A deed given by a mortgagor
to the mortgagee to satisfy a debt and avoid foreclosure.
Also called a "voluntary conveyance."
Deed of Trust
Like a mortgage, a
security instrument whereby real property is given as security
for a debt. However, in a deed of trust there are three
parties to the instrument: the borrower, the trustee, and
the lender, (or beneficiary). In such a transaction, the
borrower transfers the legal title for the property to the
trustee who holds the property in trust as security for
the payment of the debt to the lender or beneficiary. If
the borrower pays the debt as agreed, the deed of trust
becomes void. If, however, he defaults in the payment of
the debt, the trustee may sell the property at a public
sale, under the terms of the deed of trust. In most jurisdictions
where the deed of trust is in force, the borrower is subject
to having his property sold without benefit of legal proceedings.
A few States have begun in recent years to treat the deed
of trust like a mortgage.
Failure to make mortgage
payments on a timely basis or to comply with other conditions
of a mortgage.
A court order to pay
the balance owed on a loan if the proceeds from the sale
of the security are insufficient to pay off the loan. Deficiency
judgments are not allowed in all states.
A loan in which a payment
is overdue but not yet in default.
A sum of money given
to bind the sale of real estate, or a sum of money given
to ensure payment or an advance of funds in the processing
of a loan.
A decline in the value
of property; the opposite of "appreciation."
A State tax, in the
forms of stamps, required on deeds and mortgages when real
estate title passes from one owner to another. The amount
of stamps required varies with each State.
The rights of a widow
in the property of her husband at his death.
The part of the purchase
price, which the buyer pays in cash and does not finance
with a mortgage
A provision in a mortgage
that allows the lender to demand repayment in full if the
borrower sells the property that serves as security for
This terminology is
usually used for second mortgages.
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The deposit money given to the seller or his agent by the
potential buyer upon the signing of the agreement of sale
to show that he is serious about buying the house. If the
sale goes through, the earnest money is applied against
the down payment. If the sale does not go through, the earnest
money will be forfeited or lost unless the binder or offer
to purchase expressly provides that it is refundable.
A right-of-way granted to a person or company authorizing
access to or over the owner's land. An electric company
obtaining a right-of-way across private property is a common
An appraiser’s estimate of the physical condition of a
building. The actual age of a building may be shorter or
longer than its effective age. Effective gross income
Normal annual income including overtime that is regular
or guaranteed. The income may be from more than one source.
Salary is generally the principal source, but other income
may qualify if it is significant and stable.
The right of a government to take private property for
public use upon payment of its fair market value. Eminent
domain is the basis for condemnation proceedings.
A special Fannie Mae housing initiative that offers several
different ways for employers to work with local lenders
to develop plans to assist their employees in purchasing
An obstruction, building, or part of a building that intrudes
beyond a legal boundary onto neighboring private or public
land, or a building extending beyond the building line.
A legal right or interest in land that affects a good or
clear title, and diminishes the land's value. It can take
numerous forms, such as zoning ordinances, easement rights,
claims, mortgages, liens, charges, a pending legal action,
unpaid taxes, or restrictive covenants. An encumbrance does
not legally prevent transfer of the property to another.
A title search is all that is usually done to reveal the
existence of such encumbrances, and it is up to the buyer
to determine whether he wants to purchase with the encumbrance,
or what can be done to remove it.
A person who signs ownership interest over to another party.
Contrast with co-maker.
Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and other creditors
to make credit equally available without discrimination
based on race, color, religion, national origin, age, sex,
marital status, or receipt of income from public assistance
The difference between the market value of a property and
the homeowner's outstanding mortgage balance.
A loan based on the borrower's equity in his or her home.
Prior to closing; also, an account held by the lender into
which a homeowner pays money for taxes and insurance.
The account in which a mortgage servicer holds the borrower’s
escrow payments prior to paying property expenses.Escrow
periodic examination of escrow accounts to determine if
current monthly deposits will provide sufficient funds to
pay taxes, insurance, and other bills when due.
Funds collected by the servicer and set aside in an escrow
account to pay the borrower’s property taxes, mortgage insurance,
and hazard insurance. Escrow disbursements. The
use of escrow funds to pay real estate taxes, hazard insurance,
mortgage insurance, and other property expenses as they
The portion of a mortgagor’s monthly payment that is held
by the servicer to pay for taxes, hazard insurance, mortgage
insurance, lease payments, and other items as they become
due. Estate. The
ownership interest of an individual in real property. The
sum total of all the real property and personal property
owned by an individual at time of death.
The lawful expulsion of an occupant from real property.
Examination of title
The report on the title of a property from the public records
or an abstract of the title.
A written contract that gives a licensed real estate agent
the exclusive right to sell a property for a specified time,
but reserving the owner’s right to sell the property alone
without the payment of a commission.
A person named in a will to administer an estate
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Credit Reporting Act
protection law that regulates the disclosure of consumer
credit reports by consumer/credit reporting agencies and
establishes procedures for correcting mistakes on one's
price that a buyer, willing but not compelled to buy would
pay, and the lowest a seller, willing but not compelled
to sell, would accept.
Deposit Insurance Corporation). Provides insurance of accounts
for institutions whose deposits were formerly covered by
the Federal Savings & Loan Insurance Corporation. (FSLIC).
possible interest a person can have in real estate.
unlimited estate of inheritance that represents the greatest
estate and most extensive interest in land that can be enjoyed.
It is of perpetual duration. When the real estate is in
a condominium project, the unit owner is the exclusive owner
only of the air space within his or her portion of the building
(the unit) and is an owner in common with respect to the
land and other common portions of the property.
Housing Administration). A division of the Department of
Housing and Urban Development. The FHA's main activity is
the insuring of residential mortgage loans made by private
lenders. It sets standards for construction and underwriting.
FHA neither lends money, nor plans, nor constructs housing.
loans are loans that are guaranteed or purchased by government
organizations. Two of the most popular Government Loans
are the Federal Housing Administration (FHA) and the Department
of Veterans Affairs (VA).
Housing Finance Board). It oversees the credit functions
of the twelve regional Federal Home Loan Banks.
Home Loan Bank Board). A regulatory and supervisory agency
for federally charted savings institutions, which oversees
the operations of the FSLIC and FHLMC. This agency was abolished
by the Financial Institutions Reform, Recovery and Enforcement
Act of 1989. (See FIRREA.)
Home Loan Mortgage Corporation, Freddie Mac). A private
corporation authorized by Congress, which became an independent,
stockholder-owned government corporation with the passage
of FIRREA. FHLMC promotes the flow of funds into the housing
markets by purchasing conventional mortgages in the secondary
market and selling securities backed by those mortgages
in the capital market.
dollar amount your loan will cost you. It includes all interest
payments for the life of the loan, any interest paid at
closing, your origination fee and any other charges paid
to the lender and/or broker. Appraisal, credit report and
title search fees are not included in the finance charge
or commission paid to a mortgage broker for finding a mortgage
loan for a prospective borrower.
Institutions Reform, Recovery and Enforcement Act of 1989).
An act signed into law in August 1989, by President Bush
that restructured the thrift regulatory an insurance system.
agreement to make a loan to a specific borrower on a specific
that has first claim in the event of default.
payment due on a mortgage loan.
A mortgage in which the interest rate does not change during
the entire term of the loan.
National Mortgage Association, Fannie Mae). A government-sponsored
corporation, owned solely by private investors, created
to provide support to the secondary market for FHA and VA
mortgages and conventional mortgages.
property that becomes real property when attached in a permanent
manner to real estate.
that compensates for physical property damage resulting
from flooding. It is required for properties located in
federally designated flood areas.
of money, property, rights, or privileges due to a breach
of legal obligation.
by which a mortgage property may be sold when a mortgage
is in default.
mortgage (ARM) with a monthly payment that is sufficient
to amortize the remaining balance, at the interest accrual
rate, over the amortization term.
the P&I payments to the level that will fully amortize
the loan's outstanding balance over the remaining term using
the fully indexed accrual rate at the recasting point.
Indexed Accrual Rate
(accrual) rate resulting from the index at closing (or at
another point in the loan) plus the lender's full spread,
rounded as prescribed in the loan documents (often to the
nearest 1/8th of 1%).
which conveys not only all the grantor's interests in and
title to the property to the grantee, but also warrants
that if the title is defective or has a "cloud" on it (such
as mortgage claims, tax liens, title claims, judgments,
or mechanic's liens against it) the grantee may hold the
of charges, which a borrower is likely to incur in connection
with a loan closing.
A mortgage where the payments are scheduled to increase,
usually annually, for a set number of years, and then level
off. GPM can be used with either a fixed or adjustable interest
rate, and usually has a 30-year term.
in the deed who is the buyer or recipient.
in the deed who is the seller or giver.
amount the borrower earns per month, not counting any taxes
or expenses. Often used in calculations to determine whether
a borrower qualifies for a particular loan.
A fixed rate, graduated payment mortgage with small initial
payments that increase each year so that the loan pays off
in a shortened term, usually 15 years.
to protect the homeowner and the lender against physical
damage to a property from fire, wind, vandalism, or other
policy that combines liability coverage and hazard insurance.
of insurance that covers repairs to specified parts of a
house for a specific period of time.
of the monthly housing payment to total gross monthly income.
Also called Payment-to-Income Ratio or Front-End Ratio.
of Housing and Urban Development). A cabinet department
responsible for the implementation and administration of
government housing and urban development programs.
developed or improved to produce income.
called "Rate Index"). A regularly published rate, independent
of the lending institution, that measures the prevailing
cost of funds, and is used periodically with the margin
to set AML accrual rates.
Borrower Interest Rate
on which the borrower's first payment is calculated.
Borrower Payment Rate
interest rate used to calculate the borrower's initial cash
in the amount of money or credit available in relation to
the amount of goods or services available, which causes
an increase in the general price level of goods and services.
Over time, inflation reduces the purchasing power of a dollar,
making it worth less.
interest rate of the mortgage at the time of closing.
periodic payment that a borrower agrees to make to a lender.
money that is repaid in equal payments, known as installments.
A furniture loan is often paid for as an installment loan.
title that a title insurance company agrees to insure against
defects and disputes.
that provides compensation for specific losses in exchange
for a periodic payment. An individual contract is known
as an insurance policy, and the periodic payment is known
as an insurance premium.
that states that insurance is temporarily in effect. Because
the coverage will expire by a specified date, a permanent
policy must be obtained before the expiration date.
that is protected by the Federal Housing Administration
(FHA) or by private mortgage insurance (MI). If the borrower
defaults on the loan, the insurer must pay the lender the
lesser of the loss incurred or the insured amount
charged for borrowing money.
rate at which interest accrues on the mortgage. In most
cases, it is also the rate used to calculate the monthly
payments, although it is not used for an adjustable-rate
mortgage (ARM) with payment change limitations.
of an amount of money, which is paid for its use for a specified
of an ARM limiting how much interest rates may increase
per adjustment period.
adjustable-rate mortgage (ARM), the maximum interest rate,
as specified in the mortgage note.
adjustable-rate mortgage (ARM), the minimum interest rate,
as specified in the mortgage note.
that is not occupied by the owner.
(Individual Retirement Account)
account that allows individuals to make tax-deferred contributions
to a personal retirement fund. Individuals can place IRA
funds in bank accounts or in other forms of investment such
as stocks, bonds, or mutual funds.
of co-ownership that gives each tenant equal interest and
equal rights in the property, including the right of survivorship.
made by a court of law. In judgments that require the repayment
of a debt, the court may place a lien against the debtor's
real property as collateral for the judgment's creditor.
on the property of a debtor resulting from the decree of
of foreclosure proceeding used in some states that is handled
as a civil lawsuit and conducted entirely under the auspices
of a court.
or non-conforming, is a term used to describe a loan that
does not conform to Fannie Mae or Freddie Mac guidelines.
The typical Jumbo loan exceeds the maximum loan amounts
a borrower must pay when a payment is made a stated number
of days (usually 15) after the due date.
agreement between the property owner and a tenant that stipulates
the conditions under which the tenant may possess the real
estate for a specified period of time and rent.
of holding title to a property wherein the mortgagor does
not actually own the property but rather has a recorded
long-term lease on it.
description, recognized by law that is sufficient to locate
and identify the property without oral testimony.
that makes loans to borrowers on real estate.
financial obligations. Liabilities include long-term and
short-term debt, as well as any other amounts that are owed
coverage that offers protection against claims alleging
that a property owner's negligence or inappropriate action
resulted in bodily injury or property damage to another
claim against a property that must be paid when the property
of an ARM that limits the total increase in interest rates
over the life of the loan.
adjustable-rate mortgage (ARM), a limit on the amount that
payments can increase or decrease over the life of the mortgage.
by a commercial bank or other financial institution to extend
credit up to a certain amount for a certain time to a specified
asset or an asset that is easily converted into cash.
of borrowed money (principal) that is generally repaid with
offer by a lender stating the terms under which it agrees
to loan money to a homebuyer.
by which a mortgage lender brings into existence a mortgage
secured by real property.
of mortgage payments from borrowers and related responsibilities
of a loan servicer.
The loan-to-value ratio (LTV) is the original loan amount
divided by the lower of the sales price or the appraised
expressed in days, during which a lender will guarantee
period during which the lender has guaranteed an interest
rate to a borrower.
that is free and clear of objectionable liens, clouds, or
other title defects. A title which enables an owner to sell
his property freely to others and which others will accept
association in a large condominium or planned unit development
(PUD) project that is made up of representatives from associations
covering specific areas within the project. In effect, it
is a "second-level" association that handles matters affecting
the entire development, while the "first-level" associations
handle matters affecting their particular portions of the
on which the principal balance of a loan, bond, or other
financial instrument becomes due and payable.
report that contains information from three credit repositories.
When the report is created, the information is compared
for duplicate entries. Any duplicates are combined to provide
a summary of a your credit.
called "Spread"). The amount the lender adds to the index
to determine the Fully Indexed Accrual Rate.
account that provides bank depositors with many of the advantages
of a money market fund. Certain regulatory restrictions
apply to the withdrawal of funds from a money market account.
fund that allows individuals to participate in managed investments
in short-term debt securities, such as certificates of deposit
and Treasury bills.
principal, interest, taxes, and insurance paid by the borrower
on a monthly basis. Used with gross income to determine
that requires payments to reduce the debt once a month.
document that pledges a property to the lender as security
for a payment of a debt.
that originates mortgages exclusively for resale in the
that for a fee matches borrowers with lenders.
The fee paid to FHA or a private insurer for mortgage insurance.
in a mortgage agreement.
notice from the bank or other lending institution saying
it will advance mortgage funds in a specified amount to
enable a buyer to purchase a house.
made by a borrower to the lender for transmittal to HUD
to help defray the cost of the FHA mortgage insurance program
and to provide a reserve fund to protect lenders against
loss in insured mortgage transactions. In FHA insured mortgages
this represents an annual rate of one-half of one percent
paid by the mortgagor on a monthly basis.
of term life insurance often bought by mortgagors. The amount
of coverage decreases as the principal balance declines.
In the event that the borrower dies while the policy is
in force, the debt is automatically satisfied by insurance
agreement to repay a loan. The agreement is secured by a
mortgage, serves as proof of indebtedness, and states the
manner in which it shall be paid. The note states the actual
amount of the debt that the mortgage secures and renders
the mortgagor personally responsible for repayment.
in a mortgage agreement.
that provide separate housing units for more than one family,
although they secure only a single mortgage.
mortgage on a dwelling that is designed to house more than
four families, such as a high-rise apartment complex.
called "Deferred Interest"). If the payments are too small
to cover the interest due on a loan, the remaining interest
owed is added to the outstanding loan balance, causing negative
that remains for an investment property after the monthly
operating income is reduced by the monthly housing expense,
which includes principal, interest, taxes, and insurance
(PITI) for the mortgage, homeowners' association dues, leasehold
payments, and subordinate financing payments.
income less federal income tax.
increase in mortgage debt that occurs when the monthly payment
is not large enough to cover the entire principal and interest
due. The amount of the shortfall is added to the remaining
balance to create "negative" amortization
of all assets, including cash, less total liabilities.
transaction in which the new mortgage amount is limited
to the sum of the remaining balance of the existing first
mortgage, closing costs (including prepaid items), points,
the amount required to satisfy any mortgage liens that are
more than one year old (if the borrower chooses to satisfy
them), and other funds for the borrower's use (as long as
the amount does not exceed 1 percent of the principal amount
of the new mortgage).
that cannot easily be converted into cash.
document that obligates a borrower to repay a mortgage loan
at a stated interest rate during a specified period of time.
rate stated on a mortgage note.
written notice to a borrower that a default has occurred
and that legal action may be taken.
amount of principal owed on a mortgage before any payments
paid to a lender for processing a loan Application.
of Thrift Supervision). Charters federal thrifts, serves
as the primary federal examiner and regulator of federal
and state-chartered savings associations, and administers
laws governing savings and loan holding companies.
purchase transaction in which the property seller provides
all or part of the financing.
Occupied" means the property is the owner's primary residence.
of time (typically a year) between changes to the AML borrower's
buy downs occur when a third party, typically a builder,
pays part of the initial P&I payments for a year or
two, so that the borrower has smaller payments and can qualify
for the loan.
on the amount the payment can be changed at the end of each
Payment Adjustment Period.
In a payment
discount, the lender reduces the first year's interest rate
to make the mortgagor more attractive to borrowers.
on the amount that payments can increase or decrease during
any one-adjustment period.
on the amount that the interest rate can increase or decrease
during any one adjustment period, regardless of how high
or low the index might be.
that is not real property.
Interest, Taxes and Insurance are components of a mortgage
or chart of a lot, subdivision or community drawn by a surveyor
showing boundary lines, buildings, improvements on the land,
charge by the lender to increase the yield of the loan;
a point is 1 percent of the amount of the mortgage.
document that authorizes another person to act on one’s
behalf. A power of attorney can grant complete authority
or can be limited to certain acts and/or certain periods
of mortgage loan, or part of it, before due date.
of determining how much money a prospective homebuyer will
be eligible to borrow before application.
rates that banks charge to their preferred customers.
borrowed or remaining unpaid, also, that part of the monthly
payment that reduces the outstanding balance of a mortgage.
provided by nongovernmental insurers that protect lenders
against loss if a borrower defaults.
promise to repay a specified amount over a specified period
in an announced public location to sell property to repay
a mortgage that is in default.
Unit Development (PUD)
or subdivision that includes common property that is owned
and maintained by a homeowners' association for the benefit
and use of the individual PUD unit owners.
of property through the payment of money or its equivalent.
applied by lenders to determine how large a loan to grant
which transfers whatever interest, the maker of the deed
may have in the particular parcel of land. A quitclaim deed
is often given to clear the title when the grantor's interest
in a property is questionable. By accepting such a deed
the buyer assumes all the risks. Such a deed makes no warranties
as to the title, but simply transfers to the buyer whatever
interest the grantor has. (See Deed.)
gas found in some homes that in sufficient concentrations
could cause health problems.
called "Interest Rate Caps"). A limit on the amount of which
the interest rate charged to the borrower can be changed.
issued by a lender to a borrower or other mortgage originator
guaranteeing a specified interest rate for a specified period
or agent who buys and sells real estate for a company, firm,
or individual on a commission basis. The broker does not
have title to the property, but generally represents the
A term frequently used by lending institution as applied
to ownership of real property acquired for investment or
as a result of foreclosure.
Estate Settlement Procedures Act). A Federal law that requires
lenders to provide home mortgage borrowers with information
about known or estimated settlement costs.
appurtenances, including anything of a permanent nature
such as structures, trees, minerals, and the interest, benefits,
and inherent rights thereof.
estate broker or an associate who holds active membership
in a local real estate board that is affiliated with the
National Association of Realtors.
or annulment of a transaction or contract by the operation
of a law or by mutual consent.
official who keeps records of transactions that affects
real property in the area.
in the registrar’s office of the details of a properly executed
legal document, such as a deed, a mortgage note, a satisfaction
of mortgage, or an extension of mortgage, thereby making
it a part of the public record. Refinancing
of the same mortgagor paying off one loan with the proceeds
from another loan.
created to cover the costs of repairing, improving, and
sometimes acquiring an existing property.
of principal that has not yet been repaid.
amortization term minus the number of payments that have
made to repay delinquent installments or advances. Lenders'
formal repayment plans are called "relief provisions."
set aside for replacement of common property in a condominium,
PUD, or cooperative project -- particularly that which has
a short life expectancy, such as carpeting, furniture, etc.
restrictions limiting the use of real property. Restrictive
covenants are created by deed and may "run with the land,"
binding all subsequent purchasers of the land, or may be
"personal" and binding only between the original seller
and buyer. The determination whether a covenant runs with
the land or is personal is governed by the language of the
covenant, the intent of the parties, and the law in the
State where the land is situated. Restrictive covenants
that run with the land are encumbrances and may affect the
value and marketability of title. Restrictive covenants
may limit the density of buildings per acre, regulate size,
style or price range of buildings to be erected, or prevent
particular businesses from operating or minority groups
from owning or occupying homes in a given area. (This latter
discriminatory covenant is unconstitutional and has been
declared unenforceable by the U.S. Supreme Court.)
arrangement, such as a credit card, that allows a customer
to borrow against a pre-approved line of credit when purchasing
goods and services. The borrower is billed for the amount
that is actually borrowed plus any interest due.
of first refusal
in an agreement that requires the owner of a property to
give another party the first opportunity to purchase or
lease the property before he or she offers it for sale or
lease to others.
of ingress or egress
to enter or leave designated premises.
tenancy, the right of survivors to acquire the interest
of a deceased joint tenant.
Trust Corporation). Formed to resolve thrift failures over
the next three years and dispose of their assets and liabilities.
that has rights that are subordinate to the rights of the
first mortgage holders.
and selling of existing mortgages.
called "Seller Contributions"). Seller-provided funds include
all transaction cost paid by the seller except the real
estate agent's (or brokers) fee.
who has entered into an agreement with the insured to service
which provides coverage for more than a year. empty)
tax imposed on property, individual lots or all property
in the immediate area, for road construction, sidewalks,
sewers, streetlights, etc.
that binds a specified piece of property, unlike a general
lien, which is levied against all one's assets. It creates
a right to retain something of value belonging to another
person as compensation for labor, material, or money expended
in that person's behalf. In some localities it is called
"particular" lien or "specific" lien. (See Lien.)
in which the grantor conveys title to the grantee and agrees
to protect the grantee against title defects or claims asserted
by the grantor and those persons whose right to assert a
claim against the title arose during the period the grantor
held title to the property. In a special warranty deed the
grantor guarantees to the grantee that he has done nothing
during the time he held title to the property which has,
or which might in the future, impair the grantee's title.
or plat made by a licensed surveyor showing the results
of measuring the land with its elevations, improvements,
boundaries, and its relationship to surrounding tracts of
land. A survey is often required by the lender to assure
him that a building is actually sited on the land according
to its legal description.
to real estate, an enforced charge imposed on persons, property
or income, to be used to support the State. The governing
body in turn utilizes the funds in the best interest of
the general public.
against real estate for the amount of its unpaid taxes.
to a Payment Discount, but implies either an unusually large
initial rate discount or an attempt by the lender to lure
an otherwise unqualified borrower into the mortgage.
by the entirety
of joint tenancy of property that provides right of survivorship
and is available only to a husband and wife. Contrast with
tenancy in common.
of joint tenancy in a property without right of survivorship.
Contrast with tenancy by the entirety and with joint tenancy.
for a cooperative share loan, who is both a stockholder
in a cooperative corporation and a tenant of the unit under
a proprietary lease or occupancy agreement.
by which a lender uses another party to completely or partially
originate, process, underwrite, close, fund, or package
the mortgages it plans to deliver to the secondary mortgage
used, the rights of ownership and possession of particular
property. In real estate usage, title may refer to the instruments
or documents by which a right of ownership is established
(title documents), or it may refer to the ownership interest
one has in the real estate.
that specializes in examining and insuring titles to real
lenders or homeowners against loss of their interest in
property due to legal defects in title. Title insurance
may be issued to a "mortgagee's title policy." Insurance
benefits will be paid only to the "named insured" in the
title policy, so it is important that an owner purchase
an "owner's title policy", if he desires the protection
of title insurance.
Search or Examination
of the title records, generally at the local courthouse,
to make sure the buyer is purchasing a house from the legal
owner and there are no liens, overdue special assessments,
or other claims or outstanding restrictive covenants filed
in the record, which would adversely affect the marketability
or value of title.
debt and housing payments divided by gross monthly income.
Also known as Back-End Ratio.
obligations as a percentage of gross monthly income. The
total expense ratio includes monthly housing expenses plus
other monthly debts.
that results from a property purchaser giving his or her
existing property (or an asset other than real estate) as
trade as all or part of the down payment for the property
that is being purchased.
by which the ownership of a property changes hands. Lenders
consider all of the following situations to be a transfer
of ownership: the purchase of a property "subject to" the
mortgage, the assumption of the mortgage debt by the property
purchaser, and any exchange of possession of the property
under a land sales contract or any other land trust device.
In cases in which an inter vivos revocable trust is the
borrower, lenders also consider any transfer of a beneficial
interest in the trust to be a transfer of ownership.
or local tax payable when title passes from one owner to
that is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans.
who is given legal responsibility to hold property in the
best interest of or "for the benefit of" another. The trustee
is one placed in a position of responsibility for another,
a responsibility enforceable in a court of law.
A federal law that requires lenders to fully disclose, in
writing, the terms and conditions of a mortgage, including
the APR and other charges.
to four-family property
that consists of a structure that provides living space
(dwelling units) for two to four families, although ownership
of the structure is evidenced by a single deed.
of evaluating a loan application to determine the risk involved
for the lender. Underwriting involves an analysis of the
borrower's creditworthiness and the quality of the property
that is not backed by collateral.
Loans FHA / VA
loans are loans that are guaranteed or purchased by government
organizations. Two of the most popular Government Loans
are the Federal Housing Administration (FHA) and the Department
of Veterans Affairs (VA).
the right to use a portion of a fund such as an individual
of Veterans Affairs (VA)
of the federal government that guarantees residential mortgages
made to eligible veterans of the military services. The
guarantee protects the lender against loss and thus encourages
lenders to make mortgages to veterans.
that includes the remaining balance on an existing first
mortgage plus an additional amount requested by the mortgagor.
Full payments on both mortgages are made to the wraparound
mortgagee, who then forwards the payments on the first mortgage
to the first mortgagee.
at this time)
at this time)
The acts of an authorized local government establishing
building codes, and setting forth
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