase agreement such as repairs have been completed, fixture and non-fixture property ...
- warranty deed
: municipal or county regulation of land use effected through the creation and enforcement of zones under local law