MORTGAGE LOAN ORIGINATION ACTIVITIES Flashcards
(107 cards)
1
Q
A description of an extension of the existing financing either through the same lender or through a new financial arrangement.
A
Refinancing
2
Q
A transaction that occurred under typical conditions in the marketplace where each of the parties were acting in their own best interests.
A
Arm’s Length Transaction
3
Q
Person designated to receive benefits from a certain act, such as one who benefits from a trust.
A
Beneficiary
4
Q
A specific lien claimed by someone who performed work on the property (construction, repairs, or improvements) and has not been paid. This term is often used in a general sense, referring to materialmen’s liens as well as actual mechanics’ liens.
A
Mechanic’s Lien
5
Q
A contract clause that gives the lender the right to declare all outstanding payments immediately due upon a default by the borrower.
A
Acceleration Clause
6
Q
A method in which numerical values are assigned to different aspects of a borrower’s loan application and used by lenders to gauge creditworthiness and assess credit risk.
A
Credit Scoring
7
Q
The act of filing a document at the county recorder’s office so it will be placed in the public record.
A
Recording
8
Q
The process of evaluating and deciding whether to make a new loan and on what terms.
A
Underwriting
9
Q
Credit history showing previous problems in meeting financial obligations.
A
Derogatory Credit
10
Q
The actual, lawful ownership interest in a property; title is not a document but a concept.
A
Title
11
Q
Taxes levied only against properties that benefit from a public improvement (e.g., new sewer line).
A
Assessments
12
Q
The criteria an underwriter uses to determine if a borrower or property qualifies for a loan.
A
Underwriting Standards
13
Q
A lien placed against property with the consent of the owner; a mortgage (or, in other states, a deed of trust).
A
Voluntary Lien
14
Q
The theoretical price that a piece of property would bring if placed on the open market for a reasonable period of time, with a buyer willing (but not forced) to buy, and a seller willing (but not forced) to sell, if both buyer and seller were fully informed as to possible use of the land.
A
Market value
15
Q
A settlement procedure conducted with all parties present.
A
Roundtable Closing
16
Q
A credit applicant who does not have ownership interest in the security property as indicated on the title but signs the note.
A
Co-Signer
17
Q
Insurance policy that protects lenders and homeowners against losses resulting from undiscovered title defects and encumbrances.
A
Title Insurance
18
Q
Coverage that indemnifies a person with an interest in the property for a loss caused to the property by a covered peril.
A
Property Insurance
19
Q
A brief, chronological summary of the recorded documents affecting the title to a particular parcel of real property
A
Abstract of Title
20
Q
The acronym for a typical mortgage payment that includes Principal, Interest, Taxes, and Insurance. It would also include any homeowners association fees required as a condition of ownership.
A
PITI
21
Q
One percent of the loan amount. A fee charged by a lender for making a loan, calculated based on the loan amount.
A
Point
22
Q
Item on a settlement statement for which the cost has been incurred, but the expense has not yet been paid. Such expenses are considered to be paid in arrears.
A
Accrued Expense
23
Q
Monthly fees paid by each condominium or cooperative owner for common area expenses such as utilities, management, building maintenance, hazard and liability insurance for the common areas of the property, and other amenities.
A
Association Fees
24
Q
A document prepared by an attorney stating the attorney’s opinion of the status of the title to a piece of property, after performing a title search and reviewing the public records. Also called Opinion of Title.
A
Certificate of Title
25
A standardized document that presents a final, detailed accounting for a real estate transaction, listing each party's debits and credits and the amount each will receive or be required to pay at closing; required for all RESPA-related transactions. Also called Settlement Statement.
Closing Disclosure
26
The amount of money owed on a note or other promise to pay.
Debt
27
The amount of money paid at regular intervals toward reducing the principal and interest owed on a debt.
Debt Service
28
Claim with highest priority against property? Also known as a superior to the rights of subsequent lenders. (Recorded first)
First Lien
29
The disclosure of loan terms, annual percentage rate and other credit costs, and estimated settlement costs that lenders must present to borrowers within three business days of a completed loan application in order to satisfy provisions of the Truth in Lending Act and the Real Estate Settlement Procedures Act.
Loan Estimate
30
The formal process by which a lender determines if potential borrowers can be financed through the lender, and for what amount of money. Preapproval is generally binding on the lender.
Preapproval
31
The person charged with coordinating the activities and documentation necessary for completing a real estate transaction; usually the one who prepares the settlement statement and conducts the closing. Also called Closing Officer, Closing Agent, Escrow Agent, or Title Agent.
Settlement Officer
32
State in which a mortgagee holds actual title to property until the loan is repaid.
Title Theory State
33
A standardized form from Fannie Mae or Freddie Mac that lenders require potential borrowers to complete with pertinent information about the borrower and the property.
Uniform Residential Loan Application (URLA)
34
Expense items on a settlement statement the seller has already paid in advance, usually at the beginning of a month for the rest of the month, or at the beginning of the year for the rest of the year or longer.
Prepaid Expenses
35
A situation where a lender approves a loan under certain stated conditions.
Conditional Approval
36
A type of business organization that has the limited liability protection of a corporation and the tax advantages of a partnership.
Limited Liability Company
37
A clause in a contract that obligates a creditor to release of the property from the lien and conveys title to that part back to the debtor once certain provisions of the note or mortgage have been satisfied. Also called Partial Release or Satisfaction Clause.
Reconveyance Clause
38
When a buyer borrows money from another source in addition to the primary lender to pay for part of the purchase price or closing costs; usually requires a subordination agreement.
Secondary Financing
39
Recently sold properties with similar characteristics (size, room count, design, utility, etc.) that are in close proximity to the property being appraised. Also called Comps.
Comparables
40
The government's constitutional power to take (appropriate or condemn) private property for public use, as long as the owner is paid just compensation. (Government taking of private land is called condemnation.)
Eminent Domain
41
A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price. Also called a purchase and sale agreement, a purchase contract, or an earnest money agreement.
Purchase Agreement
42
A listing of a borrower's credit history, including amount of debt, record of repayment, job info, address info, etc.
Credit Report
43
The relationship of a borrower's total monthly housing expense to gross monthly income, expressed as a percentage (Total Housing Expense ÷ Income = Ratio%). Also called Income-to-Payment Ratio or Front-End Ratio.
Housing Expense Ratio
44
Cash on deposit or other highly liquid assets a borrower must have to cover two months of PITI mortgage payments after they make the cash down payment and pay all closing costs.
Reserves
45
The chain of deeds and other documents transferring title to a piece of property from one owner to the next, as disclosed in the public record.
Chain of Title
46
The expenses incurred and paid at the time of settlement in the transferring of property.
Closing Costs
47
The right to undisturbed use and control of the airspace over a parcel of land (within reasonable limits for air travel); may be transferred separately from the land.
Air rights
48
The amount of money a buyer pays to obtain a property in addition to the money that the buyer borrows.
Down Payment
49
The transfer of real property ownership from seller to buyer, according to terms and conditions in a sales contract or escrow agreement; the final stage in a real estate transaction. Also called Loan Consummation or Settlement.
Closing
50
A report issued by a title company disclosing the condition of the title to a specific piece of property; evidence of marketable title.
Title Report
51
The act of transferring interest in property from one person to another.
Conveyance
52
A person who signs the promissory note along with the primary borrower and accepts a joint obligation to repay the loan.
Co-Borrower
53
Income that can reasonably be expected to continue in the future.
Stable Monthly Income
54
The total amount needed to purchase property, including down payment, loan amount, and any allowable buyer-paid closing costs.
Acquisition Cost
55
An appraisal method that estimates the value of real estate by establishing the cost new of replacing or reproducing the improvements, minus depreciation, plus the value of the site.
Cost Approach
56
An appraisal method that estimates the value of real estate by analyzing the amount of revenue, or income, the property currently generates, or could generate. Also called Capitalization Approach.
Income Approach
57
A statement, sworn in front of a notary public or other authorized official, by the seller or grantor of property that identifies the grantor, identifies the grantor's marital status, and certifies that the grantor has no new judgments, liens, divorces, unrecorded deeds, or other potential title defects since the title examination was completed. It also certifies that the grantor is indeed in possession of the property.
Affidavit of Title
58
1. Owing payment on things for which one has the use of but has not yet paid for, such as property taxes or mortgage interest that is paid in arrears. 2. Not on time? late in making payments or completing work.
Arrears
59
A document that is given to the winning bidder of a real estate tax or foreclosure sale. Once the sale is confirmed, a deed will be issued to convey title.
Certificate of Purchase
60
Issued to builders after all inspections have been made and the property is deemed fit for occupancy by meeting the appropriate standards for health and safety.
Certificate of Occupancy
61
The relationship between the unpaid principal balances of ALL mortgage loans and the appraised value (or sales price if it is lower) of the property.
Combined Loan-to-Value (CLTV)
62
Record of debt repayment, detailing how a borrower has paid debts and obligations in the past, used to predict whether the borrower is likely to pay debts in the future.
Credit History
63
The relationship of a borrower's total monthly debt to gross monthly income, expressed as a percentage (Total Debt ÷ Income = Ratio %). Debt obligations include housing and long-term debts with more than 10 payments remaining. Also called Total Debt Service Ratio or Back-End Ratio.
Debt-to-Income Ratio
64
A state in which real estate mortgages are regarded as liens; title remains with the mortgagor as long as no default occurs.
Lien Theory State
65
A title that is free and clear from undisclosed encumbrances or other defects that would expose a purchaser to litigation or impede a purchaser's ability to enjoy the property or to later sell the property; required to be delivered by the seller to the purchaser at settlement. Also called Merchantable Title.
Marketable Title
66
Charges for filing documents at the county recorder's office so that they become part of the public record.
Recording Fees
67
A company that examines and insures title claims for real estate purposes through a thorough examination of property records.
Title Company
68
A standard appraisal report form used by lenders and appraisers because it has been developed and approved by secondary mortgage market players Fannie Mae and Freddie Mac.
Uniform Residential Appraisal Report (URAR)
69
A form sent by a bank directly to a lender verifying the borrower's accounts.
Verification of Deposit (VOD)
70
A clause in a contract that states the agreement is contingent on the buyer obtaining approval for a mortgage loan.
Mortgage Contingency
71
A certificate issued by the Department of Veteran's Affairs to establish status and amount of a veteran's eligibility to qualify for a loan guarantee.
Certificate of Eligibility (COE)
72
An appraisal method that estimates the value of real property by performing a market analysis of the area where the subject property is located. Data are collected and adjustments made for the differences in the properties. This is also referred to as the Sales Comparison Approach.
Market Approach
73
A nonpossessory interest in property, giving a lienholder the right to foreclose if the owner does not pay a debt owed the lienholder; a financial encumbrance on the owner's title.
Lien
74
A situation in the housing market when a large number of buyers are looking for housing in an area of limited availability.
Seller's Market
75
Ongoing operating expenses that do not vary based on occupancy levels of the property (e.g., taxes, insurance).
Fixed Expenses
76
A provision in a contract, deed, law, regulation, guideline, etc. that makes the parties' rights and obligations depend on the occurrence (or nonoccurrence) of a specified event. Also called Condition, Escape Clause, Subject to Clause, or Kick-Out Clause.
Contingency Clause
77
A mortgage clause allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred or pledged to transfer ownership of the property. Also called Due on Sale Clause.
Alienation Clause
78
Fee charged by lender to cover the administrative costs of making a loan, usually based on a percentage of the loan amount (where 1% = 1 point). Also called: Loan Origination Fee and Loan Service Fee
Origination Fee
79
The income a borrower has left after subtracting taxes, housing expense, and all recurring debts and obligations (used for VA loan qualifying). Also called the cash flow analysis method.
Residual Income
80
Any form of ownership in which two or more people share title to a piece of property, holding undivided interests. Also called Co-Tenancy or Concurrent Ownership.
Co-Ownership
81
A business owned and managed by one person (or for tax purposes, legally married spouses) who is personally liable for all business debts. It could be organized under a fictitious or assumed name.
Sole Proprietorship
82
Tangible items that (usually) are not permanently attached to or part of real estate; any property that is not real property; movable property not affixed to land. Also called Chattel or Personalty.
Personal Property
83
The criteria used to evaluate the quality and durability of a borrower's source of income, in conjunction with an assessment of the borrower's housing expense ratio and total debt service ratio.
Income Qualifying Standards
84
A lien that arises by operation of law, without the consent of the property owner.
Involuntary Lien
85
The transfer of ownership or an interest in property from one person to another, by any means.
Alienation
86
A partnership comprised of one or more general partners and one or more limited partners. Limited partners have no say in partnership matters and their liability is limited to their investment.
Limited Partnership
87
A tax levied only against properties that benefit from a public improvement (e.g., a sewer or street light) to cover the cost of the improvement; creates a special assessment lien (an involuntary lien).
Special Assessment
88
A person who estimates the value of property, especially an expert qualified to do so by education and experience.
Appraiser
89
A professional estimate or opinion of the value of a piece of property (parcel of land), as of a certain date, that's supported by objective data.
Appraisal
90
The relationship between the loan amount and the sales price or appraised value of the property, whichever is less.
Loan-to-Value Ratio (LTV)
91
A clause used to defeat or cancel a certain right upon the occurrence of a specific event.
Defeasance Clause
92
A form of pre-paid interest that a lender charges to increase the yield on a lower-than-market interest rate loan. One point equals 1% of the loan amount.
Discount Point
93
An entity that, for compensation, acts as a third party intermediary by contracting with independent real estate appraisers to perform appraisals for lenders.
Appraisal Management Company (AMC)
94
A fixed rate mortgage set up like a standard 30-year conventional loan, but payments are made every two weeks instead of every month.
Biweekly Payment Plan
95
A certificate establishing the current market value of a property based on an approved VA appraisal. Issued by the VA, this certificate places a limit on the amount of a VA-guaranteed loan.
Certificate of Reasonable Value (CRV)
96
A claim, encumbrance, or defect that could make the title to real property unmarketable.
Cloud on the Title
97
A method of determining the approximate market value of a home by comparing the subject property to similar homes that have sold, are presently for sale, or did not sell in a given area. Also called Competitive Market Analysis.
Comparative Market Analysis (CMA)
98
Required once a borrower's loan is paid off. The lender issues the discharge of contract, and the borrower should record this document. Also called Release of Lien or Satisfaction of Mortgage.
Discharge of Mortgage
99
A title insurance policy issued for the benefit of a lender as well as any future holder of the loan.
Lender's Policy
100
A written or electronically transmitted agreement between a lender and an applicant for a mortgage loan which, subject to the terms set forth in the agreement, obligates the lender to make a mortgage loan at a specified rate and a specific time period.
Lock-In Agreement
101
The informal process of determining how much a potential homebuyer might be eligible to borrow.
Prequalification
102
Any service provided in connection with a prospective or actual settlement of a real estate transaction, including, but not limited to, those provided by lenders, title companies, real estate brokers, property inspectors, attorneys, appraisers, etc.
Settlement Service
103
An inspection of the public record to determine all rights and encumbrances affecting title to a piece of property.
Title Search
104
Professional appraisal standards developed by The Appraisal Foundation, and now recognized throughout the United States as accepted standards of appraisal practice.
Uniform Standards of Professional Appraisal Practice (USPAP)
105
A statement in a contract that indicates the property is being sold without warranty in its present condition at the time of the contract.
As-Is Clause
106
A Certificate of Release or Discharge from Active Duty issued by the Department of Defense. The DD-214 identifies the character of service and reason for discharge (honorable, dishonorable, etc.).
DD-214
107
A type of title insurance issued in the name of the property owner. Coverage runs from the time of purchase for as long as the policyholder owns the property.
Owner's Policy
