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GLOSSARY
[A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M] [N] [O] [P] [Q] [R] [S] [T] [U] [V] [W] [Y] [Z] A B top C D top E top F top G top H top I top J top top L top M top N top O top P top top R top S top T top U top V top W top top
A The notes made by a title examiner based on his examination
of the land records. These notes are a concise summary of the transactions
affecting the property. The title agency produces a BINDER from the information
in the abstract. The right of the mortgagee (lender) to demand the immediate
repayment of the mortgage loan balance upon the default of the mortgagor (borrower),
or by using the right vested in the Due-on-Sale Clause. A condition in a real estate financing instrument giving
the lender the power to declare all sums owing lender immediately due and
payable upon the happening of an event, such as the sale of the property,
or a delinquency in the repayment of the note. The buildup of land from natural forces such as wind or
water. As a verb, the confirmation by a party executing a legal
document that this is his signature and voluntary act. This confirmation is
made to an authorized officer of the Court or notary public who signs a statement
also called an acknowledgment. 43,560 square feet of land. Forces trustees to release Post petition payments being
held prior to the Chapter 13 Confirmation Hearing. ADJUSTABLE RATE MORTGAGE (ARM) Is a mortgage in which the interest rate is adjusted periodically
based on a preselected index. Also sometimes known as the re negotiable rate
mortgage, the variable rate mortgage or the Canadian rollover mortgage. On an adjustable rate mortgage, the time between changes
in the interest rate and/or monthly payment, typically one, three or five
years, depending on the index. A person appointed by the Court to settle the estate of
a person who dies without a will. The feminine form is Administratrix. Compare,
EXECUTOR. A claim made against land titled in another person based
on open, notorious and hostile possession and use of the land to the exclusion
of the titled owner. A relationship in which the agent is given the authority
to act on behalf of another person (Principal). One who legally represents another, called a principal,
from whom authority has been derived. A change to the correct or alteration to the original
document/agreement without changing its principal essence. The amount applied for less the prepaid finance charges.
Prepaid finance charges can be found on the Good Faith Settlement Statement
(HUD1 or HUD1A). For example, if the borrower's Note is for $100,000 and the
prepaid finance charge total is $5,000, the Amount Financed would be $95,000.
The Amount Finance is the amount on which the Annual Percentage Rate (APR)
is calculated. Means loan payment by equal periodic payment calculated
to pay off the debt at the end of a fixed period, including accrued interest
on the outstanding balance. A loan to be repaid, interest and principal, by a series
of regular payments that are equal or nearly equal, without any special balloon
payment prior to maturity. The limit on the amount an adjustable rate mortgage's
interest rate can change over a 12-month period. An annual cap prevents your
payments from changing too dramatically, even if the factors that determine
changes in an adjustable mortgage's rate rise or fall sharply during that
period. ANNUAL PERCENTAGE RATE (A.P.R.) This is not the Note rate for which the borrower applied.
It is an interest rate reflecting the cost of a mortgage as a yearly rate.
This rate is likely to be higher than the stated note rate or advertised rate
on the mortgage, because it takes into account points and other credit costs,
such as private mortgage insurance, loan discount, origination fees, and other
credit costs. The APR allows home buyers to compare different types of mortgages
based on the annual cost for each loan. An estimate of the value of property, made by a qualified
professional called an appraiser. Most states require licenses. Various lenders
have their own lists of approved appraisers. An opinion of value reached by an appraiser based upon
knowledge, experience, and a study of pertinent data. An attorney authorized by a title insurance company to
handle closings and render title opinions. Anything attached to the land or used with it passing
to the new owner. In mortgage banking, the simultaneous purchase and sale
of mortgages, futures contracts, or mortgage backed securities in different
markets to profit from differences in price. A transaction in which the parties involved are entirely
independent of each other, deal with each other as strangers, and have no
reason for collusion. A local tax levied against a property for a specific purpose,
such as a sewer or street lights. The determination, for tax purposes, of how much a home
and the property it occupies is worth. To transfer interest. One who receives an assignment or transfer of rights.
An assignment of a contract transfers the right to buy property. The one who assigns to another person. A document that evidences a transfer of ownership of a
mortgage from one party to another. A person who has qualified as a real estate broker but
works for a particular broker licensed in the state. The agreement between buyer and seller where the buyer
takes over the payments on an existing mortgage from the seller. Assuming
a loan can usually save the buyer money since this is an existing mortgage
debt, unlike a new mortgage where closing cost and new, possibly higher, market-rate
interest charges will apply. The fee paid to a lender resulting from the assumption
of a mortgage. Assumption by a purchaser of the primary liability for
a payment of an existing mortgage or deed of trust. The seller remains secondarily
liable unless specially released by the lender. Seizure of property through Court process to repay a debt.
A type of agency relationship where one person holds a
POWER OF ATTORNEY allowing him to execute legal documents on behalf of another.
Decisions made by the attorney in fact are binding on the principal. Usually a short-term fixed-rate loan which involves small
payments for a certain period of time and one large payment for the remaining
amount of the principal at a time specified in the contract. The unpaid principal amount of a mortgage or other long-term
loan due on a specified date in the future. Usually the amount that must be
paid in a lump sum at the end of the term. A provision of Federal Law whereby a debtor surrenders
his assets to the Bankruptcy Court and is relieved of the future obligation
to repay his unsecured debts. A Trustee in Bankruptcy administers the assets,
selling them to pay as much of the debt as possible. If your seller is in
bankruptcy, the Trustee in Bankruptcy owns the property and is the party to
sign the contract and make decisions. After bankruptcy, the debtor is discharged
and his unsecured creditors may not pursue further collection efforts against
him. Secured creditors, those holding deeds of trust or judgment liens, continue
to be secured by the property but they may not take other action to collect
from the debtor. One one-hundredth of one percent. Used to describe the
amount of change in yield in many debt instruments, including mortgages. Term used to describe a failed real estate project. A permanent reference mark for surveyors. A person named to receive a benefit from a TRUST. A contingent
beneficiary has conditions attached to his rights, usually someone else must
die first. A mortgage with payments due every two weeks totaling
26 payments a year. An offer. A title insurance binder is the written commitment of
a title insurance company to insure title to the property subject to the conditions
and exclusions shown on the binder. A mortgage covering at least two pieces of real estate
as security for the same mortgage. This sort of loan is more common for commercial
property or special case loans. An amount of money, often posted with the Court, to guarantee
against loss as a result of a possible claim. For example, if there is a LIEN
against the property, the owner may post a bond and the lien is removed from
the property and the parties argue over the money rather than the property.
One who applies for and receives a loan in the form of
a mortgage with the intention of repaying the loan in full Failure to perform provisions of a contract. An individual in the business of assisting in arranging
funding or negotiating contracts for a client buy who does not loan the money
himself. Brokers usually charge a fee or receive a commission for their services.
A required set-back a certain distance from the road within
which no building may take place. This restriction may appear in the original
plat of subdivision, restrictive covenants or by building codes and zoning
ordinances. When the lender and/or the home builder subsidizes the
mortgage by lowering the interest rate during the first few years of the loan.
While the payments are initially low, they will increase when the subsidy
expires. These are sometimes used to qualify borrowers for a loan amount that
they would not otherwise qualify for but will be able to pay in subsequent
years as their income increases. Rules and regulations governing an association or corporation.
An option to buy a specific security at a specified price
within a designated time. In a mortgage or deed of trust, it refers to the mortgagee's
or beneficiary's ability to speed up payment of the obligation under certain
conditions. In bonds, it refers to the right to redeem the bond before maturity.
Profit earned from a sale of real estate. A method used to estimate value of a property based on
the rate of return on investment. Consumer safeguards which limit the amount the interest
rate on an adjustable rate mortgage may change per year and/or the life of
the loan. Consumer safeguards which limit the amount monthly payments
on an adjustable rate mortgage may change. The amount of cash derived over a certain period of time
from an income-producing property. The cash flow should be large enough to
pay the expenses of the income producing property (mortgage payment, maintenance,
utilities, etc.) Buyer beware. The buyer must inspect the property and
satisfy himself it is adequate for his needs. The seller is under no obligation
to disclose defects but may not actively conceal a known defect or lie if
asked. The document given to qualified veterans which entitles
them to VA guaranteed loans for homes, business, and mobile homes. certificates
of eligibility may be obtained by sending DD-214 (Separation Paper) to the
local VA office with VA form 1880 (request for Certificate of Eligibility)
A certificate issued by a local governmental body stating
that the building is in a condition to be occupied. CERTIFICATE OF REASONABLE VALUE (CRV) An appraisal issued by the Veterans Administration showing
the property's current market value A certificate issued to the buyer of real property at
a judicial sale. A document signed by the Noteholder and recorded in the
land records evidencing release of a DEED OF TRUST, MORTGAGE or other lien
on the property. A written opinion by an attorney setting forth the status
of title to the property as shown on the public records. The certificate does
not certify as to matters not of record and affords no protection unless the
author was negligent. Compare, TITLE INSURANCE. The document given to veterans or reservists who have
served 90 days of continuous active duty (including training time) It may
be obtained by sending DD 214 to the local VA office with form 26-8261a (request
for certificate of veteran status. This document enables veterans to obtain
lower down payments on certain FHA insured loans). CERTIFIED MORTGAGE BANKER (CMB) A professional designation of the mortgage banking industry.
The series of transactions from GRANTOR to GRANTEE as
evidenced in the land records. Insolvency (Involuntary) Unsecured debts are extinguished.
Secured creditors may continue to be paid, or they may force the trustee to
sell the secured property to receive payment, or they may obtain permission
to foreclose, depending on circumstances and equity. Business re-organization, similar to a Chapter 13 personal
bankruptcy. Wage Earner Plan (Voluntary) All payments delinquent at
the time of filing a chapter 13 bankruptcy (Pre-Petition Payments) are scheduled
for repayment over a period of time, often 60 months. All payments due after
the date of filing must be paid on time to the mortgagee. Foreclosure is not
permitted unless mortgagor defaults in payments due after the bankruptcy is
filed (Post Petition Payments). Personal property. A claim brought up on behalf of a group of people. Title not encumbered or burdened with defects. A fixed amount mortgage where the debt cannot be increased.
It is the opposite of an open-end mortage. The meeting between the buyer, seller and lender or their
agents where the property and funds legally change hands. Also called settlement.
closing costs usually include an origination fee, discount points, appraisal
fee, title search and insurance, survey, taxes, deed recording fee, credit
report charge and other costs assessed at settlement. The cost of closing
usually are about 3 percent to 6 percent of the mortgage amount. The fees and charges a buyer and seller must pay at the
time of closing on a home sale. These can include, among other things, broker
commissions, lender discount points, insurance premiums, and attorney's fees.
An evidence of encumbrances. Acronym for conventional mortgage-backed securities whose
underlying pool of mortgages have no federal guarantees or insurance. When more than one insurance company shares the risk of
a particular transaction or series of transactions. Lenders may require co-insurance
on large commercial projects. Property pledged to secure a loan. A promise by a lender to make a loan on specific terms
or conditions to a borrower or builder. A promise by an investor to purchase
mortgages from a lender with specific terms or conditions. An agreement, often
in writing, between a lender and a borrower to loan money at a future date
subject to the completion of paperwork or compliance with stated conditions.
Properties used as comparisons to determine the value
of a specified property. Taking of private property for a public use through exercise
of the power of EMINENT DOMAIN. The Constitution protects against taking without
fair compensation. During HUD/FHA mortgage insurance processing, it indicates
the satisfactory completion of technical processing involving the estimated
costs of the project, the as-is value of the site, the detailed estimate of
the operating expenses and taxes, the supportable costs, the financial and
credit capacity of the sponsors, financial requirements, and mortgage amounts.
A system of individual FEE SIMPLE ownership of portions
(units) in a multi-unit structure, combined with joint ownership of common
areas. Each individual may sell or encumber his own unit. Compare, COOPERATIVE.
Also called a Committee or Guardian, a person designated
by the Court to protect and preserve the property of someone who is not able
to manage their own affairs. Examples include the mentally incompetent, minors
and incarcerated persons. A short term interim loan to pay for the construction
of buildings or homes. These are usually designed to provide periodic disbursements
to the builder as he progresses. These are generally done by lenders with
offices local to the site of the construction. This enables the lender or
their agent to monitor the progress of the construction. When a mortgagor responds (answers) a Foreclosure Complaint
disagreeing with some of the facts contained in the complaint. If the disagreement
is not considered to be factual, the court may issue a Summary Judgement in
favor of the mortgagee. If the answer disputes facts stated within the complaint,
the court may order a hearing to determine the facts. If the mortgagor asserts
new matters in the answer, this may be a Counter Complaint and may also result
in Summary Judgement or a hearing. A legally enforceable agreement between two parties. Also known as a Land Contract or Land Installment Contract.
A method of financing where title remains in the Seller's name until the Buyer
has paid the full purchase price. A Contract for Deed will normally trigger
the DUE ON SALE CLAUSE in a DEED OF TRUST or MORTGAGE but Veterans Administration
regulations specifically allow Contracts for Deed without invoking the DUE
ON SALE CLAUSE. A contract between purchaser and a seller of real estate
to convey title after certain conditions have been met. It is a form of installment
sale. A mortgage not insured by FHA or guaranteed by the VA.
The redcution or disappearance of the difference between
the cash and futures prices as the delivery date in a futures contract approaches.
An adjustable rate mortgage where the mortgagor can convert
the mortgage to a fixed rate mortgage during a predetermined time period.
CONVERTIBLE STANDBY COMMITMENT FNMA mortgage purchase that may be converted to the same
yield as offered in the most recent Free Market Auction. A system of individual ownership of stock in a corporation
that in turn, owns the structure. Each owner has an exclusive right to use
his individual unit and must pay his portion of the debt encumbering the entire
building. Compare, CONDOMINIUM. An abbreviated term meaning mortgage loan correspondent.
A mortgage banker who services mortgage loans as an agent for the owner of
the mortgage or investor. Also applies to the mortgage banker in the role
of originator of mortgage loan for an investor. A method used by an appraiser to estimate replacement
cost of improvements less depreciation. Ownership in the same land by more than one person. See,
TENANTS IN COMMON, JOINT TENANTS, TENANTS BY THE ENTIRETY. A written agreement or restriction on the use of land
or promising certain acts. Homeowner Associations often enforce restrictive
covenants governing architectural controls and maintenance responsibilities.
However, land could be subject to restrictive covenants even if there is no
homeowner's association. COVENANTS, CONDITIONS, AND RESTRICTIONS. The basic rules establishing the rights and obligations
of owners of real property within a subdivision or other tract of land in
relation to other owners within the same subdivision or tract and in relation
to an association of owners organized for the purpose of operating and maintaining
property commonly owned by the individual owners. Declining term life insurance taken out by a borrower
as added security for repayment of a loan. A report documenting the credit history and current status
of a borrower's credit standing. The ration of effective annual net income to annual debt
service. A borrower's periodic payment comprising repayment of
principal plus payment of interest on the unpaid balance. The ratio, expressed as a percentage, which results when
a borrower's monthly payment obligation on long-term debts is divided by his
or her gross monthly income. See housing expenses-to-income ratio. The written document conveying real property. The Deed
must be executed (signed), ACKNOWLEDGED, and DELIVERED to the Grantee. Once
recorded at the Courthouse, the original piece of paper is not needed to convey
title in the future. A type of security instrument conveying title in trust
to a third party covering a particular piece of property. It is used to secure
the payment of a note. Compare, MORTGAGE. In some states, this document is
used in place of a mortgage to secure the payment of a note. A deed given by a mortgagor to a mortgagee to satisfy
a debt and avoid foreclosure. Failure to meet legal obligations in a contract, specifically,
failure to make the monthly payments on a mortgage. When a mortgage is written with a monthly payment that
is less than required to satisfy the note rate, the unpaid interest is deferred
by adding it to the loan balance. See negative amortization If the foreclosure sale does not bring sufficient proceeds
to pay the costs of sale and the note in full, the holder of the note may
obtain a judgment against the maker for the difference. Failure to make payments on time. this can lead to foreclosure.
The final, unconditional and absolute transfer of a DEED
to the Grantee so that the Grantor may not revoke it. A Deed, signed but held
by the Grantor, does not pass title. DEPARTMENT OF VETERANS AFFAIRS (VA) An independent agency of the federal government that guarantees
long-term, low-or no-down payment mortgages to eligible veterans. A sum of money given to bind a sale of real estate, or
a sum of money given to assure payment, or an advance of funds in the processing
of a loan. Also known as earnest money. Unsecured debts are extinguished and the bankruptcy is
closed. In loan origination, a discount refers to an amount withheld
from loan proceeds by a lender. In a secondary marketing sale, a discount
is the amount by which the sale price of a note is less than its face value.
In both instances, the purpose of a discount is to adjust the yield upward,
either in lieu of interest or in addition to interest. The rate of the amount
of the discount depends on money market conditions, the credit of the borrower,
and the rate or terms of the note. The amount of money you can choose to pay when you first
get a loan to reduce its overall interest rate. Discount points are usually
a small fraction of the total amount of your loan—i.e., 1, 2, or 3%—and
can lower the interest rate for the entire life of the loan, or just part
of it. See Point A spouse's interest in the property of a deceased spouse.
Money paid to make up the difference between the purchase
price and the mortgage amount. Representation of opposing parties (buyer and seller)
at the same time in the same transaction. This situation most often refers
to cases where the Realtor is the agent for both parties. A clause in the MORTGAGE that makes the loan non-assumable
by providing the noteholder may call the loan immediately due and payable
upon a sale or conveyance of an interest in the property. The FNMA/FHLMC form
provides that a lease of more than three years or a lease with an option to
buy also triggers this provision. Money given by a buyer to a seller as part of the purchase
price to bind a transaction or assure payment. A good faith deposit. The right to use the land of another for a specific limited
purpose. Examples include utility lines, driveways, and INGRESS AND EGRESS.
Easements can be temporary or permanent. Equal Credit Opportunity Act. ECOA is a federal law that
requires lenders and other creditors to make credit equally available without
discrimination based on race, color, religion, national origin, age, sex,
marital status, or receipt from public assistance programs. The estimated period of time during which a property can
be utilized profitably. For purposes of an appraisal, the physical age given to
a building based on its present condition, which may be longer or shorter
than its actual age. The power of the state to take private property for public
use upon payment of just compensation. The physical intrusion of a structure or improvement on
the land of another. Examples include a fence or driveway over the property
line. Any lien, liability or charge against a property. A writing on a negotiable instrument by which title to
a property mentioned therein is assigned and transferred. A notation added
to an instrument after execution to change or clarify its contents. In insurance,
coverage may be restricted or enlarged by endorsing a policy. In FHA loans,
a notation placed on the note by the FHS indicating that the loan is insured
under the National Housing Act. The VA home loan benefit is called entitlement. Entitlement
for a VA guaranteed home loan. This is also known as eligibility. EQUAL CREDIT OPPORTUNITY ACT (ECOA) A federal law that requires lenders and other creditors
to make credit equally available without discrimination based on race, color,
religion, national origin, age, sex, marital status or receipt of income from
public assistance programs. The difference between the fair market value and current
indebtedness, also referred to as the owner's interest. The value an owner
has in real estate over and above the obligation against the property. When
you first buy a home, your ownership equals your down payment; your mortgage
lender owns the rest. To figure out your equity, subtract the amount you owe
on your loan from your home's current market value. A form of joint ownership between an owner/occupant and
an owner/investor. The investor takes depreciation deductions for his share
of the ownership. The occupant receives a portion of the tax write-offs for
interest and taxes and a part of his monthly payment is treated as rent. The
co-owners divide the profit upon sale of the property. Compare, JOINT OWNERSHIP
AGREEMENT. Property that reverts to the state when an individual
dies without heirs and without a will. A bank account where you deposit money that will be used
to pay charges that come with your purchase of a house. An escrow account
is sort of a neutral area between you and your mortgage lender that stores
money you've deposited until you need it to pay for certain aspects of your
loan, like closing costs, taxes or insurance fees. The segregated trust account in which escrow funds are
held. The person or organization having a fiduciary responsibility
to both the buyer and seller (Or lender or borrower) to see that the terms
of the purchase/sale (or loan) are carried out. The periodic examination of escrow accounts to determine
if current monthly deposits will provide sufficient funds to pay tax, insurance,
and other bills when due. An organization established to act as an escrow agent.
A three-party agreement between the buyer, seller, and
the escrow agent specifying the rights and duties of each. The difference determined by escrow analysis, between
the escrow funds on deposit and the escrow funds required. The portion of a mortgagor's monthly payments held by
the lender or servicer to pay for taxes, hazard insurance, mortgage insurance,
lease payments, and other items as they become due. Known is impounds or reserves
in some states. Also know as Ejectment in some jurisdictions, the legal
removal of former property owners, tenants or squatters from a foreclosed
property. A contract where all the terms have been successfully
completed by the buyer and the seller. A person named in a will to carry out its terms and administer
the estate. The feminine form is Executrix. Compare, ADMINISTRATOR. Par value; the principal or nominal value of a bond, note,
mortgage, etc.. The amount of principal the issuer contracts to pay. A term that refers how much a home or property is worth,
given the current conditions of the local real estate market. The fair market
value of a home is usually used in conjunction with the amount of tax its
owner must be charged. See Federal National Mortgage Association. FARMERS HOME ADMINISTRATION (FMHA) Provides financing to farmers and other qualified borrowers
who are unable to obtain loans elsewhere. Federal Deposit Insurance Corporation. Originally established
by the Banking At of 1933 to insure the deposits of all banks entitled to
federal deposit insurance. FEDERAL HOME LOAN BANK BOARD (FHLBB) The former name for the regulatory and supervisory agency
for federally chartered savings institutions. Agency is now called the Office
of Thrift Supervision FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) A affiliate of the Federal Home loan Bank which creates
a secondary money market in conventional residential loans and in FHA and
VA loans by purchasing mortgage loans from members of the Federal Reserve
System and the Federal Home Loan Bank Systems. Also known as Freddie Mac.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) ALSO CALLED FREDDIE MAC, Is a quasi-governmental agency that specializes in purchasing
mortgage loans, primarily from savings and loans associations. Freddie Mac
is run by the United States government, with assistance from private sector
professionals. FEDERAL HOUSING ADMINISTRATION (FHA) A division of the Department of Housing and Urban Development.
Its main activity is the insuring of residential mortgage loans made by private
lenders. FHA also sets standards for underwriting mortgages. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) ALSO KNOW AS FANNIE MAE A tax-paying corporation created by Congress that purchases
and sells conventional residential mortgages as well as those insured by FHA
or guaranteed by VA to add cash to the mortgage market. This institution,
which provides funds for one in seven mortgages, makes mortgage money more
available and more affordable. The absolute total interest in real property. Compare,
LIFE ESTATE, REVERSION. A loan insured by the Federal Housing Administration open
to all qualified home purchasers. While there are limits to the size of FHA
loans ($155,250 as of 1/1/96), they are generous enough to handle moderately-priced
homes almost anywhere in the country. Requires a fee (up to 2.25 percent of the loan amount)
paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance
requires an annual fee of up to 0.5 percent of the current loan amount, paid
in monthly installments. The lower the down payment, the more years the fee
must be paid. The Federal Home Loan Mortgage Corporation provides a
secondary market for savings and loans by purchasing their conventional loans.
Also known as Freddie Mac. One who acts in a capacity of trust and confidence for
another. A relationship of trust and confidence between principal
and agent; lawyer and client; doctor and patient; etc. The amount of interest, prepaid finance charge, and certain
insurance premiums (if any) which the borrower will be expected to pay over
the life of the loan. Lenders record financing statements to evidence personal
property, such as a new furnace, siding or windows, is subject to a lien.
A real estate loan that creates a primary lien against
real property. A promise by FHA to insure a mortgage loam for a specified
property and borrower. A promise from a lender to make a mortgage loan. The mortgage interest rate will remain the same on these
mortgages throughout the term of the mortgage for the original borrower. An item of personal property attached to real property
so that it can not be removed without damage to the real property. A FIXTURE
becomes part of the real property. An interest rate that instead of being a fixed percent
is stated as an amount above or below another rate, usually the prime rate,
so that as the prime rate moves up and down the interest rate moves with it.
An insurance policy that covers damage your home may receive
due to flooding. If the home you're buying is in an area prone to flooding,
then you may be required by your home loan provider to get flood insurance.
To establish whether or not your home is in such an area, a land survey must
be done—at the expense of the person selling the home—at least fifteen
days before the date you close on the home purchase. The Federal National Mortgage Association is a secondary
mortgage institution, which is the largest single holder of home mortgages
in the United States. FNMA buys VA, FHA, and conventional mortgages from primary
lenders. Also known as Fannie Mae. Formal or informal agreement the mortgagee will forebear
(withhold) legal action permitting the mortgagor an extended period of time
to catch up on delinquent payments. A legal process by which the lender or the seller forces
a sale of a mortgaged property because the borrower has not met the terms
of the mortgage. Also known as a repossession of property. Under a DEED OF
TRUST, foreclosure is by public auction after appropriate advertisement. A
MORTGAGE may require the lender to obtain Court approval prior to sale. A commitment made by the lender to make or purchase a
loan in the future. The delivery of mortgages or mortgage-backed securities
to satisfy cash or future market transactions on an earlier date. See Federal Home Loan Mortgage Corporation A periodic auction conducted by the Federal National Mortgage
Association, at which commitments to purchase mortgages are issued. Approved
lenders specify a dollar amount and yield to FNMA. A legal requirement that says a person selling a home
must inform a potential buyer of everything they know about the home's physical
and economic condition. As related to adjustable rate mortgages, the index value
at the time of application plus the gross margin stated in the note. The Grantor warrants title against all claims. A repurchase agreement covering the time between the date
an issuer submits documents to the Government National Mortgage Association
for final pool approval and the date the new security is actually issued (usually
20 calendar days). A form stating that a relative is giving you money to
help you buy a home, and that they will not ask you to it pay back. The letter
also provides proof, by referring to bank statements and other records, that
the relative does, in fact, have enough money to cover the amount of the gift,
and that the money has been transferred to your possession. See Government National Mortgage Association. A strategy wherein loans are originated before an attempt
is made to sell them to investors. A strategy wherein investor commitments are obtained before
loans are originated against commitments. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION On September 1, 1968, Congress enacted legislation to
partition FNMA into two continuing corporation entities. GNMA has assumed
responsibility for the special assistance loan programs. Also, GNMA administers
the mortgage-backed securities programs that channel new sources of funds
into residential financing through the sale of privately issued securities
carrying the GNMAS guaranty. GRADUATED PAYMENT MORTGAGE (GPM) A type of flexible-payment mortgage where the payments
increase for a specified period of time and then level off. This type of mortgage
has negative amortization built into it. The person receiving an interest in property. Compare,
GRANTOR The person granting, selling or giving up an interest
in property. Compare, GRANTEE. Income before expenses. With regard to an adjustable rate mortgage, an amount
expressed as percentage points, stated in the note which is added to the current
index value on the rate adjustment date to establish a new note rate. The owner grants a long term lease of the land (usually
99 years) and allows the lessee to build and use the land as agreed. At the
end of the term, the land and all improvements revert to the owner. A term in a contract for the purchase or sale of mortgage-backed
securities that states the securities to be delivered will bear an agreed
upon interest rate. GUARANTEED MORTGAGE CERTIFICATE (GMC) A bond-like instrument issued by the Federal Home Loan
Mortgage Corporation that represents ownership in a large pool of residential
mortgages. Principal is returned annually and interest is paid semiannually.
A promise by one party to pay a debt or perform an obligation
contracted by another if the original party fails to pay or perform according
to a contract One appointed by the Court to administer the affairs of
a minor. A guardian ad litem is appointed to protect one's interest in a particular
legal action. See, CONSERVATOR. A form of insurance in which the insurance company protects
the insured from specified losses, such as fire, windstorm and the like. The matching of assets to liabilities of a similar nature;
the assumption of one risk is calculated to offset another. In mortgage banking,
the purchase or sale of mortgage futures contracts to offset market transactions
to be made at a later date. A gap or space left between two parcels of land and not
included in the legal description of either parcel. Similar terms are Gaps
and Gores. A loan that lets you borrow back money against the difference
of what you own on your current home loan and the home's estimated sales price.
People generally use home equity loans to get cash for large expenses like
education, home improvement, or health care. A declaration filed in the land records that an individual
is asserting his homestead exemption. That exemption allows one to protect
some assets (amount varies by state) against the claims of creditors. HOUSING EXPENSES-TO-INCOME RATIO The ratio, expressed as a percentage, which results when
a borrower's housing expenses are divided by his/her gross monthly income.
See debt-to-income ratio. The ratio, expressed as a percentage, which results when
a borrower's housing expenses are divided by his/her gross monthly income.
See debt-to-income ratio. That portion of a borrower's monthly payments held by
the lender or servicer to pay for taxes, hazard insurance, mortgage insurance,
lease payments, and other items as they become due. Also known as reserves.
A method used by an appraiser to estimate the value of
a property by calculating it's generated income. A protection against actual loss or damage as a result
of the matter mentioned. An indemnity is not an absolute guarantee that something
won't happen, it states the terms under which an actual loss will be compensated.
A published interest rate against which lenders measure
the difference between the current interest rate on an adjustable rate mortgage
and that earned by other investments (such as one- three-, and five-year U.S.
Treasury security yields, the monthly average interest rate on loans closed
by savings and loan institutions, and the monthly average costs-of-funds incurred
by savings and loans), which is then used to adjust the interest rate on an
adjustable mortgage up or down. Applied to EASEMENTS, meaning the right to go in and out
over a piece of property but not the right to park on it. With regard to an adjustable rate mortgage, the note rate
upon origination. This rate may differ from and is usually less than the fully
indexed rate. A financial institution that invests its own funds or
funds it is managing in real estate. Mutual savings banks, life insurance
companies, commercial banks, pesnion and trust funds, and savings and loan
associations are examples. Title subject to a defect or claim which a title insurance
company is willing to insure against. Compare, MARKETABLE TITLE. An Indemnity given to a lender from a title insurance
company, agreeing to be responsible if the closing agent does not follow the
lender's instructions or misappropriates the loan proceeds. Lenders usually
require an insured closing letter be on file for each settlement. A mortgage insured against loss to the mortgagee in the
event of default and a failure of the mortgaged property to satisfy the balance
owing plus costs of foreclosure. The amount of money a lender charges you to borrow money
to buy a home. The interest you pay is a percentage of your total loan, and
is paid over time. The percentage of an amount of money which is paid for
its use for a specified time. Usually expressed as an annual percentage. A construction loan made during completion of a building
or a project. A permanent loan usually replaces this loan after completion.
A method of determining investment yield over time assuming
a set of income, expense, and property value conditions. It combines the present
worth of the right to receive future income streams with the present worth
of the right to receive a particular profit when the property is sole. An estate without a Will. Compare, TESTATE A money source for a lender. An agreement between owners defining their rights, ownership,
monetary obligations and responsibilities. This could be between and investor
and an occupant or the occupants. If an investor is involved, the investor
does not take depreciation deductions and none of the occupant's payment is
deemed rent for tax purposes. Compare, EQUITY SHARING. Two or more persons own a property. Joint tenants with
the common law right of survivorship means the survivor inherits the property
without reference to the decedent's will. Creditors may sue to have the property
divided to settle claims against one of the owners. Compare, TENANTS IN COMMON,
TENANTS BY THE ENTIRETY. A judgment is a lien against all real property owned by
the judgment debtor in the county where the judgment is docketed (recorded).
A loan which is larger (more than $214,600 as of 1/1/97)
than the limits set by the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these
two agencies, they usually carry a higher interest rate. Mortgage of lesser priority than the prior recorded mortgage.
A term describing any benefit to a lender above ordinary
fixed interest payments. It may be an equity position in a property or a percentage
participation in the income stream. See CONTRACT FOR DEED. An additional charge a borrower is required to pay as
penalty for failure to pay a regular installment when due. Tenants right of possession for a specific period of time
under a lease agreement. (Common in Hawaii.) A financial institution, like a bank, that loans you money
to buy a home, and expects you to pay the money back to them in a stated period
of time, usually with interest. A letter authorizing a person or company to draw on a
bank or stating that the bank will honor their credit up to the stated amount.
A claim upon a piece of property for the payment or satisfaction
of a debt or obligation. Property is said to be encumbered by a lien and the
lien must be removed to clear title. With regard to an adjustable rate mortgage, a ceiling
the note rate cannot exceed over the life of the loan. The right to use, occupy, and own for the life of an individual.
Compare, FEE SIMPLE. An agreement by a commercial bank or other financial institution
to extend credit up to a certain amount for a certain time to a specified
borrower. Cash position based upon assets that can readily be converted
to cash. Recorded document showing a pending litigation filed in
the court. These show up on the preliminary title report and must be dealt
with when transferring ownership or refinancing. The loan application is the source of information on which
the lender bases a decision to make the loan; defines the term of the loan,
gives the name(s) of the borrower(s) , place of employment, salary, bank accounts
and credit references, and describes the real estate that is to be mortgaged.
It also stipulates the amount of the loan being applied for and the repayment
terms. The charge made for negotiating a loan, in addition to
interest; sometimes used in reference to an additional fee paid directly to
a lender either for a commitment or at the time advances are made. VA document stating that portion of a loan that is guaranteed.
The total amount of time you are given by a lender to
pay off your home loan. Loan terms vary, but are generally set at 15 or 30
years. The relationship between the amount of the mortgage loan
and the appraised value of the property expressed as a percentage. That portion of the term of a mortgage loan during which
the loan cannot be prepaid. Mortgagees attempt to devise a delinquency resolution
without having to resort to lengthy and expensive litigation (foreclosure).
Loss Mitigation methods include: Creative Forbearance Plans, Pre-Foreclosure
Short Sales, Deed-in-Lieu of Foreclosure, Deferments, Modifications, Refinances.
The age at which a person may handle his or her own affairs.
The amount a lender adds to the index on an adjustable
rate mortgage to establish the adjusted interest rate. A call for the deposit of additional funds or collateral
to offset trading losses on an outstanding position that is subject to margin.
The daily adjustment of margin accounts to reflect the
market gain or loss on the position relative to the daily settlement price.
In appraising, the market value estimate is predicated
upon actual prices paid in market transactions. It is a process of correlation
and analysis of similar recently sold properties. The highest price that a buyer would pay and the lowest
price a seller would accept on a property. Market value may be different from
the price a property could actually be sold for at a given time. Title without defects or claims so as to be readily accepted
without fair or reasonable doubt. Compare, INSURABLE TITLE. The scheduled date for your final payment on a loan. After
making the payment on a loan's maturity date, you assume complete ownership
of your home from the lender. The right of an unpaid contractor, laborer or supplier
to file a lien against property to recover the value of his work A means of describing land by directions and distances
rather than reference to a lot number. Generally used when land has not been
subdivided into lots. MIP (MORTGAGE INSURANCE PREMIUM) An insurance from FHA to the lender against incurring
a loss on account of the borrower's default. The percentage of a person's income they can comfortably
use each month to pay for where they live—with enough left over to spend
on food, clothing, and other luxuries. As the result of a series of mind-numbing
calculations, mortgage experts have determined that most folks can spend approximately
28% of their total income on housing. A voluntary lien filed |