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Mortgage Glossary
A-C,
D-F,
G-J,
L-M,
O-Q,
S-V
S Thru V
rate
lock
A commitment issued by a lender to a
borrower or other mortgage originator
guaranteeing a specified interest rate for a
specified period of time at a specific cost.
real
estate agent
A person
licensed to negotiate and transact the sale of
real estate.
Real
Estate Settlement Procedures Act (RESPA)
A consumer
protection law that requires lenders to give
borrowers advance notice of closing costs.
real
property
Land and
appurtenances, including anything of a
permanent nature such as structures, trees,
minerals, and the interest, benefits, and
inherent rights thereof.
Realtor®
A real estate
agent, broker or an associate who holds active
membership in a local real estate board that
is affiliated with the National Association of
Realtors.
recorder
The public
official who keeps records of transactions
that affect real property in the area.
Sometimes known as a "Registrar of
Deeds" or "County Clerk."
recording
The noting in
the registrar’s office of the details of a
properly executed legal document, such as a
deed, a mortgage note, a satisfaction of
mortgage, or an extension of mortgage, thereby
making it a part of the public record.
refinance
transaction
The process of
paying off one loan with the proceeds from a
new loan using the same property as security.
remaining
balance
The amount of
principal that has not yet been repaid. See
principal balance.
remaining
term
The original
amortization term minus the number of payments
that have been applied.
rent
loss insurance
Insurance that
protects a landlord against loss of rent or
rental value due to fire or other casualty
that renders the leased premises unavailable
for use and as a result of which the tenant is
excused from paying rent.
repayment
plan
An arrangement
made to repay delinquent installments or
advances.
replacement
reserve fund
A fund set aside for replacement of common
property in a condominium, PUD, or cooperative
project -- particularly that which has a short
life expectancy, such as carpeting, furniture,
etc.
revolving
debt
A credit
arrangement, such as a credit card, that
allows a customer to borrow against a
preapproved line of credit when purchasing
goods and services. The borrower is billed for
the amount that is actually borrowed plus any
interest due.
right
of first refusal
A provision in
an agreement that requires the owner of a
property to give another party the first
opportunity to purchase or lease the property
before he or she offers it for sale or lease
to others.
right
of ingress or egress
The right to
enter or leave designated premises.
right
of survivorship
In joint
tenancy, the right of survivors to acquire the
interest of a deceased joint tenant.
sale-leaseback
A technique in
which a seller deeds property to a buyer for a
consideration, and the buyer simultaneously
leases the property back to the seller.
second
mortgage
A mortgage that
has a lien position subordinate to the first
mortgage.
secondary
market
The buying and
selling of existing mortgages, usually as part
of a "pool" of mortgages.
secured
loan
A loan that is
backed by collateral.
security
The property
that will be pledged as collateral for a loan.
seller
carry-back
An agreement in
which the owner of a property provides
financing, often in combination with an
assumable mortgage.
servicer
An organization
that collects principal and interest payments
from borrowers and manages borrowers’ escrow
accounts. The servicer often services
mortgages that have been purchased by an
investor in the secondary mortgage market.
servicing
The collection
of mortgage payments from borrowers and
related responsibilities of a loan servicer.
settlement
statement
See HUD1
Settlement Statement
subdivision
A housing
development that is created by dividing a
tract of land into individual lots for sale or
lease.
subordinate
financing
Any mortgage or
other lien that has a priority that is lower
than that of the first mortgage.
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.
sweat
equity
Contribution to
the construction or rehabilitation of a
property in the form of labor or services
rather than cash.
tenancy
in common
As opposed to
joint tenancy, when there are two or more
individuals on title to a piece of property,
this type of ownership does not pass ownership
to the others in the event of death.
third-party
origination
A process by
which a lender uses another party to
completely or partially originate, process,
underwrite, close, fund, or package the
mortgages it plans to deliver to the secondary
mortgage market.
title
A legal document
evidencing a person's right to or ownership of
a property.
title
company
A company that
specializes in examining and insuring titles
to real estate.
title
insurance
Insurance that
protects the lender (lender's policy) or the
buyer (owner's policy) against loss arising
from disputes over ownership of a property.
title
search
A check of the
title records to ensure that the seller is the
legal owner of the property and that there are
no liens or other claims outstanding.
transfer
of ownership
Any means by
which the ownership of a property changes
hands. Lenders consider all of the following
situations to be a transfer of ownership: the
purchase of a property "subject to"
the mortgage, the assumption of the mortgage
debt by the property purchaser, and any
exchange of possession of the property under a
land sales contract or any other land trust
device.
transfer
tax
State or local tax payable when title
passes from one owner to another.
Treasury
index
An index that is
used to determine interest rate changes for
certain adjustable-rate mortgage (ARM) plans.
It is based on the results of auctions that
the U.S. Treasury holds for its Treasury bills
and securities or is derived from the U.S.
Treasury's daily yield curve, which is based
on the closing market bid yields on actively
traded Treasury securities in the
over-the-counter market.
Truth-in-Lending
A federal law
that requires lenders to fully disclose, in
writing, the terms and conditions of a
mortgage, including the annual percentage rate
(APR) and other charges.
two-step
mortgage
An
adjustable-rate mortgage (ARM) that has one
interest rate for the first five or seven
years of its mortgage term and a different
interest rate for the remainder of the
amortization term.
two-
to four-family property
A property that
consists of a structure that provides living
space (dwelling units) for two to four
families, although ownership of the structure
is evidenced by a single deed.
trustee
A fiduciary who
holds or controls property for the benefit of
another.
VA
mortgage
A mortgage that
is guaranteed by the Department of Veterans
Affairs (VA).
vested
Having the right
to use a portion of a fund such as an
individual retirement fund. For example,
individuals who are 100 percent vested can
withdraw all of the funds that are set aside
for them in a retirement fund. However, taxes
may be due on any funds that are actually
withdrawn.
Veterans
Administration (VA)
An agency of the
federal government that guarantees residential
mortgages made to eligible veterans of the
military services. The guarantee protects the
lender against loss and thus encourages
lenders to make mortgages to veterans.
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