N/O

Question 1

NEGATIVE AMORTIZATION

Answer 1

An amortization method in which the monthly payments are not large enough to pay all of the interest due on the loan. This unpaid interest is then added to the balance of the loan, causing the balance to increase rather than decrease over time.
a.k.a.: Deferred interest

Question 2

NET PRESENT VALUE TEST (NPV TEST)

Answer 2

A test that allows lenders and loan servicers to determine if it is more profitable to allow a loan modification or to proceed with foreclosure.

Question 3

NON-ASSUMPTION CLAUSE

Answer 3

A statement in a mortgage contract that forbids the assumption of the mortgage without the lender’s approval.

Question 4

NON-JUDICIAL FORECLOSURE

Answer 4

Foreclosure that occurs outside of the court system. A notice of default is mailed to the delinquent borrower, who is given a period of time in which to cure the default. If unable to cure the default, a notice of sale will be issued.

Question 5

NONPUBLIC PERSONAL INFORMATION

Answer 5

Personally-identifiable financial information that is provided by a consumer to a financial institution, results from any transaction with the consumer or any service performed for the consumer, or that is otherwise obtained by the financial institution. Examples include information that a consumer provides to obtain a loan or information from a credit report.

Question 6

NONTRADITIONAL MORTGAGE LOAN

Answer 6

Any loan other than a 30-year fixed-rate mortgage loan.

Question 7

NOTE

Answer 7

A legal document that obligates a borrower to repay a mortgage loan and specifies the terms of repayment.

Question 8

NOTE RATE

Answer 8

The stated interest rate on a mortgage or loan agreement.

Question 9

OPEN-END LOAN

Answer 9

A transaction in which the borrower and creditor anticipate repeat transactions. The creditor establishes a limit on the amount of funds that the borrower may withdraw, and the borrower has the ability to request cash advances. Borrowers may also request an increase in available credit. An example of an open-end loan would be a home equity line of credit (HELOC). See also Home Equity Line of Credit.

Question 10

ORIGINATION

Answer 10

The process of taking and processing an application for a mortgage loan.

Question 11

ORIGINATION FEE

Answer 11

The fee charged by a lender to make the loan; usually computed as a percentage of the face value of the loan.

Question 12

OWNER’S TITLE INSURANCE

Answer 12

Voluntary insurance which protects a homeowner from third-party rights affected on the property over the course of its past ownership, such as mechanic’s liens, un-released mortgages, etc.