20 Hour Course Glossary Flashcards
(375 cards)
1
Q
A Fannie Mae Loan application form designed by Fannie Mae and Freddie Mac that is used by lenders to obtain personal financial information from borrowers who apply for a mortgage loan secured by a one-to-four unit residential real estate. Also known as: Uniform Residential Loan Application (URLA)
A
1003
2
Q
allows resident and non-resident united states federal taxpayers to defer capital gains and recapture depreciation taxes when exchanging real or personal property held for a productive use in a trade, business, o r for investment for like-kind real or personal property held for productive use in a trade, business, or for investments.
A
1031 Exchange
3
Q
an IRS form used to retrieve past tax returns, W-2, and 1099 transcripts that are on file with the IRS. Used to validate income documentation for underwriting and quality control purposes
A
4506-T
4
Q
A concise statement, usually prepared for a mortgagee or purchaser of real property, summarizing the history of a piece of loan, including all conveyances, interests, liens, and encumbrances that affect title to the property.
A
Abstract of Title
5
Q
a loan-agreement provision that requires the debtor to pay off the balance sooner than the due date if some specified event occurs, such as failure to pay an installment or to maintain insurances
A
acceleration clause
6
Q
interest that is earned but not yet paid. for example: interest that accrues on real estate will be paid when the property is sold if the rental income does not cover the mortgage payments
A
accrued interest
7
Q
the original cost of an asset
A
acquisition costs
8
Q
a mortgage in which the lender can periodically adjust the mortgage interest rate in accordance with fluctuations in an external market index.
A
Adjustable Rate Mortgage ARM
9
Q
basis increased by capital improvements and decreased by depreciation deductions
A
adjusted basis
10
Q
on an ARM the time between changes in the interest rate and/or monthly payment. Typically one, three or five years depending on the index
A
Adjustment Interval
11
Q
time between the adjustment dates for an ARM
A
adjustment period
12
Q
an arrangement in which a person refers a business to a real estate service involving a federally related mortgage loan that has either an affiliate relationship with or a beneficial ownership interest. Such persons directly or indirectly refer business to that provider and may influence the selection of that provider.
A
Affiliated Business Arrangement (ABA) not a violation of section 8 of the RESPA
13
Q
an agreement that obligates someone to sell and may include a corresponding obligation for someone else to buy
A
agreement of sale
14
Q
a method of documenting a loan file by using information such as pay stubs, W-2 forms, and bank stubs instead of waiting on verification sent to third parties for confirmation of statements made on the application
A
alternative documentation
15
Q
the act or result of gradually extinguishing a debt, such as a mortgage, usually by contributing payments or principal each time a periodic interest payment is due
A
amortization
16
Q
the length of time it will take to amortize the mortgage loan expressed in months.
A
amortization term
17
Q
the actual cost of borrowing money, expressed in the form of an annualized interest rate
A
Annual percentage rate (APR)
18
Q
a fixed sum of money payable periodically, usually monthly or annually. These payments terminate upon the death of the designated beneficiary. Also, a right, often acquired under a life-insurance contract, to receive fixed payments periodically for a specified duration
A
annuity
19
Q
the determination of what constitutes a fair price for something or how its condition can be fairly stated at a point in time
A
appraisal
20
Q
a fee charged by a licensed certified appraiser to determine the fair market value
A
appraisal fee
21
Q
an impartial person who estimates the value of something such as real estate
A
appraiser
22
Q
an increase in an asset’s value (often because of inflation)
A
appreciation
23
Q
a dispute-resolution process in which the disputing parties choose one or more neutral third parties to make a final binding decision resolving the dispute. A third party may be chosen directly by mutual agreement, or indirectly by agreeing to have an arbitration organization select the third party
A
Arbitration
24
Q
describes the features of the ARM loan which must be presented to the consumer within 3 days of application
A
ARM disclosure
25
the consumer handbook to adjustable rate mortgages must be presented within 3 days of application
adjustable rate mortgage handbook (CHARM)
26
a soft gray mineral that was used as a building material in the past. it is no longer in use, but can still be found in some older homes. when asbestos dust is inhaled it can cause serious diseases of the lungs
asbestos
27
the value of an asset as determined by an appraiser for tax purposes
assessed balue
28
determination of the rate or amount of something, such as a tax or damages
assessment
29
an official who evaluates or makes assessments, especially for purposes of taxation
assessor
30
an owned item that has value
asset
31
the transfer of rights or property
assignment
32
an assignment in which a mortgage lender or borrower transfer the mortgage to a third party
assignment of mortgage
33
the acquisition of real property coupled with the assumption of personal liability for debt secured by that property
assumption (of Mortgage or trust deed)
34
the fee paid to a lender when an assumption takes place. it is usually paid by the purchaser
assumption fee
35
a statement of financial position as of the statement's date, disclosing the value of assets, liabilities, and equity
balance sheet
36
a mortgage requiring periodic payments for a specified time and a lump-sum payment of the outstanding balance at maturity
balloon mortgage
37
a final loan payment that is usually much larger than the preceding regular payments. this payment discharges the principal balance of the loan
balloon payment
38
used in computing and calculating the interest rate in real estate transaction.
Basis Point: one point is equal to 1/100th of 1% or 0.01% and is used to denote the percentage change in a financial instrument
39
a statutory procedure by which a usually insolvent debtor obtains financial relief and undergoes a judicially supervised reorganization or liquidation of the debtor's assets for the benefit of creditors
bankruptcy
40
a mortgage that covers an aggregation of property, or that secures indebtedness previously existing in various forms. for example: a mortgage covering two or more properties that pledged to support a debt
blanket mortgage
41
made in good faith without fraud or deceit
bona fide
42
someone who mortgages property
borrower (mortgagor)
43
a short-term loan that is used to cover costs until more permanent financing is arranged or to cover a portion of costs that are expected to be covered by an imminent sale
bridge loan
44
a law or regulation setting forth standards for the construction, maintenance, occupancy, use, or appearance of buildings and dwelling units
building code
45
money paid by the buyer of a house to reduce the mortgage-interest payments
buy-down
46
the account in which funds are held so they can be applied as each payment comes due for an interest rate buy-down plan
buy-down account
47
a market in which supply significantly exceeds demand, resulting in lower prices.
buyer's market
48
an option to buy something at a fixed rate price even if the market rises; the right to require another to sell
call option
49
the power to create a legal agreement under the same circumstances in which a normal person would. it is with the satisfaction of a legal qualification, such as legal age or soundness of mind, that determines one's ability to sue or be sued, enter a binding contract, etc. a party wishing to raise the issue of capacity must do so by specific negative pleading
capacity
50
the movement of cash through a business as a measure of profitability or liquidity
cash flow
51
a check drawn by a bank payable to another person. this is evidence that the payee has authorization from the bank for the amount of the money represented by the check
cashier's check
52
a banker's certificate acknowledging the receipt of money and promising to repay the depositor
certificate of deposit
53
a certificate issued by the Department of VA certifying a veteran's eligibility for a VA loan
certificate of eligibility
54
a document indicating that a building complies with a zoning and building ordinances and is ready to be occupied
certificate of occupancy
55
an appraisal issued by the Department of VA showing the property's fair market value
certificate of reasonable value (CRV)
56
a document indicating the ownership or real or personal property. this document also identifies any liens or other encumbrances
certificate of title
57
certificate given to veterans or reservists who have served 90 days of continuous active duty (including training time), which enables veterans to obtain lower down payments on certain fair housing act (FHA) loans
certificate of veteran status
58
the ownership history of a piece of land, from its first owner to the present one. for the folder to have a good title, every prior negotiation must have been proper.
chain of title
59
a modification of the original construction plans ordered by the property owner or general contractor
change orders
60
a title free from any encumbrances, burdens, or other limitations
clear title
61
affirmed that all citizens are equally protected by the law
civil rights act (1866)
62
change in the frequency of payment or interest rate of ARM
change frequency
63
the final transaction between the buyer and seller whereby the conveyances of documents is concluded and they money and property transferred
closing/settlement
64
an agent who represents the buyer in the negotiation and closing or real property transactions by handling financial calculations and transfer of documents.
closing agent
65
the expenses that must be paid, usually in a lump sum at closing, apart from the purchase price and interest, these may include taxes, title insurances, and attorney's fees
closing costs
66
the date scheduled for the conclusion fo the real estate transaction
closing date
67
a written breakdown of the costs involved in the real estate transaction, usually prepared by a lender or an escrow agent
closing statement
68
a defect or potential defect in the owner's title to a piece of land arising from some claim or encumbrance, such as a lien, an easement, or a court order.
cloud on title
69
any borrower in addition to the first borrower whose name appears on the application. the co-borrower's income, assets, liabilities, and credit history are considered in determining creditworthiness
c0-borrower
70
property that is pledged as security against a debt; the property subject to a security interest or agricultural lien
collateral
71
ratio of the total mortgage liens against the property to the lesser of either the appraised value or the sales prices
Combined Loan-to-value (CLTV)
72
the fee paid to an agent for a transaction usually as a percentage of the money received from the transaction
commission
73
a binding offer by a lender to make a loan under certain terms or conditions to a borrower. includes the amount of the mortgage, the interest rate, and repayment terms
committment
74
the realty that all tenants may use, though the landlord retains control over and responsibility for it. an area owned and used in common by the residents of a condominium, subdivision, or planned-unit development
common areas
75
intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low to moderate income neighborhoods, consistent with safe and sound banking operations
community reinvestment act (1977)
76
an abbreviation for comparable properties used in the appraisal process. properties similar to the property under consideration
comparables
77
the voluntary yielding to a demand for the sake of a settlement. In a real estate transaction, something given up or agreed to in sale negotiations. for example, the sellers may agree to help pay for closing costs
concession
78
a stipulation or prerequisite in a sales contract. if a court construes a contractual term to be a condition, then its breach will entitle the party to whom it is made to be discharged from all liabilities under the contract
condition
79
a mortgage loan under the maximum amount of loans that Fannie Mae and Freddie mac are legally allowed to buy
conforming loan
80
a single real estate unit in a multi-unit development in which a person has both separate ownership of a unit and a common interest, along with the development's other owners, in the common areas
condominium
81
a mortgage used to finance a construction project
construction mortgage
82
an independent federal agency that regulates consumer financial products and services. the Bureau protects consumers by restricting unfair and deceptive business practices, by promoting financial education, taking consumer complaints, and enforcing federal consumer-financial-protection laws. it was established by the dodd-frank act in 2010 and began operating in 2011
consumer financial protection bureau (CFPB)
83
an independent firm that collects, compiles and reports the credit activities of individuals which is made available, for a fee, to lenders or credit issuing entities investigating the creditworthiness of those applying for credit. consumers may also access reports from each of the three major reporting agencies for free as required by law
consumer reporting agency (credit bureau)
84
a clause within the sales contract stating that a certain condition must be met before a contract is legally binding, and the sale can close. Real estates contracts often have a specific date by which the contingency must be met. The buyer will often include an inspection contingency, requiring the home to be inspected for physical damages or problems before the sales contract is binding. the buyer will have the right to rescind if the contingency is not met
contingency clause
85
a mortgage, not backed by government insurance, which the borrower transfers a lien or title to the lending bank or other financial institution. these mortgages, which feature a fixed periodic payment and interest throughout the mortgage term, are typically used for home financing
conventional mortgage
86
a provision in an ARM which allows the loan to be converted from an ARM to a fixed-rate mortgage at specified times during the term. usually allowed at the end of the first adjustment period. also known as a convertible ARM
conversion clause/option
87
the voluntary transfer of property
conveyance
88
a project in which a corporation holds the title to a residential property and sells shares to individual buyers, who then receive a proprietary lease as their title
cooperative (co-op) project
89
an offeree's new offer that varies the terms of the original offer and that ordinarily rejects and terminates the original offer.
counteroffer
90
a formal agreement or promise to perform, or not perform, a particular act
covenants
91
one's ability to borrow money
credit
92
information in the files of a credit bureau regarding an individual's debts and repayments (or non-repayments)
credit history
93
life insurance on a borrower, usually in a consumer installment loan, in which the amount due is paid if the borrower dies.
credit life insurance
94
a credit bureau's report on a person's financial status, usually including the approximate amounts and locations of a person's bank accounts, charge accounts, loans, other debts, bill-paying habits, defaults, bankruptcies, foreclosures, marital status, occupation, income, and lawsuits
credit report
95
statistically derived numeric expression of a person's creditworthiness that is used by lenders to assess the likelihood that the individual will repay their debts
credit score
96
one who gives credit for money or goods
creditor
97
financially sound enough that a lender will extend credit in the belief that defaults is unlikely
creditworthy
98
liability on a claim
debt
99
the percentage of gross monthly income that goes toward paying for monthly housing expenses, alimony, child support, car payments, and other installments debts, and payments on revolving or open-ended accounts such as credit cards
Debt-to-income ratio
100
a legal document that is signed and delivered regarding the ownership of property
deed
101
Deed in which the mortgagor conveys all interest in the property to the mortgagee to satisfy a loan that is in default to avoid foreclosure proceedings.
deed-in-lieu of foreclosure
102
a deed conveying the title of real property to a trustee as security until the grantor repays a loan. this type of deed resembles a mortgage. it is an alternative to a mortgage preferred by lenders because it is faster and cheaper to foreclose
deed of trust
103
the omission or failure to perform a legal or contractual duty, especially the failure to pay a debt when due
default
104
a debt that is overdue in payment
delinquency
105
a reduction in the value of price of something, specifically, a decline in an asset's value because of use, wear, obsolescence, or age
depreciation
106
a fee equal to 1% of the loan amount that is prepaid interest on the mortgage loan. the more points, the lower the interest rate. Borrowers can typically pay from 0-4 points. it is also tax-deductible
discount point
107
a 2010 federal statuate that promotes the financial stability of the united states by improving accountability and transparency in the financial system. the statue affects nearly every federal agency with jurisdiction over finance or consumer protection, and nearly every segment of the financial-services industry
dodd-frank wall street reform & consumer protection act
108
a portion of the purchase price paid in cash (or its equivalent) at the time the sale agreement is executed
down payment
109
a mortgage provision that gives a lender the option to accelerate the debt if the borrower transfers any part of the mortgaged real estate without the lender's consent
due-on-sale clause
110
a deposit paid (often in escrow) by a prospective buyer to show a good-faith intention to complete the transaction, and ordinarily forfeited if the buyer defaults. it is generally a percentage of the purchase prices and it rarely exceeds 10%
earnest money deposit
111
an interest in land owned by another person, consisting of the right to use or control the land, or an area above or below it, for a specific limited purpose
easement
112
obsolescence that results from external economic factors, such as decreased demand or changed governmental regulations
economic obsolescence
113
the actual annual rate, which incorporates compounding when calculating interest, rather than stated rate or coupon rate
effective interest rate
114
the inherent power of a governmental entity to take privately owned property and convert it to public use, subject to reasonable compensation for the taking
eminent domain
115
a program in which an employer assists its employees in purchasing homes by helping with the down payment, closing costs, or monthly payments
employer-assisted housing
116
an interference with or intrusion onto another's property
encroachment
117
a claim or liability that is attached to property and that may lessen its value, such as lien or mortgage. an encumbrance cannot defeat the transfer of possession, but it remains after the property or right is transferred
encumbrance
118
an absolute right to a benefit granted immediately upon legal requiremet
entitlement
119
a federal statute that prohibits creditors from discriminating against credit applicants based on race, color, religion, national origin, age, sex, or marital status, with respect to any aspect of a credit transaction
equal credit opportunity act (ECOA/Regulation B)
120
a transaction that has the intent but not the form of a mortgage, and that a court of equity will treat as a mortgage
equitable mortgage
121
the amount by which an interest in property exceeds secured claims or liens. the difference between the value of the property and all encumbrances on it
equity
122
a legal document or property delivered by a promissor to a third party to be held by that third party for a given amount of time or until the occurrence of a condition at which time the third party is to hand over the document or property to the promisee
escrow
123
a bank account, generally held in the name of the depositor and an escrow agent that is returnable to the depositor or paid to a third person on the fulfillment of specified conditions
escrow account
124
the third-party depository of an escrow. an escrow holder is not a common-law agent because the holder does not act subject to the control of the parties to the escrow agreement
escrow agent
125
the instruction given to the third-party depository of an escrow
escrow agreement
126
the contract among buyer, seller, and escrow holder, setting forth the rights and responsibilities of each
escrow contract
127
the act or process of legally dispossessing a person of land or rental property
eviction
128
the right to sell a principal's products or to act as the seller's real estate agent to the exclusion of all others, including the owner. the listing agreement upon which the broker gets commission even if seller is the one who sells the house during the agreement period or for a certain period thereafter
exclusive right-to-sell listing
129
a listing giving one agent the right to be the only person, other than the owner, to sell the property during a specific period. a listing agreement upon which the broker does not get a commission if the seller sells the property themselves
exclusive agency listing
130
a person named by a testator to carry out the provisions of the testator's will
executor
131
a 2003 amendment to the federal fair credit reporting act providing free annual credit reports to consumers and establishing measures intended to help prevent identity theft. one of the act's better-known and more heavily litigated provisions prohibits merchants from printing the expiration date or more than the last five digits of the card number on a point-of-sale credit card or debit card receipts.
fair and accurate credit transactions act (FACT Act) 2003
132
a 1970 federal statute that regulates disclosure and use of consumer-credit information and ensures the right of consumers to have access to and to correct their credit reports
fair credit reporting act (FCRA/Reg V)
133
a 1968 federal statute that prohibits discrimination based on race, sex, religion, family status, or national origin in the sale or rental of a dwelling, especially in the refusal to sell or rent
fair housing act (FHA)
134
the price that a seller is willing to accept and a buyer is willing to pay on the open market and in an arm's-length transaction, the point at which supply and demand interesect
fair market value
135
The current loan limits are $484,350 single family unit home, $620,200 for a two-unit home, $749650, for a three-unit home and $931,600 for a four-unit home.
fannie mae/freddie mac loan limit
136
a privately owned and manged corporation chartered by the U.S. government that provides a secondary mortgage market for the purchase and sale of mortgages guaranteed by the Veterans administration and those insured under the FHA
federal national mortgage association (fannie Mae/FNMA)
137
a corporation that purchases both conventional and federally insured first mortgages from members of the federal reserve system and other approved banks
Federal Home loan mortgage corporation (Freddie Mac/FHLMC)
138
an agency in the U.S. Department of HUD responsible for facilitating mortgage lending by insuring mortgage loans on houses meeting the agency's standards. created in 1934
Federal Housing Administration (FHA)
139
the central bank that sets credit and monetary policy by fixing the reserves to be maintained by depository institutions, determining the discount rate charged by the Federal Reserve Banks, and regulating the amount of credit that may be extended on any security
Federal Reserve System (FRS)
140
an interest in land that, being the broadest property interest allowed by law, endures until the current holder dies without heirs
fee simple
141
a mortgage that is insured fully or partially by the federal housing administration (FHA)
FHA mortgage
142
current Federal housing Administration (FHA) upfront mortgage insurance premiums are 1.75% of the loan size.
FHA Mortgage: Insurance If an FHA-backed mortgage is used for a purchase mortgage and your loan size is $300,000 then your upfront mortgage insurance premium will be $5,250
143
a promise from a lender to make a mortgage loan
firm commitment
144
a mortgage that is senior to all other mortgages on the same property
first mortgage
145
an individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. THis includes a spouse.
first-time home buyer
146
the monthly payment due on a mortgage loan which includes both principal and interest
fixed installment
147
an ARM with an initial fixed interest rate period. after the fixed interest rate expires, the interest rate starts to adjust based on an index plus a margin. the amount by which the interest rate can adjust after the fixed period is usually subject to an interest rate cap
fixed period adjustable rate mortgage
148
a mortgage with an interest rate that remains the same over the life of the mortgage regardless of market conditions
fixed-rate mortgage (FRM
149
fee issued to the client which covers the cost of the assessment and is included in closing costs and fees
flood certification fee
150
insurance that indemnifies against a loss caused by a flood. this type of insurance is often sold privately but subsidized by the federal government
flood insurance
151
the lowest limit, such as the lowest interest rate allowed by law or the smallest permissible payment under a contract
floor
152
the act of refraining from enforcing a right, obligation, or debt. permitting one to retain a loan of money after it has become due and payable is forbearing it. forbearance, within the meaning of usury laws, is the giving of further time for the return of payment of money after the date upon which it became due
forbearance
153
a legal proceeding to terminate a mortgagor's interest in property, instituted by the lender (the mortgageee) either to gain title or to force a sale to satisfy the unpaid debt secured by the property
foreclosure
154
a destruction or deprivation of some estate or right because of the failure to perform some contractual obligation or condition.
forfeiture
155
a mortgage in which the mortgagor pays the interest as well as a portion of the principal in the periodic payment.
fully amortized mortgage
156
someone who contracts for the completion of an estate project, including purchasing all materials, hiring and paying subcontractors, and coordinating all the work
general contractor
157
a seller promises that there are no defects in the title that arose or were created while the seller owned the property or while anyone prior to the seller owned the property
general warranty deed
158
a letter to the lender from the donor stating a gift of money has been made to the buyer to purchase a specific property. the relationship of the donor and donee is stated, as well as the amount of the gift
gift letter
159
gives you an estimate of the costs of the mortgage loan. a form that lists basic information about the terms of a mortgage for which the applicant has applied.
good faith estimate
160
mortgage insured by a government entity, such as federal housing administration, VA, or Rural Housing Service (RHS)
Government Mortgage
161
A federally owned corporation in the US department of HUD responsible for guaranteeing mortgage-backed securities composed of FHA insured or VA guaranteed mortgage loans
Government National Mortgage Association (Ginnie Mae/GNMA)
162
a mortgage whose initial payments are lower than its later payments. the payments are intended to gradually increase, as the borrower's income increases over time
graduated payment mortgage (GPM)
163
an extra period of time allowed for taking some required action (such as making payment) without incurring the usual penalty for being late. Article 9 of the Uniform Commercial Code (UCC) provides for a 20-day grace period after the collateral is received.
Grace Period
164
a federal statute that repealed both parts of the glass-stegall act prohibiting combinations among banking, securities, and insurance companies, as well as related conflict-of-interest provisions for such companies' officers, directors, and employees. The act also regulates the collection, disclosure, use, and protection of consumers' nonpublic personal information
gramm-leach-bliley act 1999
165
the total amount of a person's income before taxes
gross monthly income
166
rent paid by a tenant under a long-term lease for the use of undevleoped land, usually for the construction of a commercial building
ground rent
167
a mortgage that is fully amortized over a significantly shorter term than the traditional 30-year mortgage, with increasing payments each year
growing-equity mortgage (GEM)
168
assumption of the liability of another's debts in the event of default
guarantee
169
a mortgage that is guaranteed by a third party
guarantee mortgage
170
a promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another who is liable in the first instance.
guaranty
171
insurance that protects property owners against damage caused by fires, severe storms, earthquakes, or other natural events, if the specific event is covered within the policy, the property owner will receive compensation to cover the cost of any damage incurred
Hazard Insurance
172
a line of bank credit given to a homeowner, using the homeowner's equity in the home as collateral
Home equity loan
173
a non-invasive visual examination of a residential dwelling, performed for a fee, which is designed to identify observed material defects within specific components of said dwelling
home inspection
174
this regulation provides the public loan data that can be used to assist in determining whether financial institutions are serving the housing needs of their communities, public officials in distributing public-sector investments to attract private investments to areas where it is needed, and in identifying possible discriminatory lending patterns. The regulations applies to certain financial institutions, including banks, savings associations, credit unioins, and other mortgage lending institutions
Home mortgage disclosure act of 1975 (HMDA/REG C)
175
insurance that covers both damage to the insured's residence and liability claims made against the insured, especially those arising from the insured's negligence.
homeowner's insurance
176
a warranty and insurance program that, among other coverage, insures a new home for ten years against major structural defects.
homeowner's warranty (HOW)
177
HOEPA was enacted in 1994 as an amendment to the truth-lending-act (TILA) to address abusive practices in refinances and closed end home equity loans with high interest rates or high fees
home ownership and equity protection act (HOEPA) 1994
178
the cabinet-level department of the federal government responsible for overseeing programs that are concerned with housing needs and fair-housing opportunities, and with improving and developing the country's communities.
housing and urban development (HUD)
179
a law or regulation setting standards for the construction, maintenance, occupancy, use, or appearance of buildings and dwelling units
housing code
180
a ratio comparing housing expense to before-tax income that is used by lenders to qualify borrowers for a mortgage. the housing expense measure includes mortgage principal, interest payments, property taxes, hazard insurance, mortgage insurance, and association fees. the limit for housing is generally 28% of the expense to income ratio
housing expense-to-income ratio
181
standard form which is used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate
HUD-1 settlement statement
182
it performs like a fixed and adjustable rate loan. it has a fixed rate for an initial period before turning into an ARM. these initial periods are offered in 3, 5, 7, 10 year terms
Hybrid Loan
183
portion of a monthly mortgage payment that is earmarked to pay property taxes and property insurance premiums
impound
184
property that produces income, such as rental property
income property
185
a number, usually expressed in the form of a percentage or ratio, that indicates or measures a series of observations, especially those involving a market or the economy
index
186
an interest rate charged on loans to borrowers that is calculated by taking the sum of a benchmark index interest rate and a specified margin. The indexed rate is used to calculate the interest rate on an ARM
Indexed Rate
187
a savings or brokerage account to which a person may contribute up to a specified amount of earned income each year. the contributions, along with any interest earned in the account, are not taxed until the money is withdrawn after a participant reaches the age of 59.5 (or before then, if a 10% penalty is paid)
Individual Retirement Account (IRA)
188
a general increase in prices coinciding with a fall in the real value of money
inflation
189
the interest rate that applies on the first day of the loan's term
initial interest rate
190
a request for a copy of your credit report by a lender or other business, often when you fill out a credit application and/or request more credit
inquiry
191
a term for when an individual or organization can no longer meet its financial obligations with its lender as debts become due
insolvency
192
a periodic partial payment of a debt
installment
193
a loan that is repaid by the borrower in regular installments.
installment debt
194
the charge for the privilege of borrowing money, typically expressed as an APR
interest
195
rate of interest that is added to the principal of a financial instrument between cash payments of that interest
interest accrual rate
196
arrangement that allows the seller to deposit money to an account, from which the money is released each month to reduce the mortgagor's monthly payments during the early years of the mortgage
interest rate buy down plan
197
the maximum interest rate that a financial institution can charge a borrower for an ARM or loan according to the contractual terms of the mortgage loan
Interest rate ceiling (cap)
198
date upon which the rate of interest is subject to change
interest rate change date
199
the minimum interest rate allowed according to the contractual terms of the mortgage loan
interest rate floor
200
a short-term loan secured to cover certain major expenditures, such as construction costs, until permanent financing is obtained
interim financing
201
any asset purchased to produce a profit, whether from income or resale
investment property
202
a buyer of a security or other property who seeks to profit from tit without exhausting the principal
investor
203
liability shared by two or more parties
joint liability
204
a tenancy with two or more co-owners who are not spouses on the date of acquisition and have identical interests in a property with the same right of possession.
joint tenancy
205
a lien imposed on a judgement debtor's nonexempt property
judgement lien
206
a mortgage loan in a principal amount that exceeds the dollar limits for a government guarantee
jumbo mortgage
207
a mortgage that is subordinate to another mortgage on the same property
junior mortgage
208
a tax-deferred retirement program developed for the self-employed. this plan is also known as a n H.R. 10 plan, after the house of representatives bill that established the plan
keogh plan
209
an additional fee assessed on a debt when a payment is not received by the due date
late charge
210
a person or entity from which money is borrowed
lender (mortgagee)
211
a rent-to-own purchase plan under which the buyer takes possession of the property with the first payment and takes ownership with the final payment.
lease-purchase option
212
financial obligations in a specified amount
liabilities
213
provides the insured party with protection against claims resulting from injuries and damage to people and/or property
liability insurance
214
a legal right or interest that a creditor has in another's property
lien
215
for an ARM, a limit on the amount that payments can increase or decrease over the life of the mortgage
liftetime payment cap
216
for an ARM, a limit on the amount that the interest rate can increase or decrease over the life of the mortgage
lifetime rate cap
217
an asset that is readily controvertible into cash, such as a marketable security, a note, or an account receivable
liquid asset
218
an act of lending
loan
219
a fee the buyer pays to a lender when applying for a mortgage
loan application fee
220
prepaid interest on the mortgage loan. the more points paid, the lower the interest rate. typically borrowers can pay for 0-4 points
loan discount points
221
the process by which a borrower applies for a new loan, and a lender processes that application. origination generally includes all the steps from taking a loan application up to disbursal of funds
loan origination
222
a fee charged by a lender to cover the administrative costs of making a loan
loan origination fee
223
the process by which a company collects interest, principal, and escrow payments from a borrower
loan servicing/administration
224
the ratio between the amount of a mortgage loan and the value of the property pledged as security for the mortgage, usually expressed as a percentage.
loan-to-value ratio LTV (Example: $80,000 loan on $100,000 LTV=80%)
225
a guarantee that the lender will deliver a specific combination of interst rate and points if the mortgage closes by a specified date
lock
226
a mortgage application interest rate that is established and guaranteed for a specified period
lock in rate
227
a daily compilation by the British Association of the rates that major international banks charge each other for large-volume, short-term loans of Eurodollars, with monthly maturity rates calculated out to one year. these daily rates are used as the underlying interest rate for derivative contracts in currencies other than the euro
London interbank offered rate (LIBOR)
228
a feature of some mortgages, usually fixed-rate, that helps you buy a home with a low-down payment
low-down-payment feature
229
a type of prefabricated housing that is largely assembled in factories and then transported to sites of use.
manufactured housing
230
the difference between a loan's face value and the market value of the collateral that secures the loan
margin
231
a title that a reasonable buyer would accept because it appears to lack any defect and covers the entire property that the seller has purported to sell
marketable title
232
the date when a debt falls due, such as a debt on a promissory note or bond
maturity date
233
a statutory lien that secures payment for labor or materials supplied in improving, repairing, or maintaining real or personal property.
mechanic's lien
234
a credit report that contains information from at least three credit bureaus. any duplicate entries are combined to provide a concise summary of outstanding liabilities and credit history
merged credit report
235
commercial and residential users at the same time
mixed use property
236
a process where the terms of a payment are modified outside the original terms of the contract agreed to by the lender and borrower
modification
237
an interest-bearing account at a bank or other financial institution. such an account, usually pays interest competitive with money-market funds but allows a limited number of transactions per month
money market account
238
that portion of the total monthly payment that is applied toward principal and interest. when a mortgage is negatively amortized, the monthly fixed installment does not include any amount for principal reduction and does not cover all the interest. the loan balances therefore increases instead of decreasing
monthly fixed installment
239
the sum of a homeowner's monthly mortgage principal and interest payments, hazard insurance premiums, property taxes, and homeowner's association fees, plus monthly debt service
monthly housing expense
240
a conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and that will become void upon payment or performance according to the stipulated terms
mortgage
241
an individual or organization that originates real estate loans for a fee, resells them to other parties and services the monthly payments
mortgage banker
242
an individual or organization that markets mortgage loans and brings lenders and borrowers together. a mortgage broker does not originate or service mortgage loans
mortgage broker
243
enacted to ensure that consumers receive good faith estimates of Truth-In-lending-act (TILA) disclosures at the beginning of the application process and to provide sufficient time for consumers to review the disclosures before consummation can take place
mortgage disclosure improvement act (MDIA) 2008
244
an agreement to pay off a mortgage if the insured dies or becomes disabled
mortgage insurance (MI)
245
an insurance policy used in fiar housing act (FHA loans if your down payment is less than 20% the FHA assess either an "upfront" MIP at the time of closing, or an annual MIP that is calculated every year and paid in 12 installments
mortgage insurance premium (MIP)
246
a form of insurance specifically designed to protect a repayment mortgage. if the policyholder were to die while the mortgage life insurance was in force, the policy would pay out a capital sum that will be just sufficient to repay the outstanding mortgage
Mortgage life insurance
247
a loan secured by a mortgage or deed of trust on real property
mortgage loan
248
a note evidencing a loan for which real property has been offered as security
mortgage note
249
the rate of interest charged by a mortgage lender
mortgage rate
250
a residential mortgage on a dwelling that is designed to house more than four families, such as an apartment complex
multifamily mortgage
251
a listing stating the agent will allow other agents to try to sell the property. under this agreement, the original agent gives the selling agent a percentage of the commission or some other stipulated amount
Multiple listing service (MLS)
252
an investment company that invests its shareholders' money in a diversified selection of securities
mutual funds
253
when a mortgage allows the borrower to make minimum payments that are less than the entire amount of interest owed, the unpaid interest is deferred by adding it to the loan balance. also known as a deferred interest
negative amortization
254
the amount of after-tax income produced by a specific asset or group of assets, calculated by subtracting federal income tax from gross income
net effective income
255
take home pay after taxes and payroll deductions
net monthly income
256
a measure of one's wealth, usually calculated as the excess of total assets over total liabilities
net worth
257
a statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender
non-assumption clause
258
a loan that fails to meet bank criteria for funding. reasons include the loan amount is higher than the conforming loan limit, lack of sufficient credit, the unorthodox nature of the use of funds, or the collateral backing it.
non-conforming loan
259
a debt, such as one for delinquent taxes, that is not released through bankruptcy
non-discharge debt
260
a type of asset that is not easily turned into cash. real estate is considered a non-liquid asset
non-liquid asset
261
a written promise by one party to pay money to another party
note
262
a notification given to a borrower stating that they have not made their payments by the predetermined deadline, or is otherwise in default on the mortgage contract
notice of default (NOD)
263
a price given at which one is ready to buy or sell to another party
offer
264
a US federal agency that serves to charter, regulate, and supervise the national banks and federal branches and agencies of foreign banks. headed by the comptroller of the currency
office of comptroller currency
265
an office in the US department of the treasury responsible for regulating and examining thrift institution ensure that they are financially sound
office of thrift supervision (OTS)
266
a loan with a fixed rate for the first year that has a rate that changes yearly for the remaining life of the loan.
one year adjustment rate mortgage
267
an occasion when real estate offered for sale can be viewed by prospective buyers without an appointment
open house
268
an agreement between a buyer and seller that gives the purchaser of the option the right to buy or sell a particular asset at a later date at an agreed upon price
option contract
269
the amount the borrower owes the lender on the origination date of the loan
original principal balance
270
a fee charged by a lender for preparing and processing a loan
origination fee
271
a loan provided by the seller of a property or business to the purchaser
owner financing
272
a form of housing tenure where a person owns the home in which he or she lives
owner-occupied property
273
a payment for less than the full amount claimed by the creditor
partial payment
274
a clause found in an ARM contract that limits the possible increase in loan's interest rate to a certain amount each year. the cap is usually defined in terms of rate, but the dollar amount of the principal and interest payment can be capped as well
payment cap
275
the date when a new monthly payment amount takes effect
payment change date
276
the prorated amount of interest due for remaining days in a month. calculated and paid at the time the loan closes
per diem interest
277
a restriction on how much payments can increase or decrease over a single adjustment period
periodic payment cap
278
a long-term mortgage loan. in real estate projects, it is obtained after completion of construction, usually to repay the short-term construction loan
permanent loan
279
any movable or intangible thing that is subject to ownership and not classified as really property
personal property
280
a land area zoned for a single-community subdivision with a flexible restrictions on residential, commercial, and public uses.
planned unit development (PUD)
281
an instrument granting someone authority to ac as agent or attorney-in-fact for the grantor. an ordinary power of attorney is revocable and automatically terminates upon the death or incapacity of the principal
power of attorney
282
a report prepared prior to issuing a policy of title insurance that shows the ownership of a specific parcel of land, together with the liens and encumbrances thereon which will not be covered under a subsequent title insurance policy
preliminary title report
283
an evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend
pre-approval
284
a type of asset that arises on a balance sheet because a business made payment for goods and services to be recieved
prepaid expenses
285
the satisfaction of a debt or installment payment before its official due date. a prepayment can be for the entire balance or for any upcoming payment that is paid in advance of the date for which the borrower is contractually obligated to pay it
prepayment
286
a clause in a mortgage contract that says if the mortgage is prepaid within a certain time, a penalty will be assessed. the penalty is usually based on percentage of the remaining mortgage balance or a certain number of months' worth of interst
prepayment penalty
287
an initial evaluation of the credit worthiness of a potential borrower that is used to determine the estimated amount that the person can afford to borrow
pre-qualification
288
unscrupulous actions carried out by a lender to entice, induce, and/or assist a borrower in taking a mortgage that carries high fees, a high interest rate, strips the borrower of equity, or places the borrower in a lower credit rated loan to the benefit of the lender
predatory lending
289
the national market in which mortgages are originated
primary mortgage market
290
the interest rate that a commercial bank holds out as its lowest rate for short-term loans to its most creditworthy borrowers (usually large corporations). This rate, which can vary slightly from bank to bank, often dictates other interest rates for various personal and commercial loans
prime rate
291
the amount of a debt, investment, or other fund, not including interest, earnings, or profits
principal
292
the components of a monthly mortgage payment
principal, interest, taxes, and insurance (PITI)
293
a financial statement that summarizes the revenues, costs, and expenses that a business incurred during a given period
profit and loss statement
294
a promissory note, or "promise to pay", is anote that details money borrowed from a lender and the repayment structure. the document holds the borrower accountable for paying back the money (plus interest, if any). an agreement to borrow money with the condition that if it is not paid back to the lender then the security, which is usually an asset or property, is turned over to the lender
promissory note
295
a tax levied on the owner of the property. the tax is based on the property's value. local governments often impose property taxes to finance school districts, municipal projects, etc.
property tax
296
a sales contract in which ownership of property is transferred from a seller to a buyer for a fixed sum at a fixed date
purchase/sales agreement
297
a mortgage that a buyer gives the seller when the property is conveyed to secure the unpaid balance of the purchase price
purchase money mortgage (PMM)
298
criteria used to determine eligibility for a loan
qualifying guidelines
299
the interest rate used in calculating the initial mortgage payment in qualifying a borrower
qualifying rate
300
ratio of debt to income and housing expense to income that is used by mortgage lenders to determine a borrower's credit-worthiness for certain loan amounts
qualifying ratios
301
a process used to make that companies participating in the issuance of mortgages comply with all state and national laws related to those mortgages
quality control
302
a deed that serves to transfer the title but offers no promises about the quality of that title
quitclaim deed
303
a naturally occurring radioactive gas found in some buildings. in sufficient concentrations, may cause health problems
Radon
304
a sales contract in which an offer has been made and accepted, and the contract has been signed and initialed by all parties involved
ratified sales contract
305
a real estate agent who is a member of the national association of realtors
realtor
306
one how is engaged on behalf of another (usually on a commission) to negotiate contracts relating to property in which he or she has no custodial or proprietary interest
real estate agent/broker
307
a federal statue that requires lenders to provide home buyers with information about known or estimated settlement costs
real estate settlement procedures act (RESPA/reg X)
308
land and anything growing on, attached to, or erected on it. real property can be either coporeal (soil and buildings) or incorporeal (easements)
real property
309
the act or an instance of improving the value of economically useless land by physically changing the land, such as irrigating a desert
reclamation
310
the restoration or return of something to a former owner or holder
reconveyance
311
the government official who keeps the public records affecting real property, such as deeds, liens, and judgments
recorder
312
put in place to require the prior purchaser to record their purchase so that a subsequent purchaser can search for prior purchases to determine whether they should buy the land
recording
313
when a business or person revises a payment schedule for repaying debt
refinance
314
a mortgage that covers the costs of rehabilitating a property. some rehabilitation mortgages allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan
rehabilitation mortgage
315
the original term of the loan after the number of payments made has been subtracted
remaining term
316
a contractual provision by which an owner of realty enters an agreement with another allowing the latter to rent the property upon signing the lease with the option to buy the property at the end of the lease term, usually for a reduced rate
rent with option to buy
317
an arrangement by which a borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments
repayment plan
318
the cost of a substitute asset that is equivalent to an asset currently held. the new asset has the same utility but may or may not be identical to the one replaced
replacement cost
319
a party's unilateral unmaking of a contract for a legally sufficient reason, such as the other party's material breach, or a judgement rescinding the contract
recission
320
a limitation placed on the use or enjoyment of property
restriction
321
a mortgage in which the lender disburses money over a long period to provide regular income to the borrower, and in which the loan is repaid in a lump sum when the borrower dies or when the property is sold
reverse annuity mortgage (RAM)
322
open-ended accounts, usually with variable interest rates, pre-determined credit limits and payments that are calculated as a percentage of the unpaid balance
revolving debt
323
a potential buyer's contractual right to meet the terms of a third party's higher offer. for example, if Beth has a right of first refusal on the purchase of Sam's house, and if Terry offers to buy the house for $300,000, then beth can match this offer and prevent terry from buying it
right of first refusal
324
an agency in the US department of agriculture responsible for making or guaranteeing loans
Rural housing Service (RHS)
325
the sale of property on the understanding, or with the express option, that the seller may lease the property from the buyer, usually immediately after the sale
sale-leaseback
326
the complete payment of a mortgage. Also, can refer to a discharge signed by the mortgagee or mortgage holder indicating that the property subject to the mortgage is released or that the mortgage debt has been paid and the mortgage conditions have been fully satisfied
satisfaction of mortgage
327
a mortgage that is junior to a first mortgage on the same property, but that is senior to any later mortgage
second mortgage
328
the national market in which existing mortgages are bought and sold, usually on a package basis.
secondary mortgage market
329
insurance enables homebuyers ad homeowners to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home
section 203(k) loans
330
designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan originators. mortgage loan originators who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered. all other mortgage loan originators are licensed by individual states
secure and fair enforcement act (SAFE act) 2008
331
a loan that is secured by property. also known as collateral loan
secured loan
332
collateral given or pledged to guarantee the fulfillment of an obligation, especially that a creditor will be repaid (usually with interest) any money or credit extended to a debtor
security
333
when a seller acts as the bank or lender and carries a second mortgage on the subject property, which the buyer pays down each month
seller carry back
334
when a seller wants to close a sale of real estate but the buyer is not yet able to fully fund the purchase, the parties can close the sale with the seller taking from the buyer a purchase money note and mortgage in lieu of an all-cash payment
seller take-back
335
offers protection for service members, and sometimes their family members. examples include: reduced interest rates, postponement of foreclosures, deferred income taxes, eviction prevention, protection against default judgements, postponed civil court matters, protection for small-business owners, etc
service members civil relief act
336
the administration of a mortgage loan, including the collection of payments, release liens, and payment of property insurance and taxes. servicing is usually performed by the lender or the lender's agent for a fee
servicing
337
the interest paid on the principal only and not on accumulated interest
simple interest
338
an individual, freestanding, unattached dwelling unit, typically build on a lot larger than the structure itself.
single-family properties
339
a loan in which its entirety, or a portion of it, can be forgiven or deferred for a period by the lender when certain conditions are met
soft second loan
340
seller promises that there were no defects in title that arose or were created while seller owner the property. this does not make promises about defects arising while someone prior to the seller owner the property
special warranty deed
341
the method used to determine the monthly payment required to repay the remaining balance of a mortgage, in substantially equal installments over the remaining term of the mortgage, at the current interest rate.
standard payment calculation
342
the requirement that certain kinds of contracts be memorialized in writing and signed by the party to be charged, with sufficient content to evidence the contract.
Statute of Frauds
343
A loan which allows for gradual interest rate increase during the first few years of the loan
Step Rate Mortgage
344
Debt that ranks behind the first secured lender, and means that the secured lenders will be paid back before subordinate debt holders
Subordinate Financing
345
An alternative financing option for low and moderate income households
Subsidized Second Mortgage
346
The measuring of a tract of land and its boundaries and contents. Also refers to the map indicating the results of such measurements
Survey
347
Financial equity created on a property by the owner's labor in improving the property
Sweat Equity
348
lien on a property, and all rights to that property, imposed by the federal government for unpaid federal taxes. Also refers to a lien on real estate in favor of a state or local government that may be foreclosed for nonpayment of taxes. Most states have adopted the Uniform Federal Tax Lien Registration Act
Tax Lien
349
a sale of property due to nonpayment of taxes
tax sale
350
A contractual stipulation. May also refer to a set period of time
Term
351
The examination of a structure by a qualified person to determine the possible existence of an infestation of termites
Termite Inspection
352
Origination from a third party where the person is involved in the process of making mortgages and gathering borrower information for a mortgage application, which is then transferred or sold to the actual mortgage lender
Third-Party Origination
353
The union of all elements (ownership, possession, and custody) constituting the legal right to control and dispose of property. The legal link between a person who owns property and the property itself
Title
354
A company that examines real estate titles for any encumbrances, claims, or other flaws, and issues title insurance
Title Company
355
An agreement to indemnify against loss arising from a defect in the title to real property, usually issued to the buyer of the property by the title company that conducted the search.
Title Insurance
356
An examination of the public records to determine whether any defects or encumbrances exist in a given property's chain of title. A title search is typically conducted by a title company or a real estate lawyer at a prospective buyer's or mortgagee's request
Title Search
357
Equity that results from a buyer giving an existing property as trade for all or part of the down payment on the subject property.
Trade Equity
358
Imposed on the transfer of property, especially by will, inheritance, or gift.
Transfer Tax
359
An index based on the auctions of US treasury bills or on the US treasury's daily yield curve, which is used in determining mortgage rates for mortgages with an unfixed component
Treasury index
360
A measure of the total costs associated with managing and operating an investment fund. These costs consist primarily of management fees and additional expenses such as trading fees, legal fees, auditor fees, and other operational expenses. The total cost of the fund is divided by the fund's total assets to arrive at a percentage amount.
Total Expense Ratio
361
Someone who stands in as fiduciary or confidential relation to another, especially one who, having legal title to property, holds it in trust for the benefit of another and owes a fiduciary duty to that beneficiary
Trustee
362
A 1968 federal statute enacted as the first subchapter of the Consumer Credit Protection Act to safeguard consumers in the use of credit by (1) requiring full disclosure of the terms of loan agreements, including finance charges, (2) restricting the garnishment of wages, and (3) regulating the use of credit cards
Truth-in-Lending Act (TILA/Reg Z)
363
The act of assuming a risk by insuring it
Underwriting
364
A loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral. It is obtained without the use of property as collateral for the loan. Borrower generally must have high credit ratings to be approved for an unsecured loan.
Unsecured Loan
365
The charging of an illegal rate of interest as a condition to lending money
Usury
366
A veteran's mortgage that is guaranteed by the VA
Veterans Administration (VA) Mortgage
367
A statement of a borrower's account history and status, given by banks
Verification of Deposit (VOD)
368
A process used by banks and mortgages lenders to review the employment history of a borrower, to determine the borrower's job stability and cross-reference income history with that stated on the Uniform Residential Loan Application
Verification of Employment (VOE)
369
Documentation of a borrower's mortgage payment history that is often required when applying for a loan. IN mortgage lending, the VOM is also used to verify the existing balance and monthly payments and to check for any late payments on the account.
Verification of Mortgage (VOM)
370
A form used in mortgage lending to verify monthly rents paid and late payments, if any.
Verification of Rent (VOR)
371
A clause in a sales contract that allows the buyer to examine the property being purchased at a specified time immediately before the closing.
Walk-Through
372
A charge to a borrower when a mortgage banker or other small lender must borrower money on a short-term basis to loan money on mortgage loans. If the interest rate on the short-term loan is too large to make money on the spread, the mortgage broker will charge a warehouse fee to cover its costs until it can assemble enough loans in its virtual warehouse and sell them to someone else making enough money to pay off its short-term loans.
Warehouse Fee
373
A covenant by which the grantor in a deed promises to secure to the grantee the estate conveyed in the deed, and pledges to compensate the grantee if the grantee is evicted by someone having better title. The covenant is binding on the grantor's heirs.
Warranty
374
A second mortgage issued when a lender assumes the payments on the borrower's low-interest first mortgage (usually issued through a different lender) and lends additional funds. Such a mortgage covers both the outstanding balance of the first morgage and the additional funds loaned
Wraparound Mortgage
375
A city ordinance that regulates the use to which land within various parts of the city may be put. It allocates uses to the various districts of a municipality, by allocating residences to certain parts and businesses to other parts. A comprehensive zoning ordinance usu. regulates the height of buildings and the proportion of the lot area that must be kept free from buildings.
Zoning Ordinance
