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-D-
Deed-in-lieu
A deed given
by a mortgagor to the mortgagee to satisfy a debt
and avoid foreclosure. Also called a "voluntary
conveyance."
Deed of
Trust
Like a
mortgage, a security instrument whereby real
property is given as security for a debt. However,
in a deed of trust there are three parties to the
instrument: the borrower, the trustee, and the
lender, (or beneficiary). In such a transaction, the
borrower transfers the legal title for the property
to the trustee who holds the property in trust as
security for the payment of the debt to the lender
or beneficiary. If the borrower pays the debt as
agreed, the deed of trust becomes void. If, however,
he defaults in the payment of the debt, the trustee
may sell the property at a public sale, under the
terms of the deed of trust. In most jurisdictions
where the deed of trust is in force, the borrower is
subject to having his property sold without benefit
of legal proceedings. A few States have begun in
recent years to treat the deed of trust like a
mortgage.
Default
Failure to
make mortgage payments on a timely basis or to
comply with other conditions of a mortgage.
Deficiency
Judgment
A court order
to pay the balance owed on a loan if the proceeds
from the sale of the security are insufficient to
pay off the loan. Deficiency judgments are not
allowed in all states.
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."
Discount
Points
See Points.
Documentary Stamps
A State tax,
in the forms of stamps, required on deeds and
mortgages when real estate title passes from one
owner to another. The amount of stamps required
varies with each State.
Dower
The rights of
a widow in the property of her husband at his death.
Down
Payment
The part of
the purchase price, which 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.
Due-on-transfer provision
This
terminology is usually used for second mortgages.
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- E -
Earnest Money
The deposit money given to the seller or his
agent by the potential buyer upon the signing of the
agreement of sale to show that he is serious about
buying the house. If the sale goes through, the
earnest money is applied against the down payment.
If the sale does not go through, the earnest money
will be forfeited or lost unless the binder or offer
to purchase expressly provides that it is
refundable.
Easement Rights
A right-of-way granted to a person or company
authorizing access to or over the owner's land. An
electric company obtaining a right-of-way across
private property is a common example.
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.
Eminent domain
The right of a government to take private
property for public use upon payment of its fair
market value. Eminent domain is the basis for
condemnation proceedings.
Employer-assisted housing
A special Fannie Mae housing initiative that
offers several different ways for employers to work
with local lenders to develop plans to assist their
employees in purchasing homes.
Encroachment
An obstruction, building, or part of a building
that intrudes beyond a legal boundary onto
neighboring private or public land, or a building
extending beyond the building line.
Encumbrance
A legal right or interest in land that affects a
good or clear title, and diminishes the land's
value. It can take numerous forms, such as zoning
ordinances, easement rights, claims, mortgages,
liens, charges, a pending legal action, unpaid
taxes, or restrictive covenants. An encumbrance does
not legally prevent transfer of the property to
another. A title search is all that is usually done
to reveal the existence of such encumbrances, and it
is up to the buyer to determine whether he wants to
purchase with the encumbrance, or what can be done
to remove it.
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
The difference between the market value of a
property and the homeowner's outstanding mortgage
balance.
Equity Loan
A loan based on the borrower's equity in his or
her home. Prior to closing; also, an account held by
the lender into which a homeowner pays money for
taxes and insurance.
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. 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.
Exclusive listing
A written contract that gives a licensed real
estate agent the exclusive right to sell a property
for a specified time, but reserving the owner’s
right to sell the property alone without the payment
of a commission.
Executor
A person named in a will to administer an estate
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- F -
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.
FDIC
(Federal Deposit Insurance Corporation). Provides
insurance of accounts for institutions whose
deposits were formerly covered by the Federal
Savings & Loan Insurance Corporation. (FSLIC).
Fee simple
The greatest possible interest a person can have in
real estate.
Fee simple estate
An
unconditional, unlimited estate of inheritance that
represents the greatest estate and most extensive
interest in land that can be enjoyed. It is of
perpetual duration. When the real estate is in a
condominium project, the unit owner is the exclusive
owner only of the air space within his or her
portion of the building (the unit) and is an owner
in common with respect to the land and other common
portions of the property.
FHA
(Federal Housing Administration). A division of the
Department of Housing and Urban Development. The
FHA's main activity is the insuring of residential
mortgage loans made by private lenders. It sets
standards for construction and underwriting. FHA
neither lends money, nor plans, nor constructs
housing.
FHA Loan
Government loans are loans that are guaranteed or
purchased by government organizations. Two of the
most popular Government Loans are the Federal
Housing Administration (FHA) and the Department of
Veterans Affairs (VA).
FHFB
(Federal Housing Finance Board). It oversees the
credit functions of the twelve regional Federal Home
Loan Banks.
FHLBB
(Federal Home Loan Bank Board). A regulatory and
supervisory agency for federally charted savings
institutions, which oversees the operations of the
FSLIC and FHLMC. This agency was abolished by the
Financial Institutions Reform, Recovery and
Enforcement Act of 1989. (See FIRREA.)
FHLMC
(Federal Home Loan Mortgage Corporation, Freddie
Mac). A private corporation authorized by Congress,
which became an independent, stockholder-owned
government corporation with the passage of FIRREA.
FHLMC promotes the flow of funds into the housing
markets by purchasing conventional mortgages in the
secondary market and selling securities backed by
those mortgages in the capital market.
Finance Charge
The total dollar amount your loan will cost you. It
includes all interest payments for the life of the
loan, any interest paid at closing, your origination
fee and any other charges paid to the lender and/or
broker. Appraisal, credit report and title search
fees are not included in the finance charge
calculation.
Finder's fee
A
fee or commission paid to a mortgage broker for
finding a mortgage loan for a prospective borrower.
FIRE
(Financial Institutions Reform, Recovery and
Enforcement Act of 1989). An act signed into law in
August 1989, by President Bush that restructured the
thrift regulatory an insurance system.
Firm commitment
A
lender’s agreement to make a loan to a specific
borrower on a specific property.
First Mortgage
The mortgage that has first claim in the event of
default.
Fixed installment
The monthly payment due on a mortgage loan.
Fixed-Rate Mortgage
(FRM) A mortgage in which the interest rate does not
change during the entire term of the loan.
FNMA
(Federal National Mortgage Association, Fannie Mae).
A government-sponsored corporation, owned solely by
private investors, created to provide support to the
secondary market for FHA and VA mortgages and
conventional mortgages.
Fixture
Personal property that becomes real property when
attached in a permanent manner to real estate.
Flood insurance
Insurance that compensates for physical property
damage resulting from flooding. It is required for
properties located in federally designated flood
areas.
Forfeiture
The loss of money, property, rights, or privileges
due to a breach of legal obligation.
Foreclosure
The process by which a mortgage property may be sold
when a mortgage is in default.
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.
Full Recasting
Setting the P&I payments to the level that will
fully amortize the loan's outstanding balance over
the remaining term using the fully indexed accrual
rate at the recasting point.
Fully Indexed Accrual Rate
The interest (accrual) rate resulting from the index
at closing (or at another point in the loan) plus
the lender's full spread, rounded as prescribed in
the loan documents (often to the nearest 1/8th of
1%).
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- G -
General Warranty Deed
A
deed which conveys not only all the grantor's
interests in and title to the property to the
grantee, but also warrants that if the title is
defective or has a "cloud" on it (such as mortgage
claims, tax liens, title claims, judgments, or
mechanic's liens against it) the grantee may hold
the grantor liable.
Good Faith Estimate
An
estimate of charges, which a borrower is likely to
incur in connection with a loan closing.
Graduated Payment Mortgage
(GPM) A mortgage where the payments are scheduled to
increase, usually annually, for a set number of
years, and then level off. GPM can be used with
either a fixed or adjustable interest rate, and
usually has a 30-year term.
Grantee
That party in the deed who is the buyer or
recipient.
Grantor
That party in the deed who is the seller or giver.
Gross Monthly Income
The total amount the borrower earns per month, not
counting any taxes or expenses. Often used in
calculations to determine whether a borrower
qualifies for a particular loan.
Growing Equity Mortgage
(GEM) A fixed rate, graduated payment mortgage with
small initial payments that increase each year so
that the loan pays off in a shortened term, usually
15 years.
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Hazard Insurance
Insurance to protect the homeowner and the lender
against physical damage to a property from fire,
wind, vandalism, or other hazards.
Homeowner's Insurance
An
insurance policy that combines liability coverage
and hazard insurance.
Homeowner's Warranty
A
type of insurance that covers repairs to specified
parts of a house for a specific period of time.
Housing Ratio
The ratio of the monthly housing payment to total
gross monthly income. Also called Payment-to-Income
Ratio or Front-End Ratio.
HUD
(Department of Housing and Urban Development). A
cabinet department responsible for the
implementation and administration of government
housing and urban development programs.
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- I -
Income property
Real estate developed or improved to produce income.
Index
(Also called "Rate Index"). A regularly published
rate, independent of the lending institution, that
measures the prevailing cost of funds, and is used
periodically with the margin to set AML accrual
rates.
Initial Borrower Interest Rate
The rate on which the borrower's first payment is
calculated.
Initial Borrower Payment Rate
The annual interest rate used to calculate the
borrower's initial cash payment.
Inflation
An
increase in the amount of money or credit available
in relation to the amount of goods or services
available, which causes an increase in the general
price level of goods and services. Over time,
inflation reduces the purchasing power of a dollar,
making it worth less.
Initial interest rate
The original interest rate of the mortgage at the
time of closing.
Installment
The regular periodic payment that a borrower agrees
to make to a lender.
Installment loan
Borrowed money that is repaid in equal payments,
known as installments. A furniture loan is often
paid for as an installment loan.
Insurable title
A
property title that a title insurance company agrees
to insure against defects and disputes.
Insurance
A
contract that provides compensation for specific
losses in exchange for a periodic payment. An
individual contract is known as an insurance policy,
and the periodic payment is known as an insurance
premium.
Insurance binder
A
document that states that insurance is temporarily
in effect. Because the coverage will expire by a
specified date, a permanent policy must be obtained
before the expiration date.
Insured mortgage
A
mortgage that is protected by the Federal Housing
Administration (FHA) or by private mortgage
insurance (MI). If the borrower defaults on the
loan, the insurer must pay the lender the lesser of
the loss incurred or the insured amount
Interest
The fee charged for borrowing money.
Interest accrual rate
The percentage rate at which interest accrues on the
mortgage. In most cases, it is also the rate used to
calculate the monthly payments, although it is not
used for an adjustable-rate mortgage (ARM) with
payment change limitations.
Interest Rate
The percentage of an amount of money, which is paid
for its use for a specified time.
Interest Rate Cap
A
provision of an ARM limiting how much interest rates
may increase per adjustment period.
Interest rate ceiling
For an adjustable-rate mortgage (ARM), the maximum
interest rate, as specified in the mortgage note.
Interest rate floor
For an adjustable-rate mortgage (ARM), the minimum
interest rate, as specified in the mortgage note.
Investment property
A
property that is not occupied by the owner.
IRA (Individual Retirement Account)
A
retirement account that allows individuals to make
tax-deferred contributions to a personal retirement
fund. Individuals can place IRA funds in bank
accounts or in other forms of investment such as
stocks, bonds, or mutual funds.
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- J -
Joint tenancy
A
form of co-ownership that gives each tenant equal
interest and equal rights in the property, including
the right of survivorship.
Judgment
A
decision made by a court of law. In judgments that
require the repayment of a debt, the court may place
a lien against the debtor's real property as
collateral for the judgment's creditor.
Judgment lien
A
lien on the property of a debtor resulting from the
decree of a court.
Judicial foreclosure
A
type of foreclosure proceeding used in some states
that is handled as a civil lawsuit and conducted
entirely under the auspices of a court.
Jumbo Loans
Jumbo, or non-conforming, is a term used to
describe a loan that does not conform to Fannie
Mae or Freddie Mac guidelines. The typical Jumbo
loan exceeds the maximum loan amounts described
above.
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(empty)
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- L -
Late charge
The penalty a borrower must pay when a payment is
made a stated number of days (usually 15) after the
due date.
Lease
A
written agreement between the property owner and a
tenant that stipulates the conditions under which
the tenant may possess the real estate for a
specified period of time and rent.
Leasehold estate
A
way of holding title to a property wherein the
mortgagor does not actually own the property but
rather has a recorded long-term lease on it.
Legal description
A
property description, recognized by law that is
sufficient to locate and identify the property
without oral testimony.
Lender
An
institution that makes loans to borrowers on real
estate.
Liabilities
A
person's financial obligations. Liabilities include
long-term and short-term debt, as well as any other
amounts that are owed to others.
Liability insurance
Insurance coverage that offers protection against
claims alleging that a property owner's negligence
or inappropriate action resulted in bodily injury or
property damage to another party.
Lien
A
legal claim against a property that must be paid
when the property is sold.
Lifetime Cap
A
provision of an ARM that limits the total increase
in interest rates over the life of the loan.
Lifetime payment cap
For an adjustable-rate mortgage (ARM), a limit on
the amount that payments can increase or decrease
over the life of the mortgage.
Line of credit
An
agreement by a commercial bank or other financial
institution to extend credit up to a certain amount
for a certain time to a specified borrower.
Liquid asset
A
cash asset or an asset that is easily converted into
cash.
Loan
A
sum of borrowed money (principal) that is generally
repaid with interest.
Loan Commitment
Formal offer by a lender stating the terms under
which it agrees to loan money to a homebuyer.
Loan origination
The process by which a mortgage lender brings into
existence a mortgage secured by real property.
Loan Servicing
The collection of mortgage payments from borrowers
and related responsibilities of a loan servicer.
Loan -To-Value
(LTV). The loan-to-value ratio (LTV) is the original
loan amount divided by the lower of the sales price
or the appraised value.
Lock
The period, expressed in days, during which a lender
will guarantee a rate.
Lock-in period
The time period during which the lender has
guaranteed an interest rate to a borrower.
- M -
Marketable Title
A
title that is free and clear of objectionable liens,
clouds, or other title defects. A title which
enables an owner to sell his property freely to
others and which others will accept without
objection.
Master association
A
homeowners' association in a large condominium or
planned unit development (PUD) project that is made
up of representatives from associations covering
specific areas within the project. In effect, it is
a "second-level" association that handles matters
affecting the entire development, while the
"first-level" associations handle matters affecting
their particular portions of the project.
Maturity
The date on which the principal balance of a loan,
bond, or other financial instrument becomes due and
payable.
Merged credit report
A
credit report that contains information from three
credit repositories. When the report is created, the
information is compared for duplicate entries. Any
duplicates are combined to provide a summary of a
your credit.
Modification
Margin
(Also called "Spread"). The amount the lender adds
to the index to determine the Fully Indexed Accrual
Rate.
Money market account
A
savings account that provides bank depositors with
many of the advantages of a money market fund.
Certain regulatory restrictions apply to the
withdrawal of funds from a money market account.
Money market fund
A
mutual fund that allows individuals to participate
in managed investments in short-term debt
securities, such as certificates of deposit and
Treasury bills.
Monthly Housing Expense
Total principal, interest, taxes, and insurance paid
by the borrower on a monthly basis. Used with gross
income to determine affordability.
Monthly payment mortgage
A
mortgage that requires payments to reduce the debt
once a month.
Mortgage
A
legal document that pledges a property to the lender
as security for a payment of a debt.
Mortgage Banker
A
company that originates mortgages exclusively for
resale in the secondary market.
Mortgage Broker
A
company that for a fee matches borrowers with
lenders.
Mortgage Insurance Premium
(MIP). The fee paid to FHA or a private insurer for
mortgage insurance.
Mortgagee
The lender in a mortgage agreement.
Mortgage Commitment
A
written notice from the bank or other lending
institution saying it will advance mortgage funds in
a specified amount to enable a buyer to purchase a
house.
Mortgage Insurance Premium
The payment made by a borrower to the lender for
transmittal to HUD to help defray the cost of the
FHA mortgage insurance program and to provide a
reserve fund to protect lenders against loss in
insured mortgage transactions. In FHA insured
mortgages this represents an annual rate of one-half
of one percent paid by the mortgagor on a monthly
basis.
Mortgage life insurance
A
type of term life insurance often bought by
mortgagors. The amount of coverage decreases as the
principal balance declines. In the event that the
borrower dies while the policy is in force, the debt
is automatically satisfied by insurance proceeds.
Mortgage Note
A
written agreement to repay a loan. The agreement is
secured by a mortgage, serves as proof of
indebtedness, and states the manner in which it
shall be paid. The note states the actual amount of
the debt that the mortgage secures and renders the
mortgagor personally responsible for repayment.
Mortgagor
The borrower in a mortgage agreement.
Multidwelling units
Properties that provide separate housing units for
more than one family, although they secure only a
single mortgage.
Multifamily mortgage
A
residential mortgage on a dwelling that is designed
to house more than four families, such as a
high-rise apartment complex.
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- N -
Negative Amortization
(Also called "Deferred Interest"). If the payments
are too small to cover the interest due on a loan,
the remaining interest owed is added to the
outstanding loan balance, causing negative
amortization.
Net cash flow
The income that remains for an investment property
after the monthly operating income is reduced by the
monthly housing expense, which includes principal,
interest, taxes, and insurance (PITI) for the
mortgage, homeowners' association dues, leasehold
payments, and subordinate financing payments.
Net Effective Income
Gross income less federal income tax.
Negative amortization
A
gradual increase in mortgage debt that occurs when
the monthly payment is not large enough to cover the
entire principal and interest due. The amount of the
shortfall is added to the remaining balance to
create "negative" amortization
Net Worth
The value of all assets, including cash, less total
liabilities.
No cash-out refinance
A
refinance transaction in which the new mortgage
amount is limited to the sum of the remaining
balance of the existing first mortgage, closing
costs (including prepaid items), points, the amount
required to satisfy any mortgage liens that are more
than one year old (if the borrower chooses to
satisfy them), and other funds for the borrower's
use (as long as the amount does not exceed 1 percent
of the principal amount of the new mortgage).
Non-liquid asset
An
asset that cannot easily be converted into cash.
Note
A
legal document that obligates a borrower to repay a
mortgage loan at a stated interest rate during a
specified period of time.
Note rate
The interest rate stated on a mortgage note.
Notice of Default
A
formal written notice to a borrower that a default
has occurred and that legal action may be taken.
- O -
Original principal balance
The total amount of principal owed on a mortgage
before any payments are made.
Origination Fee
A
fee paid to a lender for processing a loan
Application.
OTC
(The Office of Thrift Supervision). Charters federal
thrifts, serves as the primary federal examiner and
regulator of federal and state-chartered savings
associations, and administers laws governing savings
and loan holding companies.
Owner financing
A
property purchase transaction in which the property
seller provides all or part of the financing.
Owner Occupied
"Owner Occupied" means the property
is the owner's primary residence.
- P -
Payment Adjustment Period
The length of time (typically a year) between
changes to the AML borrower's P&I payment.
Payment Buy down
Payment buy downs occur when a third party,
typically a builder, pays part of the initial P&I
payments for a year or two, so that the borrower has
smaller payments and can qualify for the loan.
Payment Cap
A
limit on the amount the payment can be changed at
the end of each Payment Adjustment Period.
Payment Discount
In
a payment discount, the lender reduces the first
year's interest rate to make the mortgagor more
attractive to borrowers.
Periodic payment cap
A
limit on the amount that payments can increase or
decrease during any one-adjustment period.
Periodic rate cap
A
limit on the amount that the interest rate can
increase or decrease during any one adjustment
period, regardless of how high or low the index
might be.
Personal property
Any property that is not real property.
PITI
Principal, Interest, Taxes and Insurance are
components of a mortgage payment.
Plat
A
map or chart of a lot, subdivision or community
drawn by a surveyor showing boundary lines,
buildings, improvements on the land, and easements.
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.
Power of attorney
A
legal document that authorizes another person to act
on one’s behalf. A power of attorney can grant
complete authority or can be limited to certain acts
and/or certain periods of time.
Prepayment
Payment of mortgage loan, or part of it, before due
date.
Pre-qualification
The process of determining how much money a
prospective homebuyer will be eligible to borrow
before application.
Prime rate
The interest rates that banks charge to their
preferred customers.
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
Insurance provided by nongovernmental insurers that
protect lenders against loss if a borrower defaults.
Promissory note
A
written promise to repay a specified amount over a
specified period of time.
Public auction
A
meeting in an announced public location to sell
property to repay a mortgage that is in default.
Planned Unit Development (PUD)
A
project or subdivision that includes common property
that is owned and maintained by a homeowners'
association for the benefit and use of the
individual PUD unit owners.
Purchase Agreement
See Agreement of Sale.
Purchase money transaction
The acquisition of property through the payment of
money or its equivalent.
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- Q -
Qualifying Ratios
Guidelines applied by lenders to determine how large
a loan to grant a homebuyer.
Quitclaim Deed
A
deed, which transfers whatever interest, the
maker of the deed may have in the particular
parcel of land. A quitclaim deed is often given
to clear the title when the grantor's interest
in a property is questionable. By accepting
such a deed the buyer assumes all the risks.
Such a deed makes no warranties as to the title,
but simply transfers to the buyer whatever interest
the grantor has. (See Deed.)
- R -
Radon
A
radioactive gas found in some homes that in
sufficient concentrations could cause health
problems.
Rate Caps
(Also called "Interest Rate Caps"). A limit on the
amount of which the interest rate charged to the
borrower can be changed.
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.
Real Estate Broker
A
middleman or agent who buys and sells real estate
for a company, firm, or individual on a commission
basis. The broker does not have title to the
property, but generally represents the owner.
Real Estate Owned
(REO). A term frequently used by lending institution
as applied to ownership of real property acquired
for investment or as a result of foreclosure.
RESPA
(Real Estate Settlement Procedures Act). A Federal
law that requires lenders to provide home mortgage
borrowers with information about known or estimated
settlement 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 broker or an associate who holds active
membership in a local real estate board that is
affiliated with the National Association of
Realtors.
Recission
The cancellation or annulment of a transaction or
contract by the operation of a law or by mutual
consent.
Recorder
The public official who keeps records of
transactions that affects real property in the area.
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. Refinancing
The process of the same mortgagor paying off one
loan with the proceeds from another loan.
Rehabilitation mortgage
A
mortgage created to cover the costs of repairing,
improving, and sometimes acquiring an existing
property.
Remaining balance
The amount of principal that has not yet been
repaid.
Remaining term
The original amortization term minus the number of
payments that have been applied.
Repayment plan
An
arrangement made to repay delinquent installments or
advances. Lenders' formal repayment plans are called
"relief provisions."
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.
Restrictive Covenants
Private restrictions limiting the use of real
property. Restrictive covenants are created by deed
and may "run with the land," binding all subsequent
purchasers of the land, or may be "personal" and
binding only between the original seller and buyer.
The determination whether a covenant runs with the
land or is personal is governed by the language of
the covenant, the intent of the parties, and the law
in the State where the land is situated. Restrictive
covenants that run with the land are encumbrances
and may affect the value and marketability of title.
Restrictive covenants may limit the density of
buildings per acre, regulate size, style or price
range of buildings to be erected, or prevent
particular businesses from operating or minority
groups from owning or occupying homes in a given
area. (This latter discriminatory covenant is
unconstitutional and has been declared unenforceable
by the U.S. Supreme Court.)
Revolving liability
A
credit arrangement, such as a credit card, that
allows a customer to borrow against a pre-approved
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.
RTC
(Resolution Trust Corporation). Formed to resolve
thrift failures over the next three years and
dispose of their assets and liabilities.
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Sales Agreement
See Agreement of sale.
Second Mortgage
A
mortgage that has rights that are subordinate to the
rights of the first mortgage holders.
Secondary Mortgage Market
The buying and selling of existing mortgages.
Seller-Provided Funds
(Also called "Seller Contributions").
Seller-provided funds include all transaction cost
paid by the seller except the real estate agent's
(or brokers) fee.
Servicer
The party who has entered into an agreement with the
insured to service a loan.
Settlement Costs
See Closing Costs.
Single Premium
A
premium, which provides coverage for more than a
year. empty)
Special Assessments
A
special tax imposed on property, individual lots or
all property in the immediate area, for road
construction, sidewalks, sewers, streetlights, etc.
Special Lien
A
lien that binds a specified piece of property,
unlike a general lien, which is levied against all
one's assets. It creates a right to retain something
of value belonging to another person as compensation
for labor, material, or money expended in that
person's behalf. In some localities it is called
"particular" lien or "specific" lien. (See Lien.)
Special Warranty Deed
A
deed in which the grantor conveys title to the
grantee and agrees to protect the grantee against
title defects or claims asserted by the grantor and
those persons whose right to assert a claim against
the title arose during the period the grantor held
title to the property. In a special warranty deed
the grantor guarantees to the grantee that he has
done nothing during the time he held title to the
property which has, or which might in the future,
impair the grantee's title.
Survey
A
map or plat made by a licensed surveyor showing
the results of measuring the land with its elevations,
improvements, boundaries, and its relationship
to surrounding tracts of land. A survey is often
required by the lender to assure him that a
building is actually sited on the land according
to its legal description.
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Tax
As
applied to real estate, an enforced charge imposed
on persons, property or income, to be used to
support the State. The governing body in turn
utilizes the funds in the best interest of the
general public.
Tax Lien
A
claim against real estate for the amount of its
unpaid taxes.
Teaser Rate
Similar to a Payment Discount, but implies either an
unusually large initial rate discount or an attempt
by the lender to lure an otherwise unqualified
borrower into the mortgage.
Tenancy by the entirety
A
type of joint tenancy of property that provides
right of survivorship and is available only to a
husband and wife. Contrast with tenancy in common.
Tenancy in common
A
type of joint tenancy in a property without right of
survivorship. Contrast with tenancy by the entirety
and with joint tenancy.
Tenant-stockholder
The obligee for a cooperative share loan, who is
both a stockholder in a cooperative corporation and
a tenant of the unit under a proprietary lease or
occupancy agreement.
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.
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