Definitions

Question 1

Allows an employee to make contributions from his income into a retirement plan.

Answer 1

403(b) Tax Sheltered Annuity

Question 2

A qualified employer-established plan to which employees may make salary deferral (salary reduction) contributions on a post-tax and/or pre-tax basis.

Answer 2

401 (k) Plan

Question 3

A loan offered to low risk borrowers who show a strong likelihood of repayment due to high credit scores, low loan-to-value, and available assets.

Answer 3

“A” Paper (Prime Loan)

Question 4

A person who prepares and certifies the history of ownership of a property (known as title). They are typically an employee of a title company, or an attorney, and perform the title search.

Answer 4

Abstractor(Abstractor of Title)

Question 5

A common provision of a
mortgage or note providing the holder with the right to demand that the full outstanding balance is immediately due if the borrower defaults.

Answer 5

Acceleration Clause

Question 6

To get larger

Answer 6

Accrue (accrual)

Question 7

Something that is done. A notice of action taken may tell the consumer whether or not they have been approved or denied for a mortgage loan — the action in this case would be approval or denial.

Answer 7

Action

Question 8

A method of payment where a payment is first applied to the accumulated interest and any remainder is subtracted from, or any deficiency (due to default) is added to, the unpaid balance of the loan.

Answer 8

Actuarial Method

Question 9

A thing that is added. This could be a supplement to a document such as a purchase agreement or appraisal

Answer 9

Addendum

Question 10

A mortgage loan that does not have a fixed interest rate. During the life of the loan the interest rate will change based on the index rate. Also referred to as “Adjustable Mortgage Loans (AMLs)” or “Variable-Rate Mortgages (VRMs).”

Answer 10

Adjustable Rate Mortgage (ARM)

Question 11

The date that an Adjustable-rate mortgage is set to adjust.

Answer 11

Adjustment Date

Question 12

Any or all tasks performed in relation to the receipt, collection, and distribution of any information needed for the processing or underwriting of a loan.

Answer 12

Administrative or clerical tasks

Question 13

A decision by a lender to deny the extension of credit to a consumer, terminate an existing account, or make any unfavorable change

Answer 13

Adverse Action

Question 14

A legal statement or document that affirms something. This is typically seen in the phrase, lid “affidavit of affixture,” which denotes something is or isn’t part of real property.

Answer 14

Affidavit

Question 15

A type of inter-company relationship in which one of the companies owns less than a majority of the other company’s stock. Affiliation can also describe a type of inter-company relationship in which at least two different companies are subsidiaries of a larger company.

Answer 15

Affiliate

Question 16

Settlement service providers are allowed to refer business to each other as long as they do not charge a fee or receive anything of value in exchange. There is one exception to this rule the existence of an affiliated business arrangement where the referring party receives a return of ownership interest in the other company based on referrals. In such an arrangement, the referring party must provide a disclosure concerning the business arrangement to the borrower at the time the referral is made.

Answer 16

Affiliated Business Arrangement:

Question 17

The collective amount, sum, or mass arrived at by adding or putting together parts of a whole.

Answer 17

Aggregate

Question 18

When two or more parties acknowledge to offer things of value in exchange for referrals.

Answer 18

Agreement or Understanding

Question 19

This is a loan on a property that does not exist. In this scheme, loan documents are completed with real or fabricated information for an applicant with no intentions for repayment. This scheme is typically done by a financial institution insider or external parties such as loan originators, appraisers,
and title companies. It is also known as a Fictitious Loan.

Answer 19

Air Loan

Question 20

A false or assumed identity.

Answer 20

Alias

Question 21

A clause that protects the lender by preventing the borrower from assigning a debt to another person without the lender’s approval.

Answer 21

Alienation Clause

Question 22

Payments made to a spouse or former spouse under a separation or divorce agreement.

Answer 22

Alimony

Question 23

A correction or alteration proposed or affected by this process.

Answer 23

Amendment

Question 24

Periodic payments on a loan requiring payment of enough principal and interest to ensure complete repayment of the loan by the end of the loan term. As payments continue more money is allocated to the principal and less to interest and the total owed on the loan decreases.

Answer 24

Amortize (amortization)

Question 25

Providing necessary support to the primary activities or operation of an organization, institution, industry or system.

Answer 25

Ancillary

Question 26

This is a measure of the cost of credit, including interest and other charges, expressed as a yearly rate.

Answer 26

Annual Percentage Rate

Question 27

The average of annual percentaage rates offered to highly qualified mortgage borrowers. APOR is used to help determine market rate thresholds for high cost and higher priced mortgage loans under TILA (Regulation Z), as well as for compliance with HMDA (Regulation C).

Answer 27

Average Prime Offer Rate

Question 28

This is an investment, typically used as a start retirement to receive account. payments. After investing for a while, are usually given monthly or yearly and are a fixed amount. It is a form of passive income.

Answer 28

Annuity

Question 29

Fee charged by an appraiser to estimate the market value of a property.

Answer 29

Appraisal Fee

Question 30

Estimation of the current market value of a property.

Answer 30

Appraised Value

Question 31

A qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

Answer 31

Appraiser

Question 32

An increase in property value or any other assets.

Answer 32

Appreciate

Question 33

This means no repairs will be performed as a condition of the sale. Most homes are sold as is.

Answer 33

As-is Condition

Question 34

The price a home is listed on the market for by the seller.

Answer 34

Asking Price

Question 35

To evaluate something. In the mortgage industry, to evaluate a property, or a claim made against a property.

Answer 35

Assess

Question 36

The method of placing value on an asset for taxation or insurance purposes.

Answer 36

Assessments

Question 37

Any item with measurable value.

Answer 37

Assets

Question 38

A legal process that helps to settle disputes among different parties

Answer 38

Arbitrate (arbitration)

Question 39

The first step in the official loan approval process. This form is used to record important information about the potential borrower necessary to the underwriting process.

Answer 39

Application

Question 40

The act of a qualified appraiser giving an estimate of a property's fair market value based on recent sales of comparable homes in the area and the features of property. An appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Answer 40

appraisal

Question 41

A mortgage is assumable when a home is sold and the seller may be able to transfer the mortgage to the new buyer.

Answer 41

Assumable Mortgage

Question 42

A debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrowers the funds for a defined period of time at a variable or fixed interest rate.

Answer 42

Bond

Question 43

A clause in the mortgage contract that allows the mortgage to be assumed by another. It contains the conditions on how assumption can take place.

Answer 43

Assumption clause

Question 44

A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms. Also known as a "debtor" or a "mortgagor."

Answer 44

Borrower

Question 45

A ratio that compares the total of all monthly debt payments (mortgage, real estate taxes and insurance, car loans, and other consumer loans) to gross monthly income.

Answer 45

Back-End Ratio

Question 46

Advertising goods which are an apparent bargain with the intention of substituting it for an inferior option.

Answer 46

Bait and Switch

Question 47

The amount left over.

Answer 47

Balance

Question 48

A mortgage that typically offers low rates for an initial period of time, usually 5, 7, or 10 years. After that time period, the balance is due or the loan is refinanced by the borrower. These are similar to ARMs but are riskier, since the future loan rate may be higher.

Answer 48

Balloon Loan or Balloon Mortgage

Question 49

The final lump sum payment due at the end of a balloon mortgage.

Answer 49

Balloon Payment

Question 50

A detailed record of all income earned and all expenses paid for during a specific period of time.

Answer 50

Budget

Question 51

Includes all calendar days, except Sundays and legal holidays.

Answer 51

Business Day

Question 52

A mortgage loan that is paid in full upon the lender's demand and many times called a demand loan. It often has no set date of maturity.

Answer 52

Call Loan

Question 53

A limit, such as one placed on an ARM, on how much a monthly payment or interest rate can increase or decrease, either at each adjustment period or during the life of a mortgage. Payment caps do not limit the amount of interest the lender is earning, so they may cause negative amortization.

Answer 53

Cap

Question 54

The ability to make mortgage payments on time, depending on your assets and amount of monthly income after paying housing costs, debts, and other obligations.

Answer 54

Capacity

Question 55

An individual's savings, investments, or assets. Also known as "cash reserves."

Answer 55

Capital

Question 56

An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold.

Answer 56

Capital Gain

Question 57

A short-term loan that helps to secure financing for transitional periods. It is normally used until a long-term loan can be processed, for example,

Answer 57

Bridge Loan

Question 58

Quick loan processing completed through a computer-based system that evaluates past credit history to determine if a loan should be approved. This system removes the possibility of personal bias against the buyer; though, it is subject to later verification.

Answer 58

Automated Underwriting

Question 59

A federal law that states a person's assets are turned over to a trustee and used to pay off outstanding debts. This usually occurs when someone owes more than they are able to repay

Answer 59

Bankrupt (bankruptcy)

Question 60

Action done with all honesty. It literally means, "in good faith."

Answer 60

Bona Fide

Question 61

When a real estate agent or broker does a valuation on a home using a similar process to an appraisal. It is many times used as a valuation tool to see if PMI can be removed

Answer 61

Broker’s price opinion

Question 62

An additional person who's listed on the title and also responsible for loan repayment.

Answer 62

Co-Borrower

Question 63

Occurs when a borrower refinance a mortgage at a higher principle amount in order to get additional money. Usually an alternative to taking out a home equity loan

Answer 63

Cash out refinance

Question 64

An order given by a government administrative agency to stop illegal or suspicious activities

Answer 64

Cease and desist

Question 65

A savings account with a fixed maturity date

Answer 65

Certificate of deposit

Question 66

A reproduction that is confirmed to be authentic

Answer 66

Certified copy

Question 67

A list of those who have had ownership in the property

Answer 67

Chain of title

Question 68

An act of god, war, or another emergency

Answer 68

Changed circumstances

Question 69

A bankruptcy that requires assets to be liquidated in exchange for the cancellation of debt

Answer 69

Chapter 7 bankruptcy

Question 70

The portion of principle and interest due on a loan that is written off when deemed uncollected

Answer 70

Charge off

Question 71

Required by TILA used to educate consumers on the risks and advantages associated with adjustable rate mortgages

Answer 71

CHARM booklet ( consumer handbook on adjustable rate mortgages)

Question 72

A deposit account held at a financial institution that allows withdrawals and deposits

Answer 72

Checking account

Question 73

Monetary payments from one ex spouse to another after divorce proceedings have been finalized to the one who has custody of the child

Answer 73

Child support

Question 74

Financial obligation is imposed by a government authority for breaking a law or rule

Answer 74

Civil penalty

Question 75

A requirements or stipulation in a legal agreement

Answer 75

Clause

Question 76

A property title that has no defects or encumbrances

Answer 76

Clear title

Question 77

A type of loan in which the terms and maturity date of the mortgage loan cannot change

Answer 77

Closed end loan

Question 78

The day all documents have been signed, recorded and all monies have been accounted for. also known as a settlement

Answer 78

Closing

Question 79

A third party that performs loan closings on behalf of a lender

Answer 79

Closing agent

Question 80

Fees for a final property transfer not included in the price of the property like origination fees, discount points, appraisal fees survey, title insurance

Answer 80

Closing costs

Question 81

Gives a consumer an explanation of all costs associated with their loan. It must be delivered 3 business days before consummation for all forwards closed end mortgages

Answer 81

Closing disclosure

Question 82

A person who signed a credit application with another person

Answer 82

Co-signer

Question 83

Security in the form of money or property pledged for the payment of a loan

Answer 83

Collateral

Question 84

A loan that relies on the sale or refinance of a property as collateral. This type of underwriting is deemed unfair or abusive

Answer 84

Collateral dependent

Question 85

Receive monies that are due

Answer 85

Collect

Question 86

State where property is considered to be owned jointly by both spouses and divided upon divorce

Answer 86

Community property state

Question 87

Factors such as equity, assets, credit score etc that reflect a borrower’s ability to repay a loan from sources other than monthly income

Answer 87

Compensation factors

Question 88

The ability of an asset to generate earnings which are then reinvested in order to generate their own earnings

Answer 88

Compound

Question 89

A form of ownership in which individuals purchase and own a unit of housing in a multi unit complex

Answer 89

Condominium

Question 90

A loan that does not conform to Fannie Mae and Freddie Mac’s loan limits and guidelines

Answer 90

Conforming loan

Question 91

A short term open end loan that finances the cost of building a new home

Answer 91

Construction loan

Question 92

An individual who has or will obtain financial services from a financial institution for any reason

Answer 92

Consumer

Question 93

A loan extended to a natural person for personal or family use

Answer 93

Consumer credit

Question 94

Time that a consumer becomes contractually obligated on a credit transaction

Answer 94

Consummation

Question 95

Usually a part of a legal agreement that says for “a” to happen”b” must be in place

Answer 95

Contingency

Question 96

A written or spoken agreement between two or more parties

Answer 96

Contract

Question 97

A private sector loan not guaranteed or insured but the government

Answer 97

Conventional loan

Question 98

The act of transferring any ownership interest in real property from one party to another

Answer 98

Convert

Question 99

Residents purchase stock in a cooperative corporation that owns a structure and is then entitled to live in a specific unit of the structure

Answer 99

Cooperative (co-op)

Question 100

Occurs following a violation ofECOA when the creditor must identify the practices leading up to the violation

Answer 100

Corrective action

Question 101

An index is used to determine interest rate changes for some arms

Answer 101

Cost of funds index (COFI)

Question 102

Formal advisor

Answer 102

Counsel

Question 103

A limitation to the use of one’s property also referred to as a deed restriction (example restriction of height of a fence in a neighborhood

Answer 103

Covenants

Question 104

An agreement that a person will borrow money and pay it back to lender

Answer 104

Credit

Question 105

An agency that provides financial information and payment history to lenders about potential borrowers. Also known as a credit depository

Answer 105

Credit bureau

Question 106

A card issued by a financial company given the holder an option to borrow funds

Answer 106

Credit card

Question 107

Education on how to improve bad credit and how to avoid having more debt than can be repaid

Answer 107

Credit counseling

Question 108

Describes the possibility of a default on a loan by a borrower

Answer 108

Credit risk

Question 109

Calculated by using a report to determine the likelihood of a loan being repaid on time

Answer 109

Credit score

Question 110

A federally regulated non profit financial institution owned by the members of people who use their services

Answer 110

Credit union

Question 111

An individual or entity that regularly extend closed-end or open-end credit. Also known as a credit grantor

Answer 111

Creditor

Question 112

The method in which a lender measures the ability of a person to qualify and repay a loan

Answer 112

Creditworthiness

Question 113

A consumer who has a continuing relationship with a financial institution

Answer 113

Customer

Question 114

An amount of money borrowed by one party to another

Answer 114

Debt

Question 115

A comparison or ratio of housing and non housing expenses to gross income

Answer 115

Debt to income ratio

Question 116

The cash payment made by the insured to cover a portion of a damage or a loss. Sometimes called an out of pocket expense

Answer 116

Deductible

Question 117

A legal document that transfers ownership of property from one person to another or grants, the deed is recorded on public records with the property description

Answer 117

Deed

Question 118

A document used in place of a mortgage to secure the payment of a note

Answer 118

Deed of trust

Question 119

A deed given to the lender to avoid a foreclosure and fulfill the obligation to repay the debt

Answer 119

Deed-in-lieu

Question 120

The inability to Maltese timely monthly mortgage payments or otherwise comply with mortgage terms

Answer 120

Default

Question 121

A clause in the mortgage that allows for reconvene once the mortgage debt is paid in full

Answer 121

Defeasance clause

Question 122

Failure of a borrower to make any payment on time under a loan agreement

Answer 122

Delinquency

Question 123

Any bank, credit Union or savings and loan association covered under the federal deposit insurance act

Answer 123

Depository institutions

Question 124

A decrease in the value of price of a property and its contents due to changes in the market condition

Answer 124

Depreciation

Question 125

The automated underwriting system for Fannie Mae loans

Answer 125

Desktop originator (DO) Desktop underwriter (DU)