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Vocab > Overview > Flashcards

Overview Flashcards

1
Q

Mortgage Loan Originator

A

An individual who: 1) Takes a residential mortgage loan application and 2) offers or negotiates terms of a residential mortgage loan for compensation or gain.

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2
Q

Title

A

A legal document establishing the right of ownership to real property(-ies). Titles must be recorded to make them part of the public record.

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3
Q

Ownership

A

Legal right of possession documented by the deed to a property. The type or form of ownership is important if there is a change in the status of the owners or if the property changes ownership.

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4
Q

Deed

A

A legal documents that transfers ownership of a property from one person to another or grants ownership of property as long as its stipulations are upheld. The deed is recorded on public record with the property description and the owner’s signature.

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5
Q

Property

A

The land, permanent structures and fixtures within the legally described boundaries specified in a real estate contract. Ownership of the property confers the legal right to use the property as allowed within the law and within the restrictions of zoning or easements.

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6
Q

Credit

A

An agreement that a person will borrow money and repay it to the lender, typically over a specified time.

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7
Q

Loan

A

money borrowed, typically with interest and other fees involved, that is repaid over a specified time period.

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8
Q

Mortgage

A

A lien on the property that secured the promise to repay a loan. A mortgage is a security agreement between the lender and the buyer in which the property is collateral for the loan. The mortgage gives the lender the right to collect payment on the loan and to foreclose if the loan obligations are not met.

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9
Q

Traditional Mortgage

A

A 30-year fixed conventional or government loan.

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10
Q

Agreement/Understanding

A

When 2 or more parties acknowledge to offer things of value in exchange for referrals.

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11
Q

Person

A

An individual (natural person), partnership, limited liability company, trust or corporation.

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12
Q

Borrower

A

A person who has been approved to receive a loan and then is obligated to repay it and any additional fees according to the loan terms. Also known as a “debtor” or a “mortgagor”.

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13
Q

Balloon Payment

A

The final lump sum payment due at the end of a balloon mortgage.

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14
Q

FDIC

A

Federal Deposit Insurance Corporation. Is a Federal banking agency created to protect borrower deposits. (Roosevelt-Banking Act 1933)

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15
Q

FHA

A

Federal Housing Administration. Provides mortgage insurance. Created to reassure lenders in cases of borrower mortgage defaults. FHA emphasized longer mortgage terms. Led to our “traditional” mortgage.

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16
Q

Lender

A

A person or company that makes loans for real estate purchases. Sometimes referred to as a “loan officer” or “mortgagee”.

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17
Q

Default

A

The inability to make timely, monthly mortgage payments or otherwise comply with mortgage terms. A loan is considered to be in default when payment has not been. made after 60-90 days. Once in default, the lender can exercise legal rights defined in the contract to begin foreclosure proceedings.

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18
Q

Term

A

The period of time and interest rate agreed upon by the lender and the borrower to repay a loan.

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19
Q

VA

A

Department of Veterans Affairs. A Federal agency that guarantees loans to veterans. It is similar to mortgage insurance, a loan guaranty protects lenders against loss that may result from a borrower default.

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20
Q

Fannie Mae

A

Federal National Mortgage Association (FNMA). A Federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors. By purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers. Also known as “Government Sponsored Enterprises” (GSE).

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21
Q

Freddie Mac

A

Federal Home Loan Mortgage Corporation (FHLMC). A Federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors. This provides lenders with funds for new homebuyers. Also known as “Government Sponsored Enterprises” (GSE).

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22
Q

Ginnie Mae

A

Government National Mortgage Association (GNMA). A government owned corporation overseen by the U.S. Department of Housing and Urban Development. Ginnie Mae pools FHA-insured and VA-guaranteed loans to guarantee securities for private investment. As with Fannie Mae and Freddie Mac, the investment income provides funding that may be then lent to eligible borrowers by lenders.

23
Q

Capital

A

An individual’s savings, investments, or assets. Also known as “cash reserves”.

24
Q

Gramm-Leach-Bliley Financial Services Modernization Act

A

Requires financial institutions/companies that offer consumers financial products like loans, insurance, etc. to explain their information-sharing practices to their customers and to safeguard sensitive data. 3 Parts; The Financial Privacy Rule, The Safeguards Rule, and The Pretexting Provisions.

25
Q

Mortgage Backed Security (MBS)

A

A Fannie Mae or Freddie Mac security that represents an undivided interest in a group of mortgages. Principal and interest payments from the individual mortgage loans are grouped and paid out to the MBS holders.

26
Q

Collateral

A

Security in the form of money or property pledged fo the payment of a loan. For example, on a home loan the home is the collateral and can be taken away from the borrower if the mortgage payments are not made.

27
Q

Sub-Prime Mortgage

A

Any “B” Loan or “B” paper with FICO scores from 620-659, or any “C” Loan or “C” paper with FICO scores typically from 580-619. Subprime loans carry less stringent lending and underwriting terms and conditions. These loans are made to borrowers with poor credit background due to late payments, bankruptcy, foreclosures, etc. These loans give the borrower an opportunity to obtain financing with guidelines that are less stringent than traditional loans. Due to the higher risk, subprime loans charge higher rates and fees.

28
Q

Fees

A

Money paid in conjunction with a mortgage loan other than the actual loan amount and interest. This also included third party fees, such as those paid for credit reports, appraisals, or origination/broker fees. Fees affect the total cost of credit when obtaining a loan.

29
Q

Interest Rate

A

The amount of interest (expressed as a percentage) charged on a monthly loan payment.

30
Q

Foreclosure

A

This is a legal process in which the lender (mortgagee) takes over the ownership of a property, thus terminating the owner’s rights to the possession of the home. This occurs when the owner/borrower is unable to make payments to satisfy the mortgage debt. The lender will then sell the home to recover as much as the mortgage debt as they can. There are 2 procedures that can be executed to foreclose on a property 1) judicial foreclosure and 2) non-judicial foreclosure.

31
Q

Collect

A

Receive monies that are due.

32
Q

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

A

Was born after the ‘08 financial crisis to address economic concerns. It changed the oversight and capitalization of many financial institutions, added licensing and education standards for mortgage professionals, and limited the availability of riskier products in the marketplace. 5 main areas; consumer​ protection, resolution​ authority, systemic risk​ regulation, volcker​ rule, and derivatives.

33
Q

Law

A

A system of rules that govern behavior and actions.

34
Q

Consumer

A

An individual who has or will obtain financial services from a financial institution for any reason.

35
Q

Federal Banking Agencies

A

Includes the Board of Governors of the Federal Reserve System (FRB), the Comptroller of Currency (OCC), National Credit Union Administration (NCUA), and the Federal Deposit Insurance Corporation (FDIC).

36
Q

Consumer Financial Protection Bureau (CFPB)

A

Oversees and enforces the regulations of the Dodd-Frank Act, with its sole purpose being to protect consumers from deceptive and unethical financial practices.

37
Q

UDAAPs

A

An unfair, deceptive, or abusive act or practice.

38
Q

Investor

A

A person or organization that puts money into financial arrangements, property, etc. with the expectation of achieving a profit.

39
Q

Customer

A

A consumer who has a continuing relationship with a financial institution. In this situation the financial institution must comply with the regulations of GLBA (privacy notice).

40
Q

Regulator

A

A person or institution that supervises and controls a financial system in order to guarantee fair and efficient markets and financial stability. We have state and federal regulators.

41
Q

Application

A

The first step in the official loan approval process. This form is used to record important information about the potential borrower necessary to the underwriting process.

42
Q

Mortgage Broker

A

A person that originates and processes loans for multiple lenders. Mortgage brokers are intermediaries who receive compensation for negotiating, placing, or finding mortgage loans for borrowers.

43
Q

Non-Depository Institution

A

Any financial institution not regulated or covered by the Federal Deposit Insurance Act. Typically, such institutions do not maintain customer transaction accounts such as checking and savings.

44
Q

Processor

A

An individual who assists the underwriter by gathering and organizing information in the borrower’s loan file so that the underwriter has all of the necessary information to make the decision to approve or deny the loan. They can order vendor items such as title work and appraisals. Their role is administrative or clerical.

45
Q

Independent Contractor

A

An independent contractor is a person, business, or corporation that provides goods or services under a written contract or a verbal agreement. Unlike employees, independent contractors do not work regularly for an employer but work as required.

46
Q

Underwriter

A

An individual whose role is also administrative or clerical, they will review client information to determine if it is in line with the loan program guidelines. What makes their role unique from the processor is they will make final determination based on loan program guidelines of whether to approve or deny the loan.

47
Q

Appraiser

A

A qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

48
Q

Appraisal

A

The act of a qualified appraiser giving an estimate of property’s fair market value based on recent sales of comparable homes in the area and the features of property. An appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

49
Q

Closing Costs

A

Fees for a final property transfer not included in the price of the property. Typical closing costs include charges for the mortgage loan, for example, origination fees, discount points, appraisal fees, survey, title insurance, legal fees, and real estate transfer taxes. Also called “settlement costs”.

50
Q

Title Company

A

Any institution qualified to issue title insurance or authorize it through agents it employs.

51
Q

Abstractor (Abstractor of Title)

A

A person who prepares and certifies the history of ownership of a property (known as title). They are typically an employee of a title company, or an attorney, and perform the title search.

52
Q

Title Insurance

A

Insurance that protects the lender or homebuyer against any claims that arise from arguments about ownership of the property. It is also an insurance policy that guarantees the accuracy of a title search protecting against errors. Most lenders require the buyer to purchase title insurance protecting the lender against loss in the event of a title defect. This charge is included in the closing costs. A policy that protects the buyer from title defects is known as an owner’s policy and requires an additional charge.

53
Q

Real Estate Agent

A

An individual who works for a real estate broker and is licensed to negotiate and arrange real estate sales.

54
Q

Real Estate Broker

A

A licensed individual or firm that charges a fee to serve as the mediator between the buyer and the seller. Mortgage brokers are individuals in the business arranging funding or negotiating contracts for a client, but they do not loan money. A real estate broker is someone who helps find a house.

Vocab (9 decks)

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