Glossary Flashcards
(161 cards)
1
Q
Acceleration Clause
A
A clause in a mortgage or deed of trust that allows the lender to demand immediate repayment of the balance of a loan under certain conditions, such as default by the borrower.
2
Q
Adjustable Rate Mortgage (ARM)
A
Mortgage in which the rate is adjusted periodically based on a pre-determined margin, index and adjustment interval.
3
Q
Adjustment Interval
A
The period elapsing between adjustment dates for an ARM aka: Adjustment period, change frequency.
4
Q
Adjustments (In Appraisal)
A
The dollar value that is added to or subtracted from the sale price of a comparable property used to provide an indication of value of the subject property.
5
Q
Adverse Action
A
A refusal to grant credit as requested; a termination of an account or an unfavorable change in the terms of an account; or a refusal to increase the amount of credit available to a person who has applied for an increase.
6
Q
Agency
A
Legal relationship created by law/contract in which the agent performs certain acts on behalf of the principal.
7
Q
Air Loan
A
An instance where a fictitious borrower obtains a mortgage loan “secured” by fictitious property.
8
Q
Amortization
A
Scheduling the periodic payments on a loan so that each installment requires enough principal an interest to ensure complete repayment of the loan by the end of its term.
9
Q
Amortization Schedule
A
A table showing the portion of each payment that will be applied to interest and to principal, and the remaining balance.
10
Q
Annual Mortgage Insurance Premium (Annual MIP)
A
A fee paid for mortgage insurance on an FHA-insured loan. Annual MIP is paid on a monthly basis.
11
Q
Annual Percentage Rate
A
Measurement of the loan cost, including interest and financed costs of closing, expressed as a yearly percentage rate.
12
Q
Annuity
A
Payments made at specified intervals, such as with insurance contracts or certain types of investments.
13
Q
Appraisal
A
An opinion of the fair market value of a property, based on analysis of the property aka: Valuation
14
Q
Appraised Value
A
An estimate of the fair market value of real or personal property.
15
Q
Appreciation
A
An increase in the value of property that occurs over time.
16
Q
APR Threshold
A
One of several standards used to identify high-cost mortgage loans. If the APR of a loan meets or exceeds the threshold established under the law, the loan qualifies as a high-cost mortgage and must comply with corresponding regulations.
17
Q
Asset
A
Things that a person owns and that can be converted to cash, such as property, investments, savings, etc.
18
Q
Assignment
A
The transfer of the rights and obligations under a mortgage loan from one person to another.
19
Q
Assumability Clause
A
A provision in a mortgage loan that allows for the transfer of the mortgage from one party to another.
20
Q
Assumable Mortgage
A
A mortgage that a seller can transfer to a new buyer, with the buyer taking over the payments of the existing mortgage.
21
Q
Average Prime Offer Rate (APOR)
A
An annual percentage rate based on average interest rates, fees, and other terms that are offered to qualified borrowers. The APOR is used as a benchmark rate in identifying high-cost loans and higher-priced loans under federal law.
22
Q
Back-End Ratio
A
Comparison of a person’s total monthly obligations to his or her gross monthly income aka: Total Debt Ratio.
23
Q
Balloon Mortgage
A
Mortgage with periodic payments including a scheduled payment, usually the final payment, that is considerably larger than preceding payments.
24
Q
Balloon Payment
A
A scheduled payment (often the final payment) that is more than twice the amount of other average scheduled loan payments.
25
Basis Point
One 100th of 1% of the loan amount (0.0001 x loan amount = 1 basis point).
26
Bi-Weekly Payment Mortgage
A plan to reduce debt by making payments every two weeks instead of every month.
27
Bona Fide
In good faith and without fraud.
28
Borrower Credit
Credits at closing that are subtracted from the final closing costs.
29
Bridge Loan
Short-term loan collateralized by the present home and used to close on a new house before the present home is sold.
30
CAPS (FOR ARMS)
Limitations on the amount by which the rate or payment on an ARM may change. There are four caps in common use.
31
Initial Rate Cap
Limit on the amount by which the rate can increase during the first adjustment period for an ARM.
32
Periodic Rate Cap
Limit on the amount by which a rate can change during any adjustment periods.
33
Lifetime Rate Cap
Limit on the amount by which the rate can change over the life of an ARM aka: Rate Ceiling
34
Payment Cap
Limit on the amount by which the payment can change during an adjustment period.
35
Certificate of Eligibility
The document that qualified veterans must obtain from the VA in order to apply for a VA guaranteed home loan.
36
Certificate of Reasonable Value (CRV)
A statement issued by the VA showing the property's current market value based on a VA-approved appraisal.
37
Certificate of Title
A statement provided by an abstract company, title company, or attorney, stating that the title of real estate is legally held by the current owner.
38
Changed Circumstance
Acts of God, war, disaster, or other emergency, information particular to the borrower or transaction relied on providing an LE and subsequently found to be inaccurate, new information particular to the borrower/transaction that was not relied on in providing the LE; or other circumstances particular to the borrower/transaction.
39
Charm Booklet
A disclosure booklet used to educate consumers on the risks associated with adjustable rate mortgages.
40
Clear Title
Generally, a title that is clear of liens, judgements and other encumbrances.
41
Clerical or Support Duties
Receipt, collection, distribution and analysis of information for the processing or underwriting of a mortgage loan.
42
Closed-End Loan
Transaction in which the creditor disburses all funds at closing and demands repayment within a specified time.
43
Closing
Meeting between the buyer, seller and lender, where funds for the purchase of real estate legally change hands.
44
Closing Disclosure
A federal disclosure that provides a statement of the final costs of a mortgage lending transaction.
45
Cloud on Title
An outstanding claim or encumbrance on the title.
46
Collateral
Property pledged as security for a debt.
47
Combined Loan-To-Value Ratio
A comparison, expressed as a percentage, of the combined cost of all mortgages on a home and the value of the home used to secure the loans.
48
Commitment
A pledge or promise; a firm agreement.
49
Conforming Loan
A loan that meets the lending limits and other criteria established by Fannie Mae or Freddie Mac.
50
Construction Loan
An interim loan used to pay for the construction of buildings or homes.
51
Consumer Reporting Agency (CRA)
An organization that prepares reports used by lenders to determine an applicant's credit history.
52
Consumation
The time at which the consumer becomes contractually obligated by a transaction.
53
Conventional Loan
A mortgage that is not insured by the FHA or guaranteed by the VA or USDA.
54
Conversion Clause
A provision in an ARM allowing the loan to be converted to a fixed rate at some point during its term.
55
Conveyance
The transfer of the title of real estate from one person to another.
56
Credit Life Insurance
A declining term life insurance policy used to ensure repayment of a loan should the borrower die.
57
Credit Report
A report documenting the credit history an current status of a borrower's credit standing.
58
Credit Repository
An organization that gathers, records, updates and stores financial and public records information about the payment records of individuals who are being considered for credit.
59
Creditor
A person or entity to whom an obligation is owed, such as a loan. See also Lender.
60
Currency Transaction Report (CTR)
A report that must be filed for each transaction in currency of more than $10,000 by or through a bank.
61
Cursory Inspection
An inadequate inspection of property in an attempt to conceal misrepresentations or omissions.
62
Debt-To-Income Ratio
Relationship, expressed as a percentage, between a borrower's monthly obligations and his/her gross monthly income.
63
Debtor
A person who owes a debt to a creditor or lender. See also Borrower.
64
Deed
A written instrument, properly signed and delivered, that conveys title to real property.
65
Deed-In-Lieu of Foreclosure
An arrangement in which the mortgagor (borrower) conveys all interest in the property to the mortgagee (lender) in an effort to satisfy a loan that is in default and avoid foreclosure proceedings. See also Conveyance, Foreclosure.
66
Deed of Trust
In many states, a document that is used in place of a mortgage to secure the payment of a note.
67
Default
Failure to meet legal obligations in a contract; specifically, failure to make the monthly payments on a mortgage.
68
Deferred Interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See also Negative Amortization.
69
Deposit
Funds that are given in advance to show committed interest in the purchase of a property. See also Earnest Money.
70
Depreciation
A decrease in the value of a property over time.
71
Discount Point
A fee paid to a lender at closing and used to prepay a portion of the interest on a loan.
72
Discrimination
In mortgage lending, treating an applicant less favorably than other applicants on a prohibitive basis.
73
Do-Not-Call Registry
List of consumers who have put their names on the Registry to avoid receiving unwanted commercial communications.
74
Donor
In mortgage lending, the term refers to those who make gifts of money for use in the purchase of a home.
75
Down Payment
Money that is paid towards the purchase of a home and that is not financed.
76
Dry Settlement
A loan settlement in which loan funds are not made available on the same day as closing.
77
Dual Compensation
Practice of receiving prohibited compensation from a consumer and a creditor that funds mortgage loans.
78
Due-On-Demand Clause
A provision of a mortgage or deed of trust that allows a lender to demand immediate payment of the balance of the loan if specific criteria relating to fraud and misrepresentation are met.
79
Due-On-Scale Clause
A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.
80
Earnest Money
Money paid by a buyer to a seller when entering a contract to indicate the buyer's ability to carry out the contract.
81
Encumbrance
A claim against real property, which may affect the ability to transfer ownership of the property.
82
Entitlement
The loan amount that the VA guarantees when extending a loan to a veteran.
83
Equity
Difference between the fair market value of a property and the current balances of any liens against the property.
84
Equity-Based Lending
A lending decision based on the equity on the equity available in the home, rather than on the borrower's repayment ability.
85
Escrow Account
An account held by the lender into which they homebuyer deposits money for taxes and/or insurance payments.
86
Escrow Disbursments
Use of escrow funds to pay taxes, hazard insurance, mortgage insurance, and other expenses as they become due.
87
Escrow Payment
The part of a mortgagor's monthly payment that is held by the loan servicer to pay for taxes, hazard insurance, mortgage insurance, and other expenses related to the loan.
88
Federal Home Loan Mortgage Corporation (Freddie Mac)
A GSE created by Congress that purchases conforming mortgage loans and resells them in the secondary market.
89
Federal Housing Administration (FHA)
A division of the Department of Housing and Urban Development.
90
Federal National Mortgage Association (Fannie Mae)
A GSE created by Congress that purchases conforming mortgage loans, as well as those insured by the FHA, and resells them on the secondary market.
91
Fee Simple
Form of property rights that when a buyer acquires a property, it includes the land and all improvements to the land.
92
FICO Score
Credit score obtained from the use of software developed by Fair Isaac Corporation.
93
Fiduciary Duty
Duty of loyalty, good faith, and the obligation to prioritize the interests of the principal over the interests of the agent.
94
Finance Charge
Any kind of fees or charges associated with obtaining credit, expressed in a dollar amount.
95
First Mortgage
The oldest lien against a property, or the lien with first priority.
96
Fixed-Rate Mortgage
A mortgage with an interest rate that will remain the same for the entire term of the loan.
97
Float
The opposite of locking an interest rate, waiting to lock an interest rate in anticipation of interest rates falling.
98
Flood Insurance
Insurance that compensates for physical property damage resulting from flooding.
99
Forbearance
When a lender delays a foreclosure action in order to allow a borrower to make good on overdue payments.
100
Foreclosure
Legal process by which a lender forces the sale of a mortgaged property because the borrower has not met the repayment terms of the mortgage.
101
Fraud Alert
An alert placed in a consumer's credit report file at his or her request to notify any user of the information that the consumer is or believed to be a victim of fraud. A fraud alert must be kept in the consumer's file for one year.
102
Fraud for Housing
A type of fraud in which an individual misrepresents his or her employment history, credit history, intention to occupy a property as a primary residence, or income in order to improve his or her chances of securing a mortgage.
103
Fraud for Profit
Typically involves the conspiratorial involvement of individuals throughout the mortgage industry, such as bankers, brokers, loan originators, processors, underwriters, appraisers, and others, aka; industry insider fraud.
104
Front-End Ratio
Comparison of a person's income to the monthly housing expenses he/she will be taking on through the mortgage loan.
105
Fully-Amortized ARM
ARM with a monthly payment sufficient to amortize the remaining balance of the amortization term.
106
Fully-Indexed Rate
In an ARM, the interest rate indicated by adding the current index value and the margin.
107
Funding
Funds provided by the lender at settlement. The act of disbursing the cash for a loan.
108
Good Faith Estimate (GFE)
Estimate of closing costs that must be given to mortgage applicants within three days after the loan application is complete. Only applicable to transactions not covered by the TRID Rule.
109
Government National Mortgage Association (Ginnie Mae)
Agency within HUD which guarantees securities backed by the FHA, VA, or USDA/RHS.
110
Grace Period
The period during which one party may fail to perform without being considered in default.
111
Graduated Payment Mortgage (GPM)
A type if of flexible-payment mortgage where the payments increase for a specified period of time and then level off.
112
Gross Income
For qualifying purposes, the income of the borrower before taxes and expenses are deducted.
113
Hazard Insurance
Insurance that indemnifies the insured against fire, burglary, and other specified losses, aka: Homeowners insurance.
114
High-Cost Mortgage
A loan that meets or exceeds one or more of several thresholds set forth under the federal Home Ownership and Equity Protection Act (HOEPA). High-cost mortgages are subject to specific requirements under the law.
115
Higher-Priced Mortgage Loan (HPML)
A loan that meets or exceeds the threshold set forth under federal law for identifying higher-priced mortgage loans. HPMLs are subject to specific disclosure and appraisal requirements, as well as certain other restrictions.
116
Home Equity Line of Credit (HELOC)
A type of loan that establishes a credit line that can be drawn upon until the borrower reaches the maximum limit.
117
HUD-1 Settlement Statement
A document, due on the day of closing, that provides an itemized listing of all costs associated with a real estate transaction including the fees of the lender, mortgage broker, and other settlement service providers. Only applicable to certain loan transactions not covered by the TRID Rule.
118
Identity Theft
The fraudulent use of another individual's personal identifying information without his or her knowledge or consent.
119
Index
Published rate that, when combined with a margin, is used as the basis upon which the note rate of ARM will adjust.
120
Installment
The regular periodic payment that a borrower agrees to make to a lender.
121
Interest
The fee charged for borrowing money.
122
Interest Only (I-O)
Program in which payments are directed only toward the interest due on the loan, and are not used to repay principal.
123
Interest Rate Buydown Plan
Deposited money is released each month to reduce the monthly payments during the early years of a mortgage.
124
Interim Financing
Short-term financing made to cover costs while waiting for the requirements of a permanent loan to be met.
125
Joint Tenancy
An arrangement in which two or more people hold equal ownership of a property, and the interest of any deceased tenant(s) is subsequently transferred to the surviving tenant(s).
126
Judicial Foreclosure
A foreclosure process that is initiated by the lender filing a suit in a court of law. See also Lien Theory State.
127
Jumbo Loan
A loan that exceeds the lending limits established by Fannie Mae and Freddie Mac for conforming loans.
128
Junior Mortgage
A mortgage that is subordinate to the claims or lien positions of other mortgages recorded against a property.
129
Kickback
The payment of money or a thing of value as compensation or reward for completing certain actions.
130
Leasehold
When a buyer acquires leasehold property, they purchase the improvements but lease the land for a certain term. At the end of the term, they may have the opportunity to purchase the land or renew the lease.
131
Lender
An entity that makes funds available for others to borrow, see Creditor.
132
Lender's Title Insurance
Insurance that protects the lender against loss from title defects or liens that should have been cleared prior to issuance of a title policy.
133
Liabilities
A person's financial obligations. Liabilities include both long and short-term debt.
134
Liability Insurance
Part of a homeowner's insurance policy that covers bodily injury or property damage occurring on the homeowner's property as a result of negligence.
135
Liar Loan
Fraudulent loan transaction in which the applicant inflates, enhances, or misrepresents qualifying information.
136
Lien
A claim upon a piece of property for the payment or satisfaction of a debt or obligation.
137
Lien Theory State
States in which mortgages are secured by a lien.
138
Loan
A sum of borrowed money (principal), generally repaid with interest.
139
Loan Application Register (LAR)
The form that is used for reporting data required to be collected under the Home Mortgage Disclosure Act.
140
Loan Estimate
A federal disclosure that must be provided to loan applicants no more than three business days after receiving the completed application. This disclosure provides an estimate of the costs of the loan for which the borrower has applied.
141
Loan Flipping
The repeated refinancing of the same loan within a short period of time.
142
Loan Modification
A permanent change in the terms of a loan in response to the borrower's long-term in ability to make payments.
143
Loan Originator
Generally, an individual that arranges funding or negotiates mortgage loans for a potential borrower.
144
Loan-To-Value Ratio (LTV)
Relationship between the amount of the loan and the lower of the appraised value of the property or the purchase price.
145
Lump Sum
A single disbursement of the total amount due.
146
Mandatory Arbitration Agreement
Contract provision that requires all parties to submit to arbitration to resolve disputes instead instead of seeking of seeking action in court.
147
Margin
The amount that a lender adds to the index on an ARM to establish the adjusted interest rate.
148
Markup
Service provider increases the charges of another provider collected from a borrower, then retains the additional fees.
149
Maturity
The date on which the principal balance of a loan becomes due and payable.
150
Money Laundering
The process of using financial transactions to distance illegally-obtained funds from their original, unlawful source.
151
Mortgage
A legal document that pledges a property to the lender as security for repayment of a debt.
152
Mortgagee
The lender
153
Mortgage Assistance Relief Service (MARS)
Services offered, in exchange for compensation, to assist in stopping foreclosure or repossession of a dwelling.
154
Mortgage Backed Security (MBS)
A group of loans that have been bundled together for sale in the secondary mortgage market.
155
Mortgage Banker
Generally, an entity that makes and funds mortgages, services mortgages, and sells mortgages in the secondary market.
156
Mortgage Broker
Generally, an individual or entity that arranges funding or negotiates mortgage loans for a potential borrower.
157
Mortgage Insurance Premium (MIP)
Fee paid by borrowers for mortgage insurance on an FHA loan.
158
Mortgagor
The borrower.
159
Negative Amortization
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 overtime.
160
Net Present Value Test (NPV Test)
Allows lenders/servicers to determine if it is more profitable to allow a loan modification or proceed with foreclosure.
161
