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SAFE Exam > SAFE Terms > Flashcards

SAFE Terms Flashcards

1
Q

General Warranty Deed

A

This conveys ownership from one party to another with the guarantee that there are no encumbrances on title, which would threaten the new owner’s interest in the property.

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2
Q

Joint Tenancy (with Rights of Survivorship)

A

Type of ownership where individuals share ownership
equally and in the case of the death of one of the
owners, that ownership is transferred directly to the
other owner.

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3
Q

Loan Level Price Adjustments (LLPA)

A

Adjusting the interest rate of a loan to reflect the credit risk of a borrower.

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4
Q

Money Market Account

A

An interest-bearing
account that typically pays a higher interest rate than
a savings account, and which provides the account
holder with limited check-writing ability

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5
Q

Mortgage Insurance Premium (MIP)

A

A monthly
payment, usually part of the mortgage payment, paid
by a borrower for mortgage insurance.

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6
Q

Multiple Listing Service (MLS)

A

A database utilized
by real estate agents to exchange information on real
estate listings and sales in a given area.

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7
Q

Non-Judicial Foreclosure

A

A stream-lined
foreclosure process that includes a “power of sale
clause” allowing the lender to sell the home without
a lawsuit. At least 120 days before the foreclosure
sale the lender or their attorney will send a notice of
default. After ownership is transferred the home is
sold in an auction. The borrower is able to cure the
default by paying all past due amounts prior to the
sale.

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8
Q

Non-Recourse Loan

A 
A type of loan that is secured
by collateral (a pledged asset), but does not hold the
borrower personally liable for all of the debt. With a non-recourse debt, the lender can legally foreclose but has to accept the loss if the property sells for less than the loan balance.
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9
Q

Notice of Action

A

This informs the consumer of how
the lender intends to proceed with the mortgage
loan application.

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10
Q

Planned Unit Development (PUD)

A

A housing
development that is planned and constructed as one
entity. Generally, a deed and attached covenants
contain common features that apply to the homes or
lots. Most planned developments have common land
and facilities owned and managed by the owner’s or
neighborhood association. Homeowners are usually
required to participate in the association by paying
monthly or annual dues

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11
Q

Pretexting/Phishing

A

This is the act of obtaining an individual’s
non-public personal information through false
pretenses.

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12
Q

Qualifying Ratios

A

Guidelines utilized by lenders to
determine how much money a homebuyer is qualified
to borrow. Lending guidelines typically include a
front-end and back-end debt ratio.

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13
Q

Special Warranty Deed

A

Conveys ownership from
one party to another, but the seller of the property is
only going to only guarantee the history of ownership
for the period of time that they owned it and nothing
before. It may also only guarantee a certain time
frame of ownership

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14
Q

Temporary Buydown

A

A mortgage loan component
that allows the borrower to ease into the interest rate
over a limited period.

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15
Q

Yield Spread Premium (YSP)

A

Compensation
paid to a mortgage broker by a lender for giving a
borrower a rate that exceeded the going rate. This
form of compensation is no longer available due to
Section 36 of TILA Loan Origination Compensation,
which prohibits dual compensation.

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16
Q

Abstractor (Abstractor of Title)

A

A person who prepares and certifies the history of ownership of a property (known as title)

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17
Q

Adverse Action

A

A decision made by a lender to deny the extension of credit to a consumer, terminate existing account or make any unaffordable change.

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18
Q

Balloon Loan

A

A mortgage that typically offers low rates for an intitial period of time, usually 5, 7, or 10 years. After that time period, the balance is due on the loan or is refinanced by the borrower.

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19
Q

Change of Circumstance

A

An act of God, war, disaster or other emergencies. Also new or changed information particular to the borrower or transaction such as credit quality, value of home, etc.

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20
Q

CHARM

A

This is required by TILA and is used to educate consumers on the risks and advantages associated with adjustable rate mortgages.

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21
Q

Desktop Originator (DO) or Desktop Underwriter (DU)

A

The automated underwriting systems for Fannie Mae Loans.

22
Q

Encumbrance

A

Any cliam that affects the title to a property.

23
Q

Escrow Account

A

A separate account into which the lender outs a portion of each monthly mortgage payment.

24
Q

Forbearance

A

A lender’s decision not to take legal action when a borrower is late making payments.

25
Q

Fully Index Fund

A

In a ARM, this is the interest rate that can be calculated by adding the current index value independent of any caps and the margin.

26
Q

Guaranteed Underwriting System

A

The underwriting system used for USDA Loans

27
Q

HUD-1 Settlement Statement

A

A standard/uniform statement that is due to the borrower at closing, or 1 day before closing upon request

28
Q

Jumbo Mortgage Loan

A

A mortgage loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits

29
Q

Loss Mitigation

A

A process through which lenders work with delinquent homeowners to help them avoid foreclosure.

30
Q

Seller Carryback

A

A type of second loan that is funded by the seller to the borrower instead of a typical lender funding the loan.

31
Q

A Paper (Prime Loan)

A

A loan offered to low risk borrowers who show likelihood of repayment due to a high credit scores, low loan to value and available assets.

32
Q

Acceleration Clause

A

A common provision of a mortgage and note provide the holder with the right to demand that the full outstanding balance is immediately die if the borrower defaults

33
Q

Accrue

A

To get longer

34
Q

Action

A

Something that is done

35
Q

Adjustment Date

A

The date that an ARM is set to adjust

36
Q

Administrative or Clerical Tasks

A

Any or all tasks performed in relation to the receipt, collection, and distribution of any information needed for processing or underwriting a loan

37
Q

Affiliate

A

A type of inter-company relationship in which one of the companies own less than a majority of the other company’s stock. Affiliation can also describe a type of inter-company relationship in which at least 2 different companies are subsidiaries of a larger company.

38
Q

Agreement or Understanding

A

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

39
Q

Bona Fide

A

Action done with all honesty. It literally means “good faith”

40
Q

Bond

A

A debt investment in which an investor loans money to an entity which borrows the funds for a defined period of time at a variable fixed interest rate.

41
Q

Call Loan

A

A loan that is paid in full upon the lender’s demand and many times called a demand loan. It often has no set date of maturity.

42
Q

Capital Gain

A

An increase in the value of a capital asset that gives it a higher worth that the purchase price. The gain is not realized until the asset is sold.

43
Q

Condominium

A

A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex. The owner usually pays HOA fees for amenities or services, such as a shared pools or lawn care.

44
Q

Corrective Action

A

A private section loan. It is not guaranteed or insured by the US government.

45
Q

Covenants

A

A limitation to the use of one’s property, also referred to as a Deed Restriction. This can be put in place normally by a home owners association, or local government

46
Q

Impound Fund

A

An account maintained by mortgage companies to collect amounts such as hazard insurance, property taxes, private mortgage insurance and other required payments from the mortgage holders. This is another name for escrow account.

47
Q

Net Worth

A

The amount which assets exceed liabilities.

48
Q

Onerous

A

Involving a great amount of effort and difficulty

49
Q

Pandoned

A

To excuse an offense without penalty

50
Q

Par-Rate

A

The interest rate a borrower may receive without paying discount points. Also known as the “0-point rate”

SAFE Exam (2 decks)

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