MORTGAGE LOAN ORIGINATION ACTIVITIES Flashcards
A description of an extension of the existing financing either through the same lender or through a new financial arrangement.
Refinancing
A transaction that occurred under typical conditions in the marketplace where each of the parties were acting in their own best interests.
Arm’s Length Transaction
Person designated to receive benefits from a certain act, such as one who benefits from a trust.
Beneficiary
A specific lien claimed by someone who performed work on the property (construction, repairs, or improvements) and has not been paid. This term is often used in a general sense, referring to materialmen’s liens as well as actual mechanics’ liens.
Mechanic’s Lien
A contract clause that gives the lender the right to declare all outstanding payments immediately due upon a default by the borrower.
Acceleration Clause
A method in which numerical values are assigned to different aspects of a borrower’s loan application and used by lenders to gauge creditworthiness and assess credit risk.
Credit Scoring
The act of filing a document at the county recorder’s office so it will be placed in the public record.
Recording
The process of evaluating and deciding whether to make a new loan and on what terms.
Underwriting
Credit history showing previous problems in meeting financial obligations.
Derogatory Credit
The actual, lawful ownership interest in a property; title is not a document but a concept.
Title
Taxes levied only against properties that benefit from a public improvement (e.g., new sewer line).
Assessments
The criteria an underwriter uses to determine if a borrower or property qualifies for a loan.
Underwriting Standards
A lien placed against property with the consent of the owner; a mortgage (or, in other states, a deed of trust).
Voluntary Lien
The theoretical price that a piece of property would bring if placed on the open market for a reasonable period of time, with a buyer willing (but not forced) to buy, and a seller willing (but not forced) to sell, if both buyer and seller were fully informed as to possible use of the land.
Market value
A settlement procedure conducted with all parties present.
Roundtable Closing
A credit applicant who does not have ownership interest in the security property as indicated on the title but signs the note.
Co-Signer
Insurance policy that protects lenders and homeowners against losses resulting from undiscovered title defects and encumbrances.
Title Insurance
Coverage that indemnifies a person with an interest in the property for a loss caused to the property by a covered peril.
Property Insurance
A brief, chronological summary of the recorded documents affecting the title to a particular parcel of real property
Abstract of Title
The acronym for a typical mortgage payment that includes Principal, Interest, Taxes, and Insurance. It would also include any homeowners association fees required as a condition of ownership.
PITI
One percent of the loan amount. A fee charged by a lender for making a loan, calculated based on the loan amount.
Point
Item on a settlement statement for which the cost has been incurred, but the expense has not yet been paid. Such expenses are considered to be paid in arrears.
Accrued Expense
Monthly fees paid by each condominium or cooperative owner for common area expenses such as utilities, management, building maintenance, hazard and liability insurance for the common areas of the property, and other amenities.
Association Fees
A document prepared by an attorney stating the attorney’s opinion of the status of the title to a piece of property, after performing a title search and reviewing the public records. Also called Opinion of Title.
Certificate of Title
A standardized document that presents a final, detailed accounting for a real estate transaction, listing each party’s debits and credits and the amount each will receive or be required to pay at closing; required for all RESPA-related transactions. Also called Settlement Statement.
Closing Disclosure
The amount of money owed on a note or other promise to pay.
Debt
The amount of money paid at regular intervals toward reducing the principal and interest owed on a debt.
Debt Service
Claim with highest priority against property? Also known as a superior to the rights of subsequent lenders. (Recorded first)
First Lien
The disclosure of loan terms, annual percentage rate and other credit costs, and estimated settlement costs that lenders must present to borrowers within three business days of a completed loan application in order to satisfy provisions of the Truth in Lending Act and the Real Estate Settlement Procedures Act.
Loan Estimate
The formal process by which a lender determines if potential borrowers can be financed through the lender, and for what amount of money. Preapproval is generally binding on the lender.
Preapproval
The person charged with coordinating the activities and documentation necessary for completing a real estate transaction; usually the one who prepares the settlement statement and conducts the closing. Also called Closing Officer, Closing Agent, Escrow Agent, or Title Agent.
Settlement Officer
State in which a mortgagee holds actual title to property until the loan is repaid.
Title Theory State
A standardized form from Fannie Mae or Freddie Mac that lenders require potential borrowers to complete with pertinent information about the borrower and the property.
Uniform Residential Loan Application (URLA)
Expense items on a settlement statement the seller has already paid in advance, usually at the beginning of a month for the rest of the month, or at the beginning of the year for the rest of the year or longer.
Prepaid Expenses
A situation where a lender approves a loan under certain stated conditions.
Conditional Approval
A type of business organization that has the limited liability protection of a corporation and the tax advantages of a partnership.
Limited Liability Company
A clause in a contract that obligates a creditor to release of the property from the lien and conveys title to that part back to the debtor once certain provisions of the note or mortgage have been satisfied. Also called Partial Release or Satisfaction Clause.
Reconveyance Clause
When a buyer borrows money from another source in addition to the primary lender to pay for part of the purchase price or closing costs; usually requires a subordination agreement.
Secondary Financing
Recently sold properties with similar characteristics (size, room count, design, utility, etc.) that are in close proximity to the property being appraised. Also called Comps.
Comparables
The government’s constitutional power to take (appropriate or condemn) private property for public use, as long as the owner is paid just compensation. (Government taking of private land is called condemnation.)
Eminent Domain
A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price. Also called a purchase and sale agreement, a purchase contract, or an earnest money agreement.
Purchase Agreement
A listing of a borrower’s credit history, including amount of debt, record of repayment, job info, address info, etc.
Credit Report
