Home     >    Resources     >    Glossary
Glossary


A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A - (Back to Top)
Ability-to-Repay (ATR): a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms.
Adjustable Rate Mortgage (ARM): A mortgage that changes interest rate periodically based upon the changes in a specified index.
Adjustment Date: The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period: The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
Affiliate: Any company that controls, is controlled by, or is under common control with another company.
Amortization: Gradual reduction of the mortgage debt through periodic payments scheduled over the mortgage term. The repayment of a mortgage loan by installments with regular payments to cover the principal and interest.
Amortization Term: The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.
Annual Percentage Rate (APR): The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, loan origination fee (points) and other finance charges.
Annual Percentage Rate (32) / APR (32): (i) For a transaction in which the annual percentage rate will not vary during the term of the loan or credit plan, the interest rate in effect as of the date the interest rate for the transaction is set;

(ii) For a transaction in which the interest rate may vary during the term of the loan or credit plan in accordance with an index, the interest rate that results from adding the maximum margin permitted at any time during the term of the loan or credit plan to the value of the index rate in effect as of the date the interest rate for the transaction is set, or the introductory interest rate, whichever is greater; and

(iii) For a transaction in which the interest rate may or will vary during the term of the loan or credit plan, other than a transaction described in paragraph (a)(3)(ii) of this section, the maximum interest rate that may be imposed during the term of the loan or credit plan.
Application: A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.
Application (Reg B-ECOA): A request for credit in accordance with procedures used by the financial institution for a type of credit requested.
Application (Reg C-HMDA): A covered transaction that is made in accordance with the procedures of the financial institution for the type of credit requested.
Application (Reg X-RESPA): Receipt by the lender or broker of the 7 required pieces of information for an application of a consumer closed-end loan to be secured by real estate on which there is a 1 to 4 family residence or on which a 1 to 4 family dwelling is to be built using the proceeds of the loan.
Appraisal: A professional opinion of the market value of a property.
Appraiser: A person qualified by education, training, and experience to estimate the value of real property and personal property.
Appreciation: An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
Asset: Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
Assignment: The transfer of a mortgage from one person to another.
Assumable Mortgage: A mortgage that can be taken over ("assumed") by the buyer when a home is sold.
Assumption: The transfer of the seller's existing mortgage to the buyer.
Assumption Clause: A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.
Assumption Fee: The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.
Average Prime Offer Rate (APOR): an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions that have low-risk pricing characteristics.
B - (Back to Top)
Balance Sheet: A financial statement that shows assets, liabilities, and net worth as of a specific date.
Balloon Mortgage: A mortgage that has level monthly payments that will amortize it over a stated term, but that provides for a lump sum payment to be due at the end of an earlier specified term.
Balloon Payment: The final lump sum payment that is made at the maturity date of a balloon mortgage.
Bankrupt: A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.
Bankruptcy: A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.
Before-tax Income: Income before taxes are deducted.
Beneficiary: The person designated to receive the income from a trust, estate, or a deed of trust.
Binder: A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.
Biweekly Payment Mortgage: A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest.
Blanket Mortgage: The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.
Bona Fide Discount Point (BF Discount): An amount equal to each 1 point charged that reduces the rate by no less than a ¼ percentage point (.25%).
Bond: An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.
Breach: A violation of any legal obligation.
Bridge Loan: A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan."
Broker: A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.
Buydown Mortgage: A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.
C - (Back to Top)
Call Option: A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.
Cap: A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease.
Capital Improvement: Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.
Cash-out Refinance: A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.
Certificate of Eligibility: A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.
Certificate of Reasonable Value (CRV): A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
Certificate of Title: A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.
Chain of Title: The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
Change Frequency: The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).
Clear Title: A title that is free of liens or legal questions as to ownership of the property.
Closing: A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement."
Closing Costs: Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country.
Closing Date: The date in which the closing documents are signed. Usually it is the same day as the Settlement Date except when rescission is involved.
Closing Statement: Also referred to as the HUD1. The final statement of costs incurred to close on a loan or to purchase a home.
Cloud on Title: Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.
Collateral: An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
Collection: The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.
Co-maker: A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment. See endorser.
Commercial Loan: A loan that is made primarily for business, commercial, investment, agricultural, or similar purposes. The Term does not include a loan made primarily for personal, family, or household use.
Commission: The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.
Commitment Letter: A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."
Common Areas: Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
Community Home Improvement Mortgage Loan: An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can account for as much as 30 percent of the appraised value.
Community Property: In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.
Comparables: An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location , and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.
Completed Application (Reg B-ECOA): An application for which a financial institution has received all the information that it regularly obtains and has evaluated the information based on typical procedures for the type of credit requested.
Condominium: A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.
Condominium Conversion: Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
Construction Loan: A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
Consumer Finance Protection Bureau (CFPB): A Congressionally established agency, which protects consumers by carrying out federal consumer financial laws.
Consumer Reporting Agency (or Bureau): An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.
Contingency: A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
Contract: An oral or written agreement to do or not to do a certain thing.
Conventional Mortgage: Any mortgage that is not insured or guaranteed by the federal government.
Convertibility Clause: A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.
Convertible ARM: An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.
Cooperative (co-op): A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
Corporate Relocation: Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.
Cost of Funds Index (COFI): An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.
Covenant: A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
Credit: An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
Credit History: A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.
Credit Report: A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.
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.
D - (Back to Top)
Debt: An amount owed to another.
Debt-to-Income Ratio (DTI): A figure established by taking the total of all consumers monthly liabilities, including the debt being applied for, any insurance, taxes or HOA dues and dividing by the gross monthly income. .
Deducted: ("D") A fee that will be deducted from the Funding Check to the Title Company.
Deed: The legal document conveying title to a property.
Deed-In-Lieu: A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure.
Deed of Trust: The document used in some states instead of a mortgage; title is conveyed to a trustee.
Default: Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
Delinquency: A loan in which a payment is overdue but not yet in default.
Deposit: A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.
Depreciation: A decline in the value of property; the opposite of appreciation.
Document Expiration Date: The date in which the documents must be signed before they become invalid.
Dodd Frank Act (DFA): Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010;
Down Payment: The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Due-on-Sale Provision: A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
Dwelling: A residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.
E - (Back to Top)
Earnest Money Deposit: A deposit made by the potential home buyer to show that he or she is serious about buying the house.
Easement: A right of way giving persons other than the owner access to or over a property.
Effective Age: An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
Effective Gross Income: Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.
Encumbrance: Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
Endorser: A person who signs ownership interest over to another party. Contrast with co-maker.
Equal Credit Opportunity Act (ECOA): A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.
Escrow: An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.
Escrow Account: The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses.
Escrow Analysis: The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.
Escrow Collections: Funds collected by the servicer and set aside in an escrow account to pay the borrower's property taxes, mortgage insurance, and hazard insurance.
Escrow Disbursements: The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
Escrow Payment: The portion of a mortgagor's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.
Estate: The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.
Eviction: The lawful expulsion of an occupant from real property.
Examination of Title: The report on the title of a property from the public records or an abstract of the title.
F - (Back to Top)
Fair Credit Reporting Act: A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.
Fair Market Value: The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae: A congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.
Fannie Mae's Community Home Buyer's Program: An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family's buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
Federal Financial Institutions Examination Council (FFIEC): A formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB), and to make recommendations to promote uniformity in the supervision of financial institutions.
Federal Housing Administration (FHA): An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
Fee Simple: The greatest possible interest a person can have in real estate.
FHA: Federal Housing Administration, part of HUD. It insures mortgages made by private lenders.
FHA Mortgage: A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.
Finder's Fee: A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
First Mortgage: A mortgage that is the primary lien against a property.
Fixed-Rate Mortgage (FRM): A mortgage in which the interest rate does not change during the entire term of the loan.
Flood Insurance: Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
Foreclosure: The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Fully Amortized ARM: An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.
G - (Back to Top)
Good Faith Estimate: An estimate of charges which a borrower is likely to incur in connection with a settlement. A breakdown of cost to originate a mortgage loan.
GSE: Government Sponsered Enterprise (FNMA and FHLMC)
H - (Back to Top)
Hazard Insurance: Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.
Higher Priced Mortgage Loan (HPML): a closed-end consumer credit transaction secured by the consumer's principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set by specific thresholds set forth in Section 35.

-HPML / Section 35 Loan
Home Ownership Equity Protection Act (HOEPA): Enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees. Effective January 10, 2014 this definition will also include purchase and open-end credit transactions.

-HOEPA / Section 32 Loan
Housing Ratio: The ratio of the monthly housing payment in total (PITI - Principal, Interest, Taxes, and Insurance) divided by the gross monthly income. This ratio is sometimes referred to as the top ratio or front end ratio.
HUD: The U.S. Department of Housing and Urban Development.
I - (Back to Top)
Index: A published interest rate to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. Some commonly used indices include the 1 Year Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI).
Interest: The fee charged for borrowing money.
J - (Back to Top)
K - (Back to Top)
L - (Back to Top)
Lien: A legal claim against a property that must be paid off when the property is sold. An encumbrance against property for money due, either voluntary or involuntary.
Lifetime Cap: A provision of an ARM that limits the highest rate that can occur over the life of the loan.
Loan Servicing: The collection of mortgage payments from borrowers and other related responsibilities of a loan servicer.
Loan to Value Ratio (LTV): The ratio of the amount of your loan to the appraised value of the home. The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.
Lock-in: A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.
M - (Back to Top)
Margin: The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period. A representative margin would be 2.75%.
Mean: A value that is intermediate between other values, for example, an average or expected value.
Median: The middle value in a set of statistical values that are arranged in ascending or descending order.
Mode: Most frequent value:  the value that has the highest frequency within a statistical range.
Mortgage: A legal document that pledges a property to the lender as security for payment of a debt.
Mortgage Broker: RESPA defines a "Mortgage Broker" as any loan originator not using its own funds or non-investor line of credit to fund the loan. An originating bank that table funds using the investor's funds even if closing in the bank's name is a "Mortgage Broker".
Mortgage Disability Insurance: A disability insurance policy which will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time.
Mortgage Insurance (MI): Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. Usually required for loans with an LTV of 80.01% or higher.
Mortgage Insurance-Premium: ("MIP") The fee paid by a borrower to FHA or a private insurer for mortgage insurance.
Mortgagee: The person or company who receives the mortgage as a pledge for repayment of the loan. The mortgage lender.
Mortgage-related obligations: property taxes; premiums and similar charges identified in § 1026.4(b)(5), (7), (8), and (10) that are required by the creditor; fees and special assessments imposed by a condominium, cooperative, or homeowners association; ground rent; and leasehold payments.
Mortgagor: The mortgage borrower who gives the mortgage as a pledge to repay.
N - (Back to Top)
National Mortgage Licensing System (NMLS): A system implemented that provides a Unique Identifier (number) to each company, branch and individual that improves supervision and transparency in the residential mortgage markets by providing regulators, the industry and the public with a tool that tracks companies and individuals across state lines and over time.
National Mortgage Licensing System Registry (NMLSR): Centralized location based on NMLS Unique Idenifiers, that maintains up to date information on all registrants.
Non-Conforming Loan: Also called a jumbo loan. Conventional home mortgages not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac (FHLMC) because of various reasons, including loan amount, loan characteristics or underwriting guidelines. Non-conforming loans usually incur a rate and origination fee premium.The current non-conforming loan limit is ,601 and above.
Note: A written agreement containing a promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand.
O - (Back to Top)
Origination Fee: The fee paid to a lender for processing a loan application; it is stated as a percentage of the mortgage amount.
Owner Financing: A property purchase transaction in which the property seller provides all or part of the financing.
P - (Back to Top)
Paid By: "B" = Borrower, "S" = Seller, "O" = Other
PITI: Stands for principal, interest, taxes and insurance-the components of a monthly mortgage payment.
Points: A one-time charge by the lender to increase the yield of the loan; a point is 1 percent of the amount of the mortgage.
Prepaid Finance Charge: ("PFC") A charge paid by the Borrower at or before closing which according to the Truth in Lending Act and Regulation-Z increases the Borrower's Annual Percentage Rate (APR).
Prepayment Penalty: A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.
Prequalification: The process of determining how much money a prospective home buyer will be eligible to borrow before a loan is applied for.
Principal: The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
Private Mortgage Insurance: ("PMI") Insurance provided by non government insurers that protects lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater that 80 percent.
PUD: Stands for planned unit development. A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.
Q - (Back to Top)
Qualified Mortgage (QM): Pertains to Section 43 transactions. A mortgage transaction underwritten and cleared in accordance with requirements set forth in Section 43 of TILA effective January 10, 2014. Provides increased restrictions on toxic features. Implemented to ensure maximum consumer benefit, and reduce default rates.
QRM: Qualified Residential Mortgage; Still in development
Qualifying ratios: Guidelines applied by the lenders to determine how large a loan to grant a home buyer. The ratio of your fixed monthly expenses to your gross monthly income, used to determine how much you can afford to borrow. The fixed monthly expenses would include PITI along with other obligations such as student loans, car loans, or credit card payments.
R - (Back to Top)
Rate Cap: A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.
Rate Lock-In: A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.
Real Estate Settlement Procedures Act: (RESPA) A consumer protection law that requires lenders to give borrowers advance notice of closing cost.
Rebate: Compensation received from a wholesale lender which can be used to cover closing costs or as a refund to the borrower. Loans with rebates often carry higher interest rates than loans with "points" (see above).
Rebuttable Presumption: A designation given to QMs classified as higher priced covered transactions, which have rebuttable presumption of compliance with ATR requirements. Consumer may indicate that the creditor did not make a reasonable and good faith determination of the consumer's repayment ability at the time of consummation. Creditor must subsequently prove its compliance with ATR by valid documentation. Consumer may use as a defense to default for a minimum of 3 years. Pertains to Section 1026.43, QM-HPMLs.
Refinancing: The process of paying off one loan with proceeds from a new loan using the same property as security.
Residential Mortgage Credit Report (RMCR): A report requested by your lender that utilizes information from at least two of the three national credit bureaus and information provided on your loan application.
Retainage Account Amount: An amount to cover any expense incurred by Lender as a result of any default by Builder or Borrower under the Construction Loan Agreement.
S - (Back to Top)
Safe Harbor: A designation given to all QM loans which are not higher priced covered transactions, that have complete presumption of compliance with all ATR requirements, and lower risk for delay or issue upon occurrence of default. Pertains to Section 1026.43, QM-non-HPMLs.
Secondary Mortgage Market: The buying and selling of existing mortgages.
Seller Carry Back: An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage.
Settlement Date: The date in which the money is released. Usually it is the same day as the Closing Date except when rescission is involved.
Short Term Loan: A loan with a minimal term, where borrower generally makes regular periodic payments of P&I, and intends to pay the loan off upon completion of term with use of consumers own funds.
Simultaneous Loan: Another covered transaction or home equity line of credit subject to § 1026.40 that will be secured by the same dwelling and made to the same consumer at or before consummation of the covered transaction or, if to be made after consummation, will cover closing costs of the first covered transaction.
Small Creditor-Balloon: Small Creditor-(for Balloon QM). Creditor must extend over 50% of its loans in predominantly “rural or underserved” areas, along with affiliates have fewer than 500 first lien covered transactions, and less than $2 billion in assets during the previous calendar year. Will maintain these loans in portfolio for 3 years.
Small Creditor-SC QM: Small Creditor-(For Small Creditor QM). Creditor and affiliates have fewer than 500 first lien covered transactions, and less than $2 billion in assets during the previous calendar year and will maintain these loans in portfolio.Two year temporary QM catagory loans will sunset January 10, 2016. Created to help with transition for "Small Creditors".
State High Cost Loan: State Predatory Lending Loan.
Survey: A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
T - (Back to Top)
Temporary Loan: A loan which will be replaced by permanent financing at a later date. Generally indicated by interest-only payments and/or balloon at the end of a minimal term.
Tenants-in-Common: An undivided interest in property taken by two or more persons. The interest need not be equal. Upon death of one or more persons, there is no right of survivorship.
Third-party Record: A document or other record prepared or reviewed by an appropriate person other than the consumer, the creditor, or the mortgage broker, as defined in § 1026.36(a)(2), or an agent of the creditor or mortgage broker.
Time-Price Differential: Per Diem interest.
Title: The evidence one has of right to possession of land.
Title Insurance: Insurance against loss resulting from defects of title to a specifically described parcel of real property.
Title Search: An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.
Total Debt Ratio: Monthly debt and housing payments divided by gross monthly income. Also known as Obligations-to-Income Ratio or Back-End Ratio.
Total Loan Amount-Closed-End (TLA): The amount financed; 1026.18(b)-Principal loan amount+ any financed non-APR fees - PFC, then deducting any real estate fees payable to creditor or afilliate, premiums for any credit insurance, and total prepayment penalty paid by off by same lender that are financed by the loan.
Total Loan Amount-Open-End (TLA-OE): Credit limit for plan when account is opened.
Truth-in-Lending Act: A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.
U - (Back to Top)
Underwriting: The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's credit worthiness and the quality of the property itself.
V - (Back to Top)
VA Funding Fee: ("VAFF") The funding fee associated with a VA loan.
VA Loan: A loan that is guaranteed by the Department of Veterans Affairs. Also referred to as a "government" mortgage.
Venue: 'Venue' is reference to the proper place where a lawsuit should be filed. Not to be confused with 'vendue' which means public sale.
Veterans Administration (VA): A government agency guaranteeing mortgage loans with no down payment to qualified veterans.
W - (Back to Top)
X - (Back to Top)
Y - (Back to Top)
Z - (Back to Top)

Last revised: Oct 4, 2013

Stay connected

facebook twitter