Heidi M Tourangeau
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C
 
 
CC&Rs                       Abbreviation for Covenants, Conditions and Restrictions.
 
Cap                           A limitation on the increase of an adjustment rate or the mortgage payment for an adjustable rate mortgage.
 
Capital                      The money and/or property comprising the wealth owned or used by a person or business enterprise. The accumulated wealth of a person or business. The net worth of a business represented by the amount that assets exceed liabilities.
 
Capital Gain               Income from the sale of an asset rather than from the general business activity. Capital gains are generally taxed at a lower rate than ordinary income.
 
Cash Flow                  For an investment property, the actual cash the investor (owner of the property) will receive after deduction of operating expenses and debt service (loan payments) from gross income (rents) received.
 
Cash Reserves            Liquid assets available to the customer after the loan closes.
 
Caveat Emptor            “Let the buyer beware.” The buyer must examine the goods or property and buy at his own risk.
 
Certificate of              Document used when an appraisal is subject to conditions
Completion                 or work orders; states that the work has been completed per plans and specifications.
 
Certificate of Title       A written statement furnished by an abstract or title company or attorney to a client stating that the title to a piece of property is legally vested to the present owner.
 
Certificate of Value     Document used when the original appraisal report is past a certain age; certifies that the property value has not decreased.
 
Chain of Title              A chronological list of recorded instruments affecting title to real estate.
 
Clear Title                  Title not encumbered or burdened with defects.
 
 
Closing                      The delivery of a deed, financial adjustments, the signing of notes and the disbursement or funds necessary to consummate a sale or loan transaction.
 
Closing Costs             The miscellaneous expenses above the price of the property involved in the closing of a real estate transaction. Some of the costs include title insurance, tax registration fee, appraisal fee, and credit report fee.
 
Closing Statement       An accounting of funds made to the buyer and seller separately. Required by law to be made at the completion of every real estate transaction. Commonly known as a HUD-1 Settlement Statement.
 
Cloud on Title             Any outstanding claim or encumbrance which, if valid, would affect or impair title, but which can be proven invalid. It can be removed by a quitclaim deed, release, or court action.
 
Collateral                   Any property pledged as security for repayment of a debt.
 
Combined Loan-to-      The total of all mortgage loans against a property divided
Value (CLTV)               by the sales price or appraised value, whichever is less.
 
Commission               An agent’s compensation for negotiating a real estate or loan transaction often expressed as a percentage of the selling price.
 
Commitment               After a loan has been approved, the agreement between a lender and a customer to loan money, subject to specified terms and conditions.
 
Commitment Period     The limited period of time during which a loan commitment from a lender is valid.
 
Common Area             Land or improvements on land that are designated for common use and enjoyment by all occupants, tenants, or owners.
 
Community Property    In some states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.
 
Community                 A law passed by Congress in 1978 designed to encourage
Reinvestment Act        lenders to meet the credit needs of all their local communities. To comply with this act, institutions must, among other procedures, prepare a CRA statement, display a CRA notice, maintain a public comment file, and delineate their local communities. It requires institutions to help identify and meet the credit needs of their local communities, including those of low-to-moderate income neighborhoods. Deposit products are also under possible scrutiny with the goal of providing all types of banking services to less economically advantaged consumers.
 
Comparable Sales       Sales that have similar characteristics as the subject property and are used for analysis in the appraisal process. Commonly called “comps.
 
Compensating Factors  Factors in a borrower’s loan profile that are considered to be strong enough factors that they may override any negative areas that would normally cause a loan to be declined.   For Example: a borrower has a recent credit card delinquency, but it was on a $10.00 payment, and the borrower has seasoned funds of over $600,000.00 in the bank. Obviously, an oversight on payment occurred, and this would be considered a strong compensating factor.
 
Conditional Sales        A contract for the sale of a property in which transfer of
Contract                    title to the buyer is contingent on fulfillment of certain conditions.
 
Conditions                  (1) The items required by Underwriting to fund a loan; they are determined at the time the loan is approved and must be satisfied before the loan can close.                     
                                (2) Limitations on the use of land usually referred to in connection with covenants and restrictions.
 
Condominium              A structure of two or more units, the interior space of which is individually owned. The balance of the property (land, buildings, and other amenities known as “common areas”) is owned in common by the owners of the individual units.
 
Confirmation              Procedure used to verify the loan’s pricing package with the customer/broker before drawing the loan documents.
 
Conforming Mortgage   A mortgage loan that conforms to Secondary Market
Loan                          regulatory limits such as maximum loan amount, loan-to-value ratio, term, and other criteria.
 
Consideration             Something of value offered and accepted in exchange for a promise, as in a contract.
 
Construction Loans      Loans made for the construction of homes or commercial buildings. Usually funds are disbursed to the contractor/ builder during construction and after periodic inspections. Disbursements are based on an agreement between the customer and the lender.
 
Contract                     An agreement between two or more parties to do, or not to do, a certain thing.
 
Conventional Mortgage A mortgage loan made by lenders/investors without governmental underwriting; that is, a loan that is not FHA insured or VA guaranteed.
 
Conveyance                A written instrument transferring title or an interest in land from one person to another.
 
Corporation                A business entity owned by a group of owners, called stockholders.
 
Covenants                  Agreements contained in deeds or other instruments as to the use or non-use of property in a certain manner; usually referred to in connection with conditions and restrictions.
 
Credit                        (1) The financial worthiness of a customer; the history of whether the customer has met financial obligations on time in the past. (2) An accounting term designating money received or receivable, as opposed to a debit which is money paid or payable.
 
Credit Analysis            A determination of the credit risk involved in making a loan or extension of credit to a particular individual. Credit analysis includes consideration of the customer’s income, other expenses, credit characteristics, and general ability to manage financial affairs.
 
Credit Report              A report on a loan applicant’s willingness and ability to make payments in a timely manner in the past. An outside company provides this report to the bank.
 
Custom Construction   Loans made to credit-worthy customers for the purchase
Loans                        of a lot and the construction of residential housing on that lot. May also be used to finance construction on a lot already owned by the customer.
  
D
 
 
Debt Ratios                Proposed house payment plus monthly debts divided by gross monthly income.  Housing Expense Ratio is the proposed mortgage payment divided by gross monthly income. Total Debt Ratio is the proposed mortgage payments plus all other monthly debts, divided by gross monthly income.
 
Deed                         Written instrument by which the ownership of land is transferred from one person to another; in a purchase transaction, signed by the seller (grantor) to transfer property to the buyer (grantee).
 
Deed in Lieu               A deed to property given by a mortgagor (customer) to a mortgagee (lender) to satisfy a debt and avoid foreclosure.
 
Deed of Trust              A legal document that conveys the title to a piece of property to a third-party trustee (not the lender) who holds the title until the owner of the property has repaid the debt; used in place of a mortgage in many states. Also called Trust Deed or Deed to Secure Debt.
 
Default                      Failure to perform a duty or discharge an obligation; for example, failure to repay a loan when due.
 
Deferred Interest        Interest due on a loan that is not paid in the current month’s payment and so is added back to the principal balance.
 
Deficiency Judgment    A court order to pay the balance owned on a loan if the proceeds from the sale of the security are insufficient to pay the loan.
 
Delegated Underwriting    Process of approving a loan for mortgage insurance at the time it is processed by the bank instead of sending the loan package to the mortgage insurance company for approval.
 
Delinquency                Failure of a customer to make timely payments under a loan agreement.
 
Department of            A department of the federal government responsible for federal
Housing & Urban         housing programs and urban affairs; it governs FHA and GNMA
Development (HUD)     operations.
 
Deposit                      (1) An earnest money deposit is money given by the buyer to the seller or his agent with an offer to purchase to prove that he/she is serious about buying the house. It may also be known as a good faith deposit. 
                                (2) An application deposit is made to the bank to cover costs necessary to process the loan. 
                                (3) A lock-in deposit may be paid to the bank by the customer/broker to lock in an interest rate and fee.
 
Depreciation               A decline in value of a building or other real estate improvement, resulting from age, physical wear, and/or economic or functional obsolescence. This figure is deducted annually from net income.
 
Desktop Underwriter    An automated underwriting system that was developed by Fannie Mae.
 
Discount Rate             The rate the Federal Reserve charges to member banks that borrow money from it.
 
Disposition                 A lending term that refers to whether the loan was approved, denied, or withdrawn.
 
Document                  An original or official paper relied upon as basis, proof, or support of anything else. Also called an instrument if it is a legal document.
 
Donee                       A person who receives a gift.
 
Donor                        A person who gives a gift.
 
Down Payment            On a purchase transaction, the portion of the sales price paid by a customer from his own funds, as opposed to that portion of the purchase price that is financed. The difference between the sale price of real estate and the mortgage amount.
 
Due-on-Sale Clause     A clause in the mortgage or deed of trust that demands payment of the entire loan balance upon the sale or transfer of a mortgaged property.
 
Duplex                       Any building containing exactly two dwelling units. It most commonly refers to units, which are side by side with a common wall and roof.