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Definitions Flashcards

1
Q

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

A

403(b) Tax Sheltered Annuity

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2
Q

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

A

401 (k) Plan

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3
Q

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.

A

“A” Paper (Prime Loan)

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4
Q

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.

A

Abstractor(Abstractor of Title)

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5
Q

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.

A

Acceleration Clause

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6
Q

To get larger

A

Accrue (accrual)

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7
Q

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.

A

Action

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8
Q

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.

A

Actuarial Method

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9
Q

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

A

Addendum

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10
Q

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).”

A

Adjustable Rate Mortgage (ARM)

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11
Q

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

A

Adjustment Date

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12
Q

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.

A

Administrative or clerical tasks

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13
Q

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

A

Adverse Action

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14
Q

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.

A

Affidavit

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15
Q

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.

A

Affiliate

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16
Q

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.

A

Affiliated Business Arrangement:

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17
Q

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

A

Aggregate

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18
Q

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

A

Agreement or Understanding

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19
Q

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.

A

Air Loan

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20
Q

A false or assumed identity.

A

Alias

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21
Q

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

A

Alienation Clause

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22
Q

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

A

Alimony

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23
Q

A correction or alteration proposed or affected by this process.

A

Amendment

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24
Q

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.

A

Amortize (amortization)

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25
Q

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

A

Ancillary

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26
Q

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

A

Annual Percentage Rate

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27
Q

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).

A

Average Prime Offer Rate

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28
Q

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.

A

Annuity

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29
Q

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

A

Appraisal Fee

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30
Q

Estimation of the current market value of a property.

A

Appraised Value

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31
Q

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

A

Appraiser

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32
Q

An increase in property value or any other assets.

A

Appreciate

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33
Q

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

A

As-is Condition

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34
Q

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

A

Asking Price

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35
Q

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

A

Assess

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36
Q

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

A

Assessments

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37
Q

Any item with measurable value.

A

Assets

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38
Q

A legal process that helps to settle disputes among different parties

A

Arbitrate (arbitration)

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39
Q

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.

A

Application

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40
Q

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.

A

appraisal

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41
Q

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

A

Assumable Mortgage

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42
Q

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.

A

Bond

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43
Q

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.

A

Assumption clause

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44
Q

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.”

A

Borrower

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45
Q

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.

A

Back-End Ratio

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46
Q

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

A

Bait and Switch

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47
Q

The amount left over.

A

Balance

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48
Q

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.

A

Balloon Loan or Balloon Mortgage

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49
Q

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

A

Balloon Payment

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50
Q

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

A

Budget

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51
Q

Includes all calendar days, except Sundays and legal holidays.

A

Business Day

52
Q

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.

A

Call Loan

53
Q

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.

A

Cap

54
Q

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.

A

Capacity

55
Q

An individual’s savings, investments, or assets. Also known as “cash reserves.”

A

Capital

56
Q

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.

A

Capital Gain

57
Q

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,

A

Bridge Loan

58
Q

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.

A

Automated Underwriting

59
Q

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

A

Bankrupt (bankruptcy)

60
Q

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

A

Bona Fide

61
Q

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

A

Broker’s price opinion

62
Q

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

A

Co-Borrower

63
Q

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

A

Cash out refinance

64
Q

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

A

Cease and desist

65
Q

A savings account with a fixed maturity date

A

Certificate of deposit

66
Q

A reproduction that is confirmed to be authentic

A

Certified copy

67
Q

A list of those who have had ownership in the property

A

Chain of title

68
Q

An act of god, war, or another emergency

A

Changed circumstances

69
Q

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

A

Chapter 7 bankruptcy

70
Q

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

A

Charge off

71
Q

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

A

CHARM booklet ( consumer handbook on adjustable rate mortgages)

72
Q

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

A

Checking account

73
Q

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

A

Child support

74
Q

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

A

Civil penalty

75
Q

A requirements or stipulation in a legal agreement

A

Clause

76
Q

A property title that has no defects or encumbrances

A

Clear title

77
Q

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

A

Closed end loan

78
Q

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

A

Closing

79
Q

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

A

Closing agent

80
Q

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

A

Closing costs

81
Q

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

A

Closing disclosure

82
Q

A person who signed a credit application with another person

A

Co-signer

83
Q

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

A

Collateral

84
Q

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

A

Collateral dependent

85
Q

Receive monies that are due

A

Collect

86
Q

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

A

Community property state

87
Q

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

A

Compensation factors

88
Q

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

A

Compound

89
Q

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

A

Condominium

90
Q

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

A

Conforming loan

91
Q

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

A

Construction loan

92
Q

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

A

Consumer

93
Q

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

A

Consumer credit

94
Q

Time that a consumer becomes contractually obligated on a credit transaction

A

Consummation

95
Q

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

A

Contingency

96
Q

A written or spoken agreement between two or more parties

A

Contract

97
Q

A private sector loan not guaranteed or insured but the government

A

Conventional loan

98
Q

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

A

Convert

99
Q

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

A

Cooperative (co-op)

100
Q

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

A

Corrective action

101
Q

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

A

Cost of funds index (COFI)

102
Q

Formal advisor

A

Counsel

103
Q

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

A

Covenants

104
Q

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

A

Credit

105
Q

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

A

Credit bureau

106
Q

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

A

Credit card

107
Q

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

A

Credit counseling

108
Q

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

A

Credit risk

109
Q

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

A

Credit score

110
Q

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

A

Credit union

111
Q

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

A

Creditor

112
Q

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

A

Creditworthiness

113
Q

A consumer who has a continuing relationship with a financial institution

A

Customer

114
Q

An amount of money borrowed by one party to another

A

Debt

115
Q

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

A

Debt to income ratio

116
Q

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

A

Deductible

117
Q

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

A

Deed

118
Q

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

A

Deed of trust

119
Q

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

A

Deed-in-lieu

120
Q

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

A

Default

121
Q

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

A

Defeasance clause

122
Q

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

A

Delinquency

123
Q

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

A

Depository institutions

124
Q

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

A

Depreciation

125
Q

The automated underwriting system for Fannie Mae loans

A

Desktop originator (DO)
Desktop underwriter (DU)

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