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MLO Study Guide > Vocabulary > Flashcards

Vocabulary Flashcards

(90 cards)

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1
Q

Abandonment

A

The voluntary surrender of property owned or leased. Abandonment does not relieve obligations associated with ownership or lease.

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2
Q

Abatement

A

A reduction in amount or intensity. Usually relates to a decrease in taxes or to a decrease in continuing payments such as rent

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3
Q

Absolute Title

A

A title that is clear of any liens, judgments, or other encumbrances

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4
Q

Abstract Title

A

A brief history of the legal ownership of a piece of property

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5
Q

Abstractor

A

A professional in the title industry (sometimes an attorney) who conducts a title search and produces an abstract

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6
Q

Abstract Update

A

Making current an existing Title Abstract

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7
Q

Acceleration Clause

A

A clause in a mortgage or deed of trust that allows the lender to demand the immediate repayment of the balance of a loan under conditions such as default by the borrower

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8
Q

Acknowledgement

A

A declaration by a person who has signed a document that such signature is a voluntary act, made before a duly authorized person

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9
Q

Acquisition Cost

A

A term used in FHA loans meaning the total cost to close the loan

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10
Q

Act of God

A

An unpreventable destruction occurrence of the natural world

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11
Q

Addendum

A

An addition or supplement to a contract

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12
Q

Adjustable Rate Mortgage (ARM)

A

A mortgage in which the interest is adjusted periodically based on a pre-selected margin, index, and adjustment interval. AKA Variable Rate Mortgage

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13
Q

Adjusted Date

A

The date that the interest rate may change on an ARM

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14
Q

Adjustment Interval

A

The periodic elapsing between adjustment dates for an ARM. The interval can apply to an interest or payment adjustments and is typically one, three, or five years. AKA Adjustment Period, or Change frequency

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15
Q

Adjustments (In Appraisal)

A

The dollar value added or subtracted from the sale price of a comparable property used to provide an indication of value of the subject property

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16
Q

Affordability Analysis

A

An analysis of a buyer’s ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage planned, the area where a home is located, and the closing costs that are likely to be incurred

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17
Q

Agency

A

A legal relationship created by law or contract in which the agent performs certain acts on behalf of the principal

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18
Q

Amortization

A

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

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19
Q

Amortization Schedule

A

A table that shows the portion of each payment that will be applied to interest and principal, and the balance remaining after the payment has been applied

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20
Q

Amortization Term

A

The length of time required to amortize the mortgage loan, expressed as a number of months

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21
Q

Annual Mortgage Statement

A

Report to the mortgage of taxes and interest paid during the year and remaining principal balance

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22
Q

Annual Percentage Rate

A

A uniform measurement of the cost of a loan, including interest and financed costs of closing, expressed as a yearly percentage

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23
Q

Annuity

A

Payments made at specified intervals, such as with insurance contracts or certain types of investments

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24
Q

Applicant

A

one who applies for a real estate loan (the prospective mortgager)

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25
Application
The method by which a consumer formally applies to obtain a mortgage loan. The actual application form is the Uniform residential Loan Application (URLA), or Form 1003
26
Application Fee
Fee charged by a mortgage broker for processing a mortgage loan application. Might be a flat fee or percentage of the loan amount
27
Appraisal
An estimate of the fair market value of real or personal property
28
Appraised Value
An opinion of a property’s fair market value based on an appraiser’s knowledge, experience, and an analysis of the property utilizing recent comparable sales and market conditions
29
Appraiser
The increase in the value of a property that has occurred over time
30
Arm’s Length Transaction
A transaction among parties, each of whom acts in his or her best interest
31
Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights
32
Assests
Things that a person owns, that can be converted to cash such as property, investments, savings, etc.
33
Assignment
The transfer of the rights and obligations under a mortgage from one person to another
34
Assumability Clause
A provision in the mortgage that allows transfer of the mortgage from one party to another
35
Assumable Mortgage
A mortgage that a seller can transfer to a new buyer, with the buyer taking over the payments on the seller’s existing mortgage. Lenders may require a credit review of the new borrower and payment of a fee for the assumption. If a mortgage contains a due-on-sale clause, the mortgage is not assumable by the new buyer
36
Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) when an assumption takes place
37
Attachment
A legal seizure of property to force payment of a debt. An attachment creates a lien on real property
38
Attest
To witness by observation and signature
39
Balance
The amount due, including principal, unpaid interest, and any fees or penalties owed
40
Balloon Mortgage
A mortgage with periodic payments including a final payment that is considerable larger than the preceding payments
41
Balloon Payment
The final lump sum paid at the maturity date of a balloon mortgage
42
Bankruptcy
The financial inability to pay one’s debts when due and the debtors application to the courts for relief through the restructuring or erasing of the debt
43
Basis Point
One 100th of 1% of the loan amount (0.0001 x Loan Amount = 1 basis point)
44
Beneficiary
The person who receives or is to receive the benefits from a specific action or act
45
Bill of Sale
A written instrument given to pass title of personal property from the seller to the buyer
46
Biweekly Payment Mortgage
A plan to reduce the debt every two weeks instead of making monthly payments. The result is that the equivalent of one additional monthly payment is made each year
47
Blanket Mortgage
A mortgage that uses at least two pieces of real estate for security
48
Bona Fide
In good faith, without fraud
49
Borrower (Mortgager)
One who applies for and receives a loan in the form of a mortgage
50
Borrowers Credits
Credits at closing that are subtracted from the final closing costs these might include fees or points paid by the seller, a portion of the yield spread premium, or fees paid by the borrower paid prior to closing, such as the appraisal fee
51
Bridge loan
A short term loan collateralized by the borrowers present home and used to close on a new house before the present home is sold a.k.a. a swing loan
52
Bridge loan
A short term loan collateralized by the borrowers present home and used to close on a new house before the present home is sold a.k.a. a swing loan
53
Buy down mortgage
A mortgage with below market interest rate made by a lender in return for an interest rate subsidy in the form of additional discount points paid by the builder, seller, or buyer
54
CAPS (ARMS)
Consumer protection, which limit the amount, the interest rate or payment on an ARM may change these are four caps in common use which include the initial rate cap, periodic rate cap, lifetime rate, cap, payment cap
55
CAPS (ARMS)
Consumer protection, which limit the amount, the interest rate or payment on an ARM may change these are four caps in common use which include the initial rate cap, periodic rate cap, lifetime rate, cap, payment cap
56
Initial rate cap
A limit on the amount that the interest rate can increase during the first adjustment period for an ARM
57
Periodic rate cap
A limit on the amount that the interest rate can change during the adjustment period
58
Lifetime rate cap
A limit on the amount that an interest rate can change over the life of an ARM a.k.a. a rate ceiling
59
Payment cap
A limit on the amount that the payment can change during one adjustment period on an ARM payment cap can result in negative amortization
60
Cancellation clause
A clause in a contract or lease, whereby either one of the parties is permitted to terminate the contract or lease upon the occurrence of specific condition set for in the clause. For example, if the buyers were not certain whether they can secure a mortgage, they would insist on this clause to protect them in the event a mortgage is not secure.
61
Cash flow
The amount of cash derived from an income producing property over a period of time
62
Certificate of eligibility
The document that qualified veterans must obtain from the VA in order to apply for a VA guaranteed home loan
63
Certificate of reasonable value (CRV)
A statement issued by the VA showing the properties current market value based on a VA approved appraisal
64
Certificate of reasonable value (CRV)
A statement issued by the VA showing the properties current market value based on a VA approved appraisal
65
Certificate of title
A document stating the name of the legal owner of a house, which often furnishes a legal description of the property
66
Certificate of veteran status
A document available through the VA that veterans used to establish eligibility for certain FHA loans
67
Chain of title
A list as far back as the records show of all transfers of a title with a list of everything that may affect the title such as easements or encumbrances
68
Chattel
Personal property
69
Clear title
Defined with some differences under the marketable record, title loss of different states, a clear title is generally a title clear of liens, judgments, and other encumbrances
70
Closing
A meeting between the buyer, seller, and lender or their agents were real estate funds for its purchase, legally change hands, a.k.a. settlements
71
Closing cost
Expenses over and above the price of the property incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include in origination fee, property, taxes, charges for title insurance, and escrow cost, appraisal fees, etc. Closing cost will vary according to the area of the country in the lenders used
72
Cloud on title
In outstanding claim on encumbrance on the title
73
Code of ethics
A statement of principles concerning the behavior of those who subscribe to the code
74
COFI
The 11th district cost of funds index. One type of index used to determine interest rates for adjustable rate mortgage.
75
Collateral
Property pledged at security for a debt
76
Combined loan to value ratio
A comparison, expressed as a percentage of the combined cost of all mortgages in a home and the value of the home use to secure the loans
77
Commitment
A pledge or promise, a firm agreement
78
Commitment
A pledge or promise, a firm agreement
79
Condemnation
A non-judicial determination that a property is unfit to occupy made by a municipal building or health inspector
80
Construction loan
An interim loan used to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he or she progresses.
81
Conforming loan
Alone that meets stilling limits and other criteria establish by Fannie Mae or Freddie Mac
82
Consumer reporting agency CRA
In organization that prepares reports to use by lenders to determine an applicants credit history
83
Contract
In agreement between two parties to do or not to do certain things for a legal consideration. To be enforceable, contracts must be in writing and must include a consideration, (price and terms), a valid description, place and date of delivery, and all terms and clauses that were agreed upon
84
Contract
In agreement between two parties to do or not to do certain things for a legal consideration. To be enforceable, contracts must be in writing and must include a consideration, (price and terms), a valid description, place and date of delivery, and all terms and clauses that were agreed upon
85
Contract of Sale or Contract of Deed
Contract between a purchaser and a seller of real estate to convey title after certain conditions have been met
86
Conventional Financing
Mortgage financing that is not insured or guaranteed by government agency, such as HUD/FHA, VA or GRH
87
Conventional Loan
A mortgage not insured by the FHA or guaranteed by the VA
88
Conversion Clause
A provision in the ARM allowing the loan to be converted to a fixed-rate at some point during the loan term
89
Conveyance
the transfer of the title of real estate from one to another
90
Cost of Funds Index (COFI)
the rate changed to banks for borrowing money from a Federal Reserve Banks. Each district office sets it own rate. The 11th district COFI is the rate most often used as an index for an ARM

MLO Study Guide (3 decks)

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