LSS Flashcards
(121 cards)
1
Q
Who is the Borrower?
A
Individual who applies for and receives funds for loan
2
Q
What is the Title?
A
Document giving evidence of ownership for property.
3
Q
What is Refinancing?
A
Process of paying off one loan with proceeds from a new loan secured by same property.
4
Q
Who is the Escrow Company?
A
Third party company licensed to distribute legal documents and funding on behalf of buyer and seller.
5
Q
Who is the Escrow Agent?
A
Person with fiduciary responsibility to buyer and seller, borrower or lender to ensure terms of purchase/sale/loan are carried out.
6
Q
Who is the Title Company?
A
Company making sure piece of real estate is legitimate then issues title insurance for property protecting both lender and owner from lawsuits for title disputes.
Accurately record Liens and ownership of prop.
7
Q
What is Title Insurance?
A
Protects a lender against any title dispute. Required to close on home
8
Q
Who is the Lender?
A
The lender is bank lending money.
9
Q
What is the Deed of Trust & Rider?
A
Document that records who owns property, amount borrower is receiving from bank, who is lending money, legal description of property, rules® buyer must abide by
10
Q
What is the Principal?
A
Amount of debt left on loan (not including interest)
11
Q
What is the Note?
A
Fancy way of saying contract. Borrower agrees to terms of loan. Specify amount, interest and payment period.
12
Q
What is the Interest Rate?
A
What the borrower agrees to pay back the bank for borrowed money. Lower risk = lower interest.
13
Q
What is the Loan to Value?
A
How much owed versus value of home. (Appraised value or sale price, whichever is lower) Higher LTV = Higher risk
14
Q
What is the Fix Rate Note?
A
Interest will not change for duration of the loan. Longer the term = longer interest rate.
15
Q
What is a Adjustable Rate Mortgage (ARM)?
A
Changing interest rate, often after a period of fixed-rate payments. 5/1 5 = five fixed-rate years / 1 = changing after each year afterwards.
16
Q
What is a Home Equity Line of Credit (HELOC)?
A
Line of credit tied to the house, similar to that of a credit card but tied to the security of a home’s equity.
17
Q
What is a Reverse Mortgage?
A
Enables homeowners 62+ years or older to convert part of their home equity into tax-free income without having to sell the home, give up title, or take on new monthly mortgage payment. Lender makes payments based off equity.
18
Q
What are Discount Points/Buy Down?
A
Points are up-front fee paid to lender at time of loan to lower interest rate. Buy down the interest rate.
19
Q
What does it mean to Default?
A
Lenders only lend on a house if they have the right to take the house from borrower if the borrower fails to pay back loan on agreed terms.
20
Q
What is Foreclosure?
A
If borrower hasn’t lived up to terms of the loan the bank can foreclose on the house. Most banks start after 3 consecutive missed payments.
21
Q
What is a Lien?
A
Form of security interest over a property to secure payment of a debt. Anyone can put a lien on a home with homeowner’s consent. Upon no payment bank is allowed to sell property and recoup lien amount.
22
Q
What is Property Tax?
A
Taxes due to county the property resides in. Usually due twice a year.
23
Q
What is an Impound Account/Escrow Account?
A
Sometimes requested/forced, savings account for taxes and homeowner insurance. Monthly deposit from monthly payment to ensure taxes and insurance get paid.
24
Q
What is Amortization?
A
Repayment of loan with periodic payments of both principal and interest calculated to payoff loan.
25
What is Hazard Insurance?
Protects insured against loss due to fire or other natural disaster.
26
What is PITI?
Principal, Interest, Taxes and Insurance. The components of monthly payment.
27
What are FHA Loans?
Fixed/ARM insured by US Dept of HUD for first time homebuyers to have lower down payment than conventional loans (3%)
28
What are VA Loans?
Fixed-Rate Loans guaranteed by Us Dept of VA to make housing more affordable for veterans. Some eligible for no down payment, application fee and low closing costs.
29
What are Escrow Instructions?
Escrow's role and responsibility during the transaction to the borrower.
P: Escrow gets back original, lender gets copy.
30
What is an Escrow Amendment?
Changes made to original such as price change.
| P: Escrow gets back original, lender gets copy.
31
What is the Closing Statement?
Document brings together all of escrow (neutral 3rd party), title and lender's fees for borrower approval.
P: Escrow gets back original, lender gets copy.
32
What is the Insurance Information Sheet?
Borrower lets escrow know insurance company name, policy # and agent's name & number.
33
What is the Disbursement of Proceeds?
Borrower due a refund from closing, this will be instructions on how to receive it. Not filled out = no disbursement.
34
What is the Borrower Information Sheet?
Gives Escrow info to open escrow. Current payoff, whom it is owed to and how much, any private liens, HOA info and/or insurance information.
35
What is the Payoff Demand?
Payoff Statement showing borrower what is currently owed to lender. Escrow responsible for ordering demand from current lender to present it to borrower.
P: Escrow gets back original, lender gets a copy. Title gets copy of payoff.
36
What is the Statement of Information?
Application for Title Insurance.
| P: Title gets back original, escrow gets a copy.
37
What is the Grant Deed or Quitclaim Deed?
Changes way title is held, from seller to buyer, vise versa or name/marriage changes.
38
What is the Trust Certification?
Doc proving borrower has established valid trust, mandatory if there is a trust involved.
P: Title gets back original, escrow gets a copy.
39
What is the Preliminary Change of Ownership Report (PCOR)?
Instructs to county what is going on with Grant Deed/Quitclaim Deed
P: Title gets back original
40
What is the Subordination Agreement?
Maintains order for subordinate lien/mortgage positions. Lender will only approve loan if their loan goes in first position.
P: Title gets back original, lender gets a copy, escrow gets a copy.
41
What is Insurance?
Borrowers homeowners insurance/hazard insurance.
| P: Escrow gets back original, lender gets a copy
42
What is Power of Attorney?
Another person given authority on one individuals behalf.
| P: County gets back original, lender gets a copy, escrow gets a copy.
43
What is the Purchase Contract?
Contract between byer and seller on terms of sale.
| P: Escrow gets back original, lender gets a copy.
44
What are Receipts?
Proof of deposit required to open escrow.
| P: Escrow gets back original, lender gets a copy.
45
What is the Payoff (purchase)?
How much is owed on current mortgage.
46
What is the Termite Report?
Informing homeowner and lender of termites on property, requiring proven clearance of pest.
47
What are Lender's Instructions?
Closing Instructions, typed out to escrow and title from lender on how lender wants the loan closed. Signed by borrower and escrow officer.
P: Lender gets back original, escrow gets a copy, title gets a copy
48
What is the 1003 Loan Application?
Ten-Oh-Three, vital document.
| P: Lender gets back original, escrow gets a copy.
49
What is the Notice of Right to Cancel?
Refinance on primary residence, borrower has three business days from day the sign loan to cancel the loan. Lender cannot fund loan until after this time period.
50
What is the Closing Disclosure?
CD (Truth in Lending Form) informs borrower pertinent information about loan. Total interest, all costs associated with transaction.
51
What is the 4506?
Gives permission to lender to request and receive borrowers taxes filed with IRS.
52
What is the Occupancy Affidavit?
Tells lender whether property being bought/refinanced is a primary, secondary or investment property.
53
What is the California Domestic Partnership Addendum to Uniform Residential Loan Application?
Some states recognize domestic partnerships as if two people are married, this page has this information for lender.
54
What is the Borrower Certification and Authorization?
Gives permission to lender to confirm employment, have assets, credit report and financial records in their possession.
55
What are the Hazard Insurance Authorization and Requirements?
Homes that have mortgages require this, lender is named as loss payee.
56
What is the W-9?
Interest paid on loans is tax deductible, borrower may write it off on taxes.
57
What is the Acknowledgment of Receipt of Appraisal Report?
If an appraisal was completed borrower has right to a copy, signing confirms they've received one.
58
What is a Compliance Agreement?
Informs borrower anything holding up loan disbursement.
59
What is the Consumer Credit Disclosure?
Borrower has right to know their credit score and is informed with this doc.
60
What is the Housing Financial Discrimination Act of 1977 Fair Lending Notice?
Says borrower was not discriminated against.
61
What is the Hazard Insurance Disclosure?
Max amount of insurance coverage lender can force borrower to have as replacement cost of the house (not appraised value.)
62
What is the California Impound Disclosure/Waiver?
Whether borrower has to have impound/escrow account, or can request to have or deny one.
63
What is the California per Diem Interest Disclosure
Borrower has to pay interest the day the loan funds, how much per day is told in this doc. (Overlap in refinance from two active loans at same time)
64
What is the Signature Affidavit and AKA Statement?
Borrower confirms their signature is theirs. Any other known associated names also appear here from credit reports.
65
What is the Contact Verification Form?
Borrower confirms all contact information the lender has is correct.
66
What is the Counseling Checklist for Military Home Buyers?
VA letting veteran know if they miss any payments home counseling might be required.
67
What is the USA Patriot Act?
Notary Signing Agent records ID Info used to identify borrower.
68
What is the Federal Equal Credit Opportunity Act Notice?
Lets borrower know if credit score was a determining factor on approval.
69
What is the Flood Insurance Coverage Subject to Change Disclosure?
Rezoned constantly, if home is in flood zone insurance is required.
70
What is the Initial Escrow Account Disclosure Statement?
How impound account will look in next 12 months, when tax and insurance payments are made and how much.
71
What is the Mailing Address Certification?
Informs lender where borrower prefers bill for loan.
72
What is the Notice Concerning the Furnishing of Negative Information to the Consumer Reporting Agency?
If borrower misses a payment it will be reported and affect their score.
73
What is the Notice to VA Loan Borrowers?
VA letting borrower know the loan is assumable.
74
What is the Payment Letter to Borrower?
Tells borrower what their full payment including impound account is. Also is first payment coupon with address for first payment.
75
What is the Payoff Schedule/Amortization Table?
Shows every payment for duration of the loan, broken down by principal and interest.
76
What is the Quality Control Release and Authorization to Re-verify?
Lets borrower know there may be a survey asking how much the loan officer did, lender Quality Control.
77
What is the Federal Collection Policy Notice?
Lets borrower know how lender will or will not share info.
78
What is the Acceleration Clause?
Loan holder has right to demand entire outstanding balance immediately due in event of default.
79
What is the Adjustment Interval?
Length of time between changes in interest rate on ARM loan.
80
What is the Agreement of Sale?
Contract by buyer and seller stating terms and conditions under which a property will be sold.
81
What is Alternative Documentation?
Documenting a loan file that relies on information that the borrower is likely to be able to provide instead of waiting on verification sent to third parties for confirmation of statements made in application.
82
What is the Application Fee?
Fee charged by lender to cover cost of initial processing of loan application. Cost of obtaining appraisal, credit report, lock-in fee, or other closing costs where they apply.
83
What is the Assessed Value?
Value of property decided by public tax assessor.
84
What is Assignment?
The transfer of ownership, rights or interests in one property from one person/entity to another.
85
What is Assumption?
When buyer of property agrees to become responsible for repayment of existing loan on property.
86
What is the Assignment Recording Fee?
After lender sends loan to loan servicer who handles collection, this covers cost of recording at local offices.
87
What is a Balloon Mortgage?
Short term fixed-rate loans with set number of years followed by one large final balloon payment for remainder of principal.
88
What is Bankruptcy?
Proceeding in federal court to relieve certain debts of a person or business unable to pay.
89
What is a Beneficiary?
Person named to receive benefit from a trust. (Usually has conditions)
90
What is a Bequest?
Gift of personal property by will.
91
What is a Blanket Morgage?
Mortgage that covers more than one parcel of real estate.
92
Who is the Broker?
Individual who brings buyers and sellers together and assists in negotiating contracts for a client.
93
What is the Broker Processing Fee?
Fee charged to have file packaged and handed over to lender.
94
What is a Buyer's Market?
When there are more sellers than buyers in the market. (Lower prices)
95
What is a Cash Reserve?
Requirement of many lenders that buyers have sufficient cash remaining after closing to make first two mortgage payments.
96
What is the Certificate of Eligibility?
Doc issued by VA to qualified Veterans that verifies eligibility. Obtainable through VA with form DD-214 and form 1880.
97
What is the Certificate of Title?
Written opinion of status of title to property, given by attorney or title company.
98
What is the Chain of Title?
Chronological order of conveyance of a property from original owner to present.
99
What is a Clear Title?
Title free of liens and legal questions of ownership.
100
What is the Closing/Settlement?
Conclusion of RE Transaction including delivery of security instrument, signing of legal documents and disbursements/collections of funds necessary.
101
What are the Closing Fees?
Settlement costs including title fees, recording fees, appraisal fees, credit report fee, pest inspection fee, attorney's fees, taxes and surveying fees.
102
What is Collateral?
Assets pledged as security for debt.
103
What is a Commission?
Money paid to RE Agent/Broker for negotiation RE/Loan transaction.
104
What is the Commitment?
Promise to lend by lender on terms and conditions under which the loan was made.
105
What are Comparables?
Properties of similar size, location, amenities and have been recently sold. Assists appraiser in forming fair market value.
106
What is Compound Interest?
Calculated on initial principal and accumulated interest of prior periods.
107
What is a Conforming Loan?
A loan that meets all requirements to be eligible for purchase by federal agencies such as Fannie Mae and Freddie Mac. (Max 300,700 for one-unit property, higher in some areas.)
108
What is a Construction Loan?
Loan for short interim to finance cost of construction. Lender advances funds to builder in intervals.
109
What is a Contingency?
Condition that must be satisfied before contract is legally binding.
110
What is a Conventional Loan?
Loan not made under any government housing program or subject to gov resitrctions.
111
What is the Conversion Clause?
Provision in some ARMS that allows you to change an ARM to Fixed-Rate loan usually after the first adjustment period. (Possible charge for conversion)
112
What is Conveyance?
The Document used to affect a transfer such as deed or mortgage.
113
What is the Debt-to-Income Ratio?
Ratio expressed as percentage resulting when borrower's monthly payment is divided by their net effective income (for FHA/VA) or gross monthly income (for Conventional Loans)
114
What is the Deed?
Legal document with which the title is transferred including description of property, signatures that are witnessed and delivered to buyer at closing.
115
What is the Deed of Trust?
Legal document conveying title to real property to a third party to hold until owner has repaid debts in full.
116
What is Earnest Money?
Good faith down payment made by buyer after purchase agreement is signed.
117
What is Equity?
Difference between current market value of property and total debt obligations against property. (In new mortgage this is down payment)
118
What is Escrow?
Transaction where third party acts as agent for seller and buyer in handling legal document and disbursing funds.
119
What is the Escrow Account?
Account held by lender to collect installment from borrower as a part of monthly payment, due for taxes and insurance.
120
What is Fee Simple?
Absolute ownership of Real Property.
121
What is the Federal Reserve Board?
7 Member Board of governors to oversee Federal Reserve Banks, establish monetary policies and monitor economic health of the US, appointed by President subject to Senate confirmation. (The Fed)
