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Terminology > Terminology 2 > Flashcards

Terminology 2 Flashcards

1
Q

Debt

A

Liability on a claim

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2
Q

Debt-to-Income Ratio

A

The percentage of gross monthly income that goes toward paying for monthly housing expenses, alimony, child support, car payments, and other installment debts, and payments on revolving or open-ended accounts, such as credit cards.

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3
Q

Deed

A

A written instrument by which land is conveyed.

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4
Q

Deed-in-Lieu of Foreclosure

A

Deed in which the mortgagor conveys all interest in the property to the mortgagee to satisfy a loan that is in default in order to avoid foreclosure proceedings.
This is not a clog.
Written settlement agreement will always accompany deed in lieu.
Lender waives the right to collect any deficiency based on a promissory not

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5
Q

Deed of Trust

A

A deed conveying title to real property to a trustee as security until the grator repays a loan. This type of deed resembles a mortgage.
It is an alternative to a mortgage preferred by lenders because it is faster and cheaper to foreclose.

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6
Q

Default

A

The omission or failure to perform a legal or contractual duty, especially the failure to pay a debt when due.

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7
Q

Delinquency

A

A debt that is overdue in payment

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8
Q

Department of Veterans Affairs (VA)

A

The cabinet-level department of the federal government responsible for operating programs that benefit veterans of military service and their families.
It is headed by the Secretary of Veterans Affairs.

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9
Q

Depreciation

A

A reduction in the value or price of something, specifically, a decline in an asset’s value because of use, wear, obsolescence, or age.

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10
Q

Discount Point

A

A fee equal to 1% of the loan amount that is prepaid interest on the mortgage loan. The more points, the lower the interest rate.
Borrowers can typically pay from 0-4 points. Tax-deductible.

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11
Q

Dodd-Frank Wall Street Reform & Consumer Protection Act

A

A 2010 federal statute whose stated purposes include promoting the financial stability of the United States by improving accountability and transparency in the financial system.
The statute affects nearly every federal agency with jurisdiction over finance or consumer protection, and nearly every segment of the financial-services industry.

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12
Q

Down Payment

A

The portion of a purchase price paid in cash (or its equivalent) at the time the sale agreement is executed.

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13
Q

Due-on-Sale Clause

A

A mortgage provision that gives the lender the option to accelerate the debt if the borrower transfers or conveys any part of the mortgaged real estate without the lender’s consent.

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14
Q

Earnest Money Deposit

A

A deposit paid (often in escrow) by a prospective buyer to show a good-faith intention to complete the transaction, and ordinarily forfeited if the buyer defaults.
In real estate, it is generally a percentage of the purchase price and may be a substantial sum. Though it rarely exceeds 10% of the purchase price.

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15
Q

Easement

A

An interest in land owned by another person, consisting of the right to use or control the land, or an area above or below it, for a specific limited purpose.
E.g., an ingress and egress easement for the right to access the land through the land of another.
The land benefitting from an easement is called the dominant estate, while the land burdened by an easement is called the servient estate.
Unlike a lease or license, an easement may last forever, but it does not give the holder the right to possess, take from, improve upon, or sell the land.
The primary recognized easements are (1) a right-of-way,
(2) a right of entry for any purpose relating to the dominant estate, (3) a right to support of land and buildings,
(4) a right of light and air,
(5) a right to water,
(6) a right to do some act that would otherwise amount to a nuisance, and (7) a right to place or keep something on the servient estate.

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16
Q

Economic Obsolescence

A

Obsolescence that results from external economic factors, such as decreased demand or changed governmental regulations.

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17
Q

Effective Interest Rate

A

The actual annual rate, which incorporates compounding when calculating interest, rather than the stated rate or coupon rate.

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18
Q

Eminent Domain

A

The inherent power of a governmental entity to take privately owned property and convert it to public use, subject to reasonable compensation for the taking.
See, the Takings Clause of the Fifth Amendment: “Nor shall private property be taken for public use without just compensation.”

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19
Q

Employer-Assisted Housing

A

A program in which an employer assists its employees in purchasing homes by providing assistance with the down payment, closing costs, or monthly payments.

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20
Q

Encroachment

A

An interference with or intrusion onto another’s property.

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21
Q

Encumbrance

A

A claim or liability that is attached to property and that may lessen its value, such as a lien or mortgage.
Any property right that is not an ownership interest.
An encumbrance cannot defeat the transfer of possession, but it remains after the property or right is transferred

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22
Q

Entitlement

A

An absolute right to a benefit granted immediately upon legal requirement.

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23
Q

Equal Credit Opportunity Act (ECOA/Regulation B)

A

A federal statute that prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, age, sex, or marital status with respect to any aspect of a credit transaction.

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24
Q

Equitable Mortgage

A

A transaction that has the intent but not the form of a mortgage, and that a court of equity will treat as a mortgage.

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25
Q

Equity

A

The amount by which an interest in property exceeds secured claims or liens. The difference between the value of the property and all encumbrances on it.

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26
Q

Escrow

A

A legal document or property delivered by a promisor to a third party to be held by the third party for a given amount of time or until the occurrence of a condition at which time the third party is to hand over the document or property to the promisee.

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27
Q

Escrow Account

A

A blank account, generally held in the name of the depositor and an escrow agent that is returnable to the depositor or paid to a third person on the fulfillment of specified conditions.

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28
Q

Escrow Agent

A

The third-party depositary of an escrow.
An escrow holder is not a common-law agent because the holder does not act subject to the control of the parties to the escrow agreement.

AKA Escrow Deposit

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29
Q

Escrow Agreement

A

The instruction given to the third-party depositary of an escrow.

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30
Q

Escrow Contract

A

The contract among buyer, seller, and escrow holder, setting forth the rights and responsibilities of each.

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31
Q

Eviction

A

The act or process of legally dispossessing a person of land or rental property.

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32
Q

Exclusive Right-to-Sell Listing

A

The right to sell a principal’s products or to act as the seller’s real-estate agent to the exclusion of all others, including the owner.
Listing agreement upon which the broker gets commission even if seller is the one who sells the house during the agreement period or for a certain period of time thereafter.

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33
Q

Exclusive Agency Listing

A

A listing providing that one agent has the right to be the only person, other than the owner, to sell the property during a specified period.
Listing agreement upon which the broker does not get commission if seller sells the property himself.

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34
Q

Executor

A

A person named by a testator to carry out the provisions of the testator’s will.

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35
Q

Fair and Accurate Credit Transactions Act (FACT Act) 2003

A

A 2003 amendment to the federal Fair Credit Reporting Act providing for free annual credit reports to consumers and establishing measures intended to help prevent identity.
One of the Act’s better-known and more heavily litigated provisions prohibits merchants from printing the expiration date or more than the last five digits of the card number on a point-of-sale credit-card or debit-card receipt.

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36
Q

Fair Credit Reporting Act (FCRA/Regulation V)

A

A 1970 federal statute that regulates disclosure and use of consumer-credit information and ensures the right of consumers to have access to and to correct their credit reports.
Many states have enacted similar statutes.

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37
Q

Fair Housing Act (FHA)

A

A 1968 federal statute that prohibits discrimination on the basis of race, sex, religion, family status, or national origin in the sale or rental of a dwelling, especially in the refusal to sell or rent.

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38
Q

Fair Market Value

A

The price that a seller is willing to accept and a buyer is willing to pay on the open market and in an arm’s-length transaction, the point at which supply and demand intersect.

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39
Q

Fannie Mae/Freddie Mac Loan Limit

A

The current single family loan limit 510,400

765,600 in Alaska, Hawaii, Guam, and the U.S. Virgin Islan

40
Q

Federal National Mortgage Association (Fannie Mae/FNMA)

A

A privately owned and managed corporation chartered by the U.S. government that provides a secondary mortgage market for the purchase and sale of mortgages guaranteed by the Veterans Administration and those insured under the Federal Housing Administration.

41
Q

Federal Home Loan Mortgage Corporation (Freddie Mac/FHLMC)

A

A corporation that purchases both conventional and federally insured first mortgages from members of the Federal Reserve System and other approved banks.

42
Q

Federal Housing Administration (FHA)

A

An agency in the U.S. Department of Housing and Urban Development responsible for facilitating mortgage lending by insuring mortgage loans on houses meeting the agency’s standards.
Created in 1934.

43
Q

Federal Reserve System (FRS)

A

The central bank that sets credit and monetary policy by fixing the reserves to be maintained by depository institutions, determining the discount rate charged by Federal Reserve Banks, and regulating the amount of credit that may be extended on any security.
The Federal Reserve System was established by the Federal Reserve Act of 1913.
It compromises 12 central banks supervised by a Board of Governors whose members are appointed by the President and confirmed by the Senate.

44
Q

Fee Simple

A

An interest in land that, being the broadest property interest allowed by law, endures until the current holder dies without heirs; especially a fee simple absolute.

45
Q

FHA Mortgage

A

A mortgage that is insured fully or partially by the Federal Housing Administration.

46
Q

FHA Mortgage Insurance

A

Current FHA upfront mortgage insurance premiums are 1.75 percent of the loan size.

If an FHA-back mortgage is used for a purchase mortgage and your loan size is $300,000, then your upfront MIP will be $5,250.

47
Q

Firm Commitment

A

A promise from a lender to make a mortgage loan.

48
Q

First Mortgage

A

A mortgage that is senior to all other mortgages on the same property.

49
Q

First-Time Home Buyer

A

An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property.
This includes a spouse. If either meets the test, they are considered first-time homebuyers. A single parent who has only owned with a former spouse while married.

50
Q

Fixed Installment

A

The monthly payment due on a mortgage loan which includes both principal and interest.

51
Q

Fixed-Period Adjustable-Rate Mortgage

A

An adjustable rate mortgage with an initial fixed-interest-rate period.
After the fixed-interest rate expires, the interest rate starts to adjust based on an index plus a margin.
The amount by which the interest rate can adjust after the fixed period is usually subject to an interest rate cap structure.

52
Q

Fixed-Rate Mortgage (FRM)

A

A mortgage with an interest rate that remains the same over the life of the mortgage regardless of market conditions.

53
Q

Flood Certification Fee

A

Fee issued to the client which covers the cost of the assessment and is included in closing costs and fees.

54
Q

Flood Insurance

A

Insurance that indemnifies against a loss caused by a flood. This type of insurance is often sold privately but subsidized by the federal government.

55
Q

Floor

A

The lowest limit, such as the lowest interest rate allowed by law or the smallest permissible payment under a contract.

56
Q

Forbearance

A

The act of refraining from enforcing a right, obligation, or debt.

The terms loan and forbearance are correlative. Permitting one to retain a loan of money after it has become due and payable is forbearing it. That is, forbearance, within the meaning of usury laws, is the giving of further time for the return of payment of money after the date upon which it became due.

57
Q

Foreclosure

A

A legal proceeding to terminate a mortgagor’s interest in property, instituted by the lender (the mortgagee) either to gain title or to force a sale in order to satisfy the unpaid debt secured by the property.

58
Q

Forfeiture

A

A destruction or deprivation of some estate or right because of the failure to perform some contractual obligation or condition.
When a condition is not likely to occur until the obligee has relied on the expected exchange by, for example, performing or preparing to perform, nonoccurrence of the condition results in the obligee’s loss of its reliance interest when the obligee loses the right to that exchange. This loss of reliance interest is often described as forfeiture.

59
Q

Fully Amortized Mortgage

A

A mortgage in which the mortgagor pays the interest as well as a portion of the principal in the periodic payment.
At maturity, the periodic payments will have completely repaid the loan AKA self-liquidating mortgage

60
Q

General Contractor

A

Someone who contracts for the completion of an estate project, including purchasing all materials, hiring and paying subcontractors, and coordinating all the work.

61
Q

General Warranty Deed

A

Seller promises that there are no defects in title that arose or were created while seller owned the property or while anyone prior to seller owned the property.

62
Q

Gift Letter

A

A letter to the lender from the donor stating a gift of money has been made to the buyer in order to purchase specific property. The relationship of the donor and done is stated, as well as the amount of the gift.

63
Q

Good Faith Estimate

A

Gives you an estimate of the costs of the mortgage loan.
A form that lists basic information about the terms of a mortgage for which the applicant has applied. If the applicant applied for a mortgage before October 3, 2015, or if the applicant is applying for a reverse mortgage, they will receive a GFE.

64
Q

Government Mortgage

A

Mortgage insured by the a government entity, such as FHA, VA or RHS

65
Q

Government National Mortgage Association (Ginnie Mae/GNMA)

A

A federally owned corporation in the U.S. Department of Housing and Urban Development responsible for guaranteeing mortgage-backed securities composed of FHA-insured or VA- guaranteed mortgage loans.
The Association purchases, on the secondary market, residential mortgages originated by local lenders; it then issues federally insured securities backed by these mortgages.

66
Q

Graduated Payment Mortgage (GPM)

A

A mortgage whose initial payments are lower than its later payments.
The payments are intended to gradually increase, as the borrower’s income increases over time.

67
Q

Grace Period

A

A period of extra time allowed for taking some required action (such as making payment) without incurring the usual penalty for being late.
Article 9 of the UCC provides for a 20-day grace period, after the collateral is received, during which a purchase-money security interest must be perfected to have priority over any conflicting security interests.

68
Q

Gramm-Leach-Bliley Act (GLB) 1999

A

A federal statute that repealed both the part of the Glass-Stegall Act prohibiting combinations among banking, securities, and insurance companies, and related conflict-of-interest provisions for such companies’ officers, directors, and employees.
The Act also regulates the collection, disclosure, use, and protection of consumers’ nonpublic personal information.

69
Q

Gross Monthly Income

A

The total amount of a person’s income before taxes.

70
Q

Ground Rent

A

Rent paid by a tenant under a long-term lease for the use of undeveloped land, usually for the construction of a commercial building.

71
Q

Growing-Equity Mortgage (GEM)

A

A mortgage that is fully amortized over a significantly shorter term than the traditional 25- to 30- year mortgage, with increasing payments each year.

72
Q

Guarantee

A

Assumption of the liability of another’s debts in the event of default.

73
Q

Guarantee Mortgage

A

A mortgage that is guaranteed by a third party.

74
Q

Guaranty

A

A promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another who is liable in the first instance; a collateral undertaking by one person to be answerable for the payment of some debt or performance of some duty or contract for another person who stands first bound to pay or perform.

75
Q

Hazard Insurance

A

nsurance that protects property owners against damage caused by fires, severe storms, earthquakes, or other natural events.
As long as the specific event is covered within the policy, the property owner will receive compensation to cover the cost of any damage incurred.

76
Q

Home Equity Loan

A

A line of bank credit given to a homeowner, using as collateral the homeowner’s equity in the home.

77
Q

Home Inspection

A

Non-invasive visual examination of a residential dwelling, performed for a fee, which is designed to identify observed material defects within specific components of said dwelling.

78
Q

Home Mortgage Disclosure Act of 1975 (HMDA/Regulation C)

A

This regulation provides the public loan data that can be used to assist in determining whether financial institutions are serving the housing needs of their communities, public officials in distributing public-sector investments so as to attract private investment to areas where it is needed, and in identifying possible discriminatory lending patterns.
The regulation applies to certain financial institutions, including banks, savings associations, credit unions, and other mortgage lending institutions.

79
Q

Homeowner’s Insurance

A

Insurance that covers both damage to the insured’s residence and liability claims made against the insured, especially those arising from the insured’s negligence.

80
Q

Homeowner’s Warranty (HOW)

A

A warranty and insurance program that, among other coverage, insures a new home for ten years against major structural defects.
The program was developed by the Home Owners Warranty Corporation, a subsidiary of the National Association of Home Builders.
Builders often provide this type of coverage, and may states provide similar warranty protection by statute.

81
Q

Home Ownership and Equity Protection Act (HOEPA) 1994

A

HOEPA was enacted in 1994 as an amendment to TILA to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees.

82
Q

Housing and Urban Development (HUD)

A

The cabinet-level department of the federal government responsible for overseeing programs that are concerned with housing needs and fair-housing opportunities, and with improving and developing the country’s communities.
Established in 1965, headed by the Secretary of Housing and Urban Development.

83
Q

Housing Code

A

A law or regulation setting forth standards for the construction, maintenance, occupancy, use, or appearance of buildings and dwelling units.

84
Q

Housing Expenses-to-Income Ratio

A

A ratio comparing housing expenses to before-tax income that is used by lenders to qualify borrowers for a mortgage.
The housing expense measure includes mortgage principal, interest payments, property taxes, hazard insurance, mortgage insurance, and association fees.
The limit is generally 28%.

85
Q

HUD-1 Settlement Statement

A

Standard form which is used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate.

86
Q

Hybrid Loan

A

It performs like a fixed and adjustable rate loan. It has a fixed rate for an initial period before turning into an ARM.
These initial periods are offered in 3, 5, 7, and 10 year terms.

87
Q

Impound

A

The portion of a monthly mortgage payment that is earmarked to pay property taxes and property-insurance premiums.

88
Q

Income Property

A

Property that produces income, such as rental property.

89
Q

Index

A

A number, usually expressed in the form of a percentage or ratio, that indicates or measures a series of observations, especially those involving a market or the economy.

90
Q

Indexed Rate

A

An interest rate charged on loans to borrowers that is calculated by taking the sum of a benchmark index interest rate and a specified margin.
The indexed rate is used to calculate the interest rate on an ARM.

91
Q

Individual Retirement Account (IRA)

A

A savings or brokerage account to which a person may contribute up to a specified amount of earned income each year.
The contributions, along with any interest earned in the account, are not taxed until the money is withdrawn after a participant reaches 591/2 (or before then, if a 10% penalty is paid).

92
Q

Inflation

A

A general increase in prices coinciding with a fall in the real value of money.

93
Q

Initial Interest Rate

A

The interest rate that applies on the first day of the loan’s term.

94
Q

Inquiry

A

A request for a copy of your credit report by a lender or other business, often when you fill out a credit application and/or request more credit.

95
Q

Insolvency

A

The condition of being unable to pay debts as they fall due or in the usual course of business.

96
Q

Installment

A

A periodic partial payment of a debt.

97
Q

Installment Debt

A

A debt that is evidenced by a legal judgment or brought about by a successful lawsuit against the debtor.

Terminology (9 decks)

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