Mortgages and Residential Lending Flashcards
Adjustable Rate Mortgage
A mortgage in which the borrower and lender share risks of a fluctuating interest rate economy
Capacity
The ability to pay a debt or loan being contemplated
Character
The desire or willingness to pay a debt or loan being contemplated
Collateral
The security pledged for the payment of a loan
Conforming Loan
A conventional loan that follows Fannie Mae and Freddie Mac residential loan uniform documentation and qualification parameters
Conventional Loan
A loan that is made that is not federally insured or guaranteed
Credit
The reputation of a person or firm for the paying of bills when due
Gap Loan
Also referred to as a Bridge loan or swing loan. This type of loan is used as a short-term loan until long term financing can be obtained
Government-Backed Loan
Residential mortgage loan that is insured or guaranteed by federal agencies
Graduated Payment Mortgage
Begins with low payments but increases at regular intervals for set number of years and then levels out for the balance of the term
Negative Amoritization
Occurs when the monthly loan payment is not enough to pay the interest due
Nonconforming Loan
Also known as a jumbo or high balance loan, can also be sold to the secondary mortgage market, although the purchaser will most likely be a nongovernment entity
Participation Loan
A loan where the lender participates in the profits generated by a commercial property used to secure the debt
Qualified Mortgage
A new class of mortgage defined by Consumer Financial Protection Bureau rules that are designed to be safer and easier for consumers
Release
When the lender removes the lien on a property
Reverse Annuity Mortgage
The lender makes monthly payments to a homeowners who repays in a lump sum upon the homeowner’s death or sale of the home
Shared Appreciation Mortgage
Lender participates in the appreciation of the property value and in turn accepts a note with a lower rate of interest
Subprime Loan
A loan where the applicant does not qualify for prime loans but can qualify for a higher interested rate above the prime rate
Take out Loan
This term is used when changing from a short term loan to a long term loan
Wraparound Mortgage
Purchasing money transaction subjects to, but still including, encumbrances to which it is subordinate
