Bank Vocab Flashcards
A form of check fraud, involves taking advantage of “float” time making use of non existent funds in a bank acct.
Check Kiting
Money borrowed on a credit card
Cash advance
A situation in which many depositors simultaneously decide to withdraw money from a bank
Bank run
Interest rate the Federal Reserve charges on its loans to member banks
Discount rate
Money banks make from processing credit and debit transactions
Interchange
How interchange works
Each time you swipe your card the store or merchant pays an interchange fee
Those involved in a card transaction
Acquiring bank - where the money is going to
Card issuing bank - where the money is coming from
Credit card association - visa, MasterCard, discover, etc
Who pays for the interchange fees?
Merchant services which is generally then passed on to the customers through slightly higher product or service pricing
______________ is the paying off of debt with a fixed repayment schedule in regular installments over a period of time for example with a mortgage or a car loan.
Amortization
A pre-approved loan between a financial institution and borrower that may be used repeatedly up to a certain limit and can subsequently be paid back prior to payments coming due.
Open End Credit
Loans underwritten conservatively and supported by the net worth of individual borrowers.
Unsecured Loans
The legal instrument used to secure a lien position on real estate.
Deed of Trust
The underwriting calculation that reflects total income divided by total debts. Measure of a borrowers ability to make loan payments from cash flow.
Debt Servicing Ratio
The Inverse of Debt to Income Ratio
Debt Servicing Ratio
What is used in conjunction with DSR to determine qualification?
Residual Income (RI)
A requirement for loans that fall under ATR
Verification of Employment (VOE)
The automated underwriting system that is required for all secondary market mortgages
Desktop Underwriter (DU)
A term used to describe a loan payment
Principal and Interest (PI)
A term used to describe a mortgage payment where the bank is also escrow in for property taxes and homeowners insurance
Principal, Interest, Taxes, Insurance (PITI)
A mortgage loan program with adjustable rate feature. The interest rate and payment can change.
Adjustable Rate Mortgage (ARM)/ Fixed Initial Rate Mortgage (FIRM)
Used to verify loans or rent payments not present on the credit report
Verification of Mortgage (VOM)
The annualized cost of credit, expressed as a percentage.
Annual Percentage Rate (APR)
A form that verifies bank account information
Verification of Deposit (VOD)
A mortgage insurance policy that protects the bank in case the borrower defaults on payments. Required in most cases, when the borrower has less than 20% equity in their home.
Private Mortgage Insurance (PMI)
The secondary market underwriting term for DSR that displays the result in a percentage form
Debt to Income Ratio (DTI)
The permit given by the city/ county to certify that a newly constructed home is complete and in a condition suitable for occupancy.
Certificate of Occupancy
The cost to complete the interior of a commercial building, for a specific tenant.
Tenant Improvement (TI)
Bank balance sheet item typically associated with foreclosed properties. (Banks want to get rid of these as soon as possible)
Other Real Estate Owned (OREO)
A base interest rate used for loans with variable pricing, and FirstBank’s preferred index. Alternative to London Inter-Bank Offering Rate.
WSJ Prime Rate
Yield of US Government Borrowing, considered to be the least risky investment available.
Treasury Bill
Money paid to confirm a contract.
Earnest Money
