Glossary Flashcards
vocab
abusive act
action that materially interferes with a consumer’s ability to understand the product or service
acceleration clause
clause that gives a lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions
accrued expenses
items on a settlement statement for which the cost has been incurred, but the expense has not yet been paid
acquisition cost
the total amount needed to purchase property, including down payment, loan amount, and any allowable buyer-paid closing costs
adjustable rate mortgage (ARM)
a mortgage that permits the lender to periodically adjust the interest rate to reflect fluctuations in the cost of money
adverse action
the denial of credit or an increased charge for credit based on information obtained from a third party
advertisement
a commercial message in any medium that promotes, directly or indirectly, a credit transaction
alienation clause
in a contract, gives the lender certain stated rights when there is a transfer of ownership in a property (also called “due on sale clause”
alt-a loan
a type of loan in which the risk is greater than prime, but less than subprime. The borrower may have a strong credit history, but the mortgage may have elements that increase risk. Risk issues could include higher loan-to-value and debt-to-income ratios, or lack of documentation about the borrower’s income.
Amortization
Reduction of the loan balance by paying back, on a regular basis, some of the principal owed.
Application
Submission of a borrowers financial information in anticipation of a credit decision.
ALIENS = address, loan amount, income, estimate of property value, name, SSN
Appraisal
A professional estimate or opinion of the value of a piece of property (parcel of land), as of a certain date, that’s supported by objective data.
Appraisal Management Company
A business entity that (for a management fee) administers a network of certified and licensed appraisers to fulfill real estate appraisal assignments on behalf of mortgage lending institutions.
Appraiser
A person who estimates the value of property, especially a licensed expert qualified to do so by education and experience.
Assets
Items of value
Assumption
An action in which one party agrees to take over payments of another party’s debts, with terms of the note staying unchanged.
Average Prime Offer Rate (APOR)
An annual percentage rate derived from average interest rates, points, and other loan pricing terms that are currently offered to consumers by a representative sample of lenders for mortgage transactions that have low-risk pricing characteristics.
Balloon Payment
A final lump-sum payment at the end of a loan term to pay off the entire remaining balance of principal and interest not covered by payments during the loan term.
Bankruptcy
A court process that cancels debt and provides some relief for creditors
Bankruptcy; Chapter 7
Sometimes called a straight bankruptcy, it is a liquidation proceeding
Bankruptcy; Chapter 13
Sometimes called a reorganization proceeding, is filed by individuals who want to pay off their debts over a period of 3-5 years.
Bi-Weekly Payment Plan
Plan in which payments are made every two weeks instead of once a month.
Bona Fide Offer
An offer made in good faith with no element of fraud.
Boot
Money and like-kind property exchanged in a transaction; term frequently expressed concerning IRS Section 1031 exchanges.
Buydown, Permanent
The payment of points by a borrower to a lender to reduce the interest rate and loan payments for the entire life of the loan.
Buydown, Temporary
The payment of points by a borrower to a lender to reduce the interest rate and payments early in a loan, with interest rates and payments rising later. ETC ETC ETC
Chain of Title
A clear and unbroken chronological record of the ownership of a specific piece of property.
Closing
The final stage in a real estate transaction where ownership of real property is transferred from seller to buyer according to the terms and conditions set forth in a sales contract or escrow agreement.
Closing
Loan Consummation or Settlement
Closing Costs
Expenses incurred in the transfer of real estate in addition to the purchase price (ex: the appraisal fee, title insurance premiums, broker’s commission, transfer tax).
Cloud on the Title
A claim, encumbrance, or defect that makes the title to real property unmarketable.
Collateral
Property pledged as security for a debt.
Conforming Loan
A loan that meets the criteria necessary to be sold in the secondary market.
Consumer
Individual who obtains, or has obtained, a financial product or service from a financial institution for personal, family, or household reasons.
Consumer Financial Protection Bureau (CFPB)
Independent agency funded by the Federal Reserve with rulemaking and enforcement authority over many consumer financial laws. Established under Title X of the Dodd-Frank Act.
Conventional Loan
A loan usually made by a bank or institution lender that is not insured or guaranteed by a government entity or agency (ex: FHA, VA)
Conversion Option
An ARM option that gives the borrower the right to convert from an adjustable rate loan to a fixed-rate loan.
Correspondent
A mortgage banker who originates mortgage loans that are sold to other mortgage bankers or financial institutions.
Cost of Funds Index (COFI)
A regional average of interest expenses incurred by financial institutions, which in turn is used as a base for calculating variable rate loans.
Credit
Sum of money to be received.
Credit Freeze
Places a credit file “on ice” by preventing the information from being reported to third parties, such as credit grantors and other companies. ETC ETC ETC
Credit History
A person’s record of debt repayment, often used as a guide to whether he or she is likely to pay accounts on time in the future.
Credit Scoring
A means by which the lender makes certain determinations regarding the creditworthiness of potential borrowers. This involves a lender assigning specified numerical values to different aspects relating to a borrower.
Customer
Consumer with a continuing, significant relationship with a financial institution.
Debit
Sum of money that is owned
Debt
Any recurring monetary obligation that will not be cancelled.
Debt-to-Income Ratio (DTI)
The relationship of a borrower’s total monthly debt obligations to income, expressed as a percentage.Total debt / income = ratio. Also known as “back-end”.
Deed of Trust
A security instrustment placing into the hands of a disinterested third party a specific financial interest in the title to real property as security for the payment of a note.
Defeasance Clause
A clause in a legal document that states that in the event a stated condition has been fulfilled, the document becomes null and void
Demand Clause
Any provision that enables a creditor to call a loan due before maturity.
Demand Deposit
Money that is immediately accessible by a customer, who may elect to withdraw it from the bank at any time.
Depository Institution
Any bank or savings association and includes any credit union.
Discount Points
A form of pre-paid interest that is charged by a lender to increase the yield on a lower-than-market interest rate loan; one point equals one percent of the loan amount.
Disintermediation
The loss of deposits to competing investments that offer higher returns
Disparate Impact
A law that may be neutral on its face, but has a discriminatory effect since it has a greater adverse impact on one group than on others
Dodd-Frank Wall Street Reform and Consumer Protection Act
A federal law with the purpose to promote the financial stability of the US by improving accountability and transparency in the financial system. It establishes the Consumer Financial Protection Bureau and new standards concerning a wide range of mortgage lending practices, including compensation of mortgage originators, federal mortgage disclosures, and mortgage servicing.
Dower or Curtesy Right
Interest in the real estate of a deceased spouse given by law to the surviving partner.
Down Payment
The amount a buyer pays to obtain a property in addition to the money that the buyer borrows.
Dual Tracking
The term used when servicers move forward on a foreclosure at the same time the mortgage servicer is working with a borrower on a workout plan.
Dwelling
A residential structure or mobile home, which contains one-to-four family housing units, or individual units of condominiums or cooperatives.
Easement
The non-ownership right acquired by a person to use the land of another for a specific purpose. It is irrevocable and creates an interest in the property.
Encumbrance
Any claim, lein, charge, or liability that affects or limits the fee simple title to real property.
Entitlement
A veteran’s maximum guaranty amount for a loan guarantee by the VA.
Equitable Title
Substitute title so they don’t have to use real paper title
Equity Exchange
Condition in which value in one property is traded for value in another property. Also called a tax-deferred exchange, tax-free exchange, like-kind exchange, or Section 1031.