Heidi M Tourangeau
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Abstract of Title           A summary of the condition of title of real property based on an examination of public records.

 

Accelerated                 Accelerated amortization can occur with some ARM loans.

Amortization               Since ARM loan interest rates can change more often than the minimum monthly payment, if interest rates decreased, less of the payment amount would be required to pay interest and a greater amount could be applied to the principal.  Accelerated amortization occurs when the loan balance decreases more rapidly than if the interest rate and payment remained constant.      

 

 

Acceleration Clause     A clause in a mortgage or deed of trust permitting the lender to declare the entire unpaid balance immediately due and payable upon the happening of a stated event, such as the failure to pay an installment.  Also referred to as a "due-on-sale" clause.

 

Account Manager         The primary responsibility of an Account Manager is to build and maintain business relationships with mortgage brokers.  The Account Manager provides training and keeps brokers well informed of their company's programs and products.

 

Accrued Interest          The interest earned for the period of time that has elapsed since interest was last paid or, if a deferred interest loan, accrued but unpaid due to a difference between paid interest rate and accrual rate.

 

Acknowledgement        A formal declaration before an authorized official by the party executing an instrument that it is his/her act and deed.

 

Adjustable Rate          A type of mortgage loan program in which the interest

Mortgage (ARM)          rate fluctuates with market conditions and the economic indicators that reflect those conditions.  The interest rate and payment may be adjusted upward or downward as frequently as monthly to reflect changes in the market.  The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions.

 

Adjustment Date         The date of periodic interest rate adjustments for an adjustable rate mortgage.

 

Adjustment Period       The time period between one interest rate change and the next for an adjustable rate mortgage.

 

 

Advances                   Money advanced by a lender under a trust deed/mortgage to pay real estate taxes or other items needed to protect the lender's interest.

 

Adversed Loan             Any loan that does not close, including those that are approved, but not accepted by the customer; canceled due to incompleteness; counter offered but not accepted by the customer; denied; rescinded; or withdrawn.

 

Affidavit                     A written statement sworn to before an authorized official.

 

Agent                        A person who acts for another.

 

Agreement of

Sale                          A written document in which the purchaser agrees to buy certain real estate or personal property and the seller agrees to sell under stated conditions.  Also called a sales contract, binder, or earnest money contract.

 

Alienation                  The voluntary transfer of the ownership of real property.

 

Alienation Clause        A type of acceleration clause that demands payment of the entire balance upon sale or other transfers of title; also called a "due-on-sale" clause.

 

All-Inclusive Deed of   A technique involving the creation of a new deed of trust

Trust                         that includes the balance due on the existing note plus new funds advanced; also known as a wraparound mortgage.

 

ALTA Owner's Policy     An owner's extended coverage policy that provides buyers or owners the same protection the ALTA policy gives to lenders.

 

Amenity                     An aspect of property that enhances its value (e.g. close proximity of good public transportation).

 

 

American Land Title     A type of title insurance policy issued by title insurance

Association Title         companies, which expands the risks normally insured

Policy (ALTA)              against under the standard type policy.  Items insured include unrecorded mechanic's liens; unrecorded physical easements; facts a physical survey would show; water and mineral rights; and rights of parties in possession, such as tenants and buyers under unrecorded instruments.

 

Americans with           Federal law that prohibits discrimination against any

Disabilities Act (ADA)  individual on the basis of disability; requires lenders to ensure equal access to products and services offered.

 

Amortization               Amortization is the repayment of a loan with periodic payments to the principal and interest.  The principal amount of a loan is gradually paid off at the time of each interest payment.  For example, as each payment toward principal is made, the loan amount is reduced, or amortized by that amount.  This is in contrast to an "interest only" payment where the principal balance is never reduced.

 

·        Regular amortization will pay off the loan in the defined time period (e.g. for a 30-year loan, regular amortization will cause the loan to be paid in full at the end of the 30th year).

·        Accelerated amortization occurs when the loan balance decreases more rapidly- for example, if the customer makes extra payments to the principal.

·        Negative amortization (also called "Neg Am") occurs when the customer makes payments that are less than the interest charged for the loan.  In this case, any interest not covered by the payment is added to the principal balance- this is called "deferred interest."

 

 

Amortized Loan           A loan that is completely paid off, interest and principal, by a series of regular payment that are equal or nearly equal.

 

Annual Percentage      Under Regulation Z, Truth-In-Lending, the APR is intended to

Rate (APR)                 represent the true cost of borrowing expressed as a yearly percentage rate.  The APR takes into account the amount of interest and other loan fees (such as the origination fee, prepaid interest, and other closing costs) charged over the life of the loan. For example, a loan for $100,000 with an interest rate of 8.25% may have an APR of 8.50% because of the other costs involved in the loan.

 

Appraisal                   An estimate of the market value of a piece of real estate.

 

Appraiser                   One qualified by education, training, and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and the use of formal appraisal processes.

 

Appreciation               The increase in value or price of a property over time.

 

Appurtenant               Anything belonging to or attached to land such as a barn, garage, or easement that is part of the property and is therefore included in a sale or transfer.

 

Assessed Value           The value of a property for tax purposes set by the county tax assessor according to a formula.

 

Assessments              Special and local taxes imposed upon property in the immediate vicinity of an improvement by which the property is benefited.

 

Assignment                A transfer in writing of a person's interest in real or personal property.

 

Assumable                 Able to be taken over by another party, under the original terms and conditions.

 

Assumability               Agreement by a buyer to assume liability under an existing agreement between seller and lender.  The lender must typically approve the new borrower.

 

Assumption                The taking over by one party of an obligation originally incurred by another.

 

Attachment                The act of taking property by judicial order into the custody of the court as security for payment of a judgment in an impending suit.

 

Atypical Property         Real estate that does not conform to standard guidelines, has unusual features, or does not conform to the neighborhood in which it is located.

 

Automated                 The engine that provides an immediate loan decision for a

Underwriting System    customer, using the credit report and information entered

(AUS)                         on the loan application.

 

 

  

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Balance Sheet             A statement showing the financial position of a company or an individual at a point in time, usually the last day of the calendar year or the last day of a fiscal quarter.

 

Balloon Mortgage         A mortgage with periodic installments of principal and interest that do not fully amortize the loan.  The balance of the mortgage is due in a lump sum on a specified date in the future, usually at the end of the term.

 

Balloon Payment         A scheduled payment on a mortgage that is larger than other periodic payments; usually the un-amortized final payment.

 

Bankruptcy                 A court action under the Federal Bankruptcy Code under which an individual, firm, or corporation is relieved from the payment of debts.  Chapter 13 covers the workout of debts; Chapter 11 reorganizes bankrupt businesses; Chapter 7 covers the liquidation of the debtor's assets.  A debtor's debts may be discharged in bankruptcy.

 

Base Pricing               The interest rate, points, margin, and life cap (as applicable) that are shown on lender's rate sheets; the pricing for a loan before any adjustments are made.

 

Basis Point                 A unit of measure—1/100th of one percent.  For example, the difference between a 9.00% interest rate and a 9.50% interest rate is .50% or 50 basis points.

 

Beneficiary                 A person who benefits from a life insurance policy, will, contract, or deed of trust.  In the latter case, the lender is the beneficiary.

 

Beneficiary Statement  A statement from a lender showing the remaining principal balance plus accrued interest and other information about the loan.  It is usually obtained when an owner wishes to sell or refinance.

 

Bequeath                   To give or hand down by will; to leave by will.

 

Bequest                     That which is given by the terms of a will.

 

 

Binder                       An agreement to consider a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser.  Also, a notation of coverage on an insurance policy, issued by an agent, and given to the insured prior to issuing the policy.

 

Blanket Mortgage        A mortgage that covers more than one parcel of real estate owned by the mortgagor.

 

Bridge Loan                A short-term, interim loan that uses property to be sold as collateral.  The loan, in essence, bridges the gap between two transactions.  Also referred to as a Swing Loan.

 

Broker                       An individual or company who aids in solicitation or negotiation on behalf of another, usually on a fee or commission basis.

 

Buydown                    A reduction in the initial interest rate on a loan achieved by paying increased fees.

 

Buyer's Agent             The Realtor who assists the buyer.

 

Buyup                        An increase in the initial interest rate on a loan by reducing the initial fees.