Dictionary

A
ADJUSTABLE-RATE MORTGAGE (ARM)
ALIMONY
AMORTIZATION
ANNUAL PERCENTAGE RATE
APPRAISAL
B
BENEFICIARY
BORROWER
BUSINESS LICENSE
C
CANCELED CHECK
CASH VALUE
CASH-OUT
CASH-OUT EXPLANATION LETTER
CHAPTER 13 BK
CHAPTER 7 BK
CHILD SUPPORT
CLOSING
CLOSING COSTS
CLOSING STATEMENT
CO-BORROWER
COMBINED LOAN TO VALUE (CLTV)
COMBINED MONTHLY HOUSING EXPENSE
COMMERCIAL PROPERTY
COMMUNITY PROPERTY
CONDOMINIUM (CONDO)
CONDOMINIUM ASSOCIATION
CREDIT AUTHORIZATION LETTER
CREDIT BUREAU
CREDIT HISTORY
CREDIT REPORT
CREDIT SCORE
D
DEBT CONSOLIDATION LOAN
DEBT RATIO (DR)
DEED OF TRUST
DELINQUENCY
DEMAND
DIVORCE DECREE
DOCS
DOWN PAYMENT
DUPLEX
E
EQUITY
EQUITY LINE OF CREDIT
ESCROW
ESCROW INSTRUCTIONS
ESTATE (REAL PROPERTY)
F
FANNIE MAE
FEDERAL TAX LIEN
FLOOD INSURANCE
FORBEARANCE
FORECLOSURE
FOSTER CARE AGREEMENT
FULLY ADJUSTED RATE
G
GRANT DEED
GRANTEE
GRANTOR
GROSS INCOME (BUSINESS)
GROSS MONTHLY INCOME (BORROWER)
GROSS RENTAL INCOME
H
HAZARD INSURANCE
HOME MORTGAGE DISCLOSURE ACT (HMDA)
HOMEOWNERS' ASSOCIATION (HOA)
HOMEOWNERS' ASSOCIATION DUES
HUD-1 (or HUD-1a)
I
INDEX
INSTRUCTIONS TO TITLE
INTEREST RATE
INVESTMENT PROPERTY
INVOLUNTARY LIEN
K

L
LIABILITIES
LIEN
LOAN AMOUNT
LOAN TO VALUE RATIO (LTV)
M
MARKET VALUE
MECHANICS LIEN
MORTGAGE
MORTGAGE BANKER
MORTGAGE BROKER
MORTGAGE LATE
MORTGAGEE
MORTGAGOR
N
NEGATIVE AMORTIZATION
NET INCOME
NON-OWNER OCCUPIED
NOTARY PUBLIC
NOTE
NOTICE OF DEFAULT (NOD)
O
ORIGINATION FEE
OWNER OCCUPIED
P
PARTNERSHIP
PAYMENT SCHEDULE
PENSION AWARD LETTER
PITI
PLAINTIFF
POWER OF ATTORNEY
PRELIMINARY TITLE REPORT (PRELIM)
PREPAID FINANCE CHARGE
PREPAID INTEREST CHARGE
PREPAYMENT PENALTY
PROPERTY TAXES
PURCHASE AGREEMENT
Q
QUITCLAIM DEED
R
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
REAL PROPERTY
REBUILD LETTER
RECISION
RELEASE OF LIEN
S
SATISFACTION
SECOND MORTGAGE
SECONDARY FINANCING
SERVICING
SOCIAL SECURITY AWARD LETTER
SOLE OWNERSHIP
SOLE PROPRIETORSHIP
SUBMISSION
SUBORDINATE
SUBORDINATION AGREEMENT
T
TAX LIEN
TEMPORARY DISABILITY AWARD LETTER
TITLE
TITLE CLOSING
TITLE INSTRUCTIONS
TOTAL MONTHLY INCOME
TRUST DEED
TRUTH-IN-LENDING DISCLOSURE
U
UNDERWRITING
UNEMPLOYMENT COMPENSATION AWARD LETTER
V
VARIABLE INTEREST RATE
VERIFICATION OF SECONDARY FINANCING FUNDS FORM
VOLUNTARY LIEN
W
WARRANTY DEED
Z
ZONING

ADJUSTABLE-RATE MORTGAGE (ARM)
A mortgage loan where the interest rate is not fixed for the entire term of the loan, and can change during the life of the loan in line with movements of an index rate.

ALIMONY
Periodic payments made under a divorce decree or a written separation agreement toward the support of a former spouse. Alimony may be taken as a deduction from adjusted gross income by the person who pays it, while the person who receives it must claim it as a taxable income.

AMORTIZATION
Payment of debt in regular, periodic installments of principal and interest, as opposed to interest only payments. Amortization is the process of reducing principal and interest in equal installment payments at specific intervals over a set term. For example, a fully amortized loan payment is a portion of which will be applied to pay the accruing interest on the loan with the remainder being applied to principal. Over time, the interest portion decreases as the loan balance decreases and the amount applied to principal increases so that the loan is paid off in the specified term .

ANNUAL PERCENTAGE RATE
The Annual Percentage Rate ("APR") is a measure of the cost of credit, expressed as a yearly rate. The APR takes into account the amount financed, the finance charge, and the amounts and timing of the payments. Under the Truth in Lending Law, the APR must be disclosed and labeled.

APPRAISAL
Opinion as to the monetary value of the property. For example, an appraisal of property provides an idea of how much money the property is worth in the housing market at a given time.

BENEFICIARY
The entity or lender that funds the loan and to which the loan is owed.

BORROWER
One who borrows money and is responsible for repaying it to the lender. Also known as obligor. If the loan is secured by a mortgage, the borrower is known as a mortgagor.

BUSINESS LICENSE
A license that authorizes a business to operate and is typically required and issued by the city in which the business is located.

CHILD SUPPORT
Periodic payments made under a divorce decree or a written separation agreement for the support of the children.

CLOSING
A meeting between a lender and borrower or a buyer, seller and lender or their agents when the loan documents are signed and the funds legally change hands. Also known as settlement.

CLOSING COSTS
Money paid by the borrower to effect the closing of a mortgage loan, including such costs as title insurance premiums, appraisal fees, lender fees, closing agent fees, recording fees, etc.

CLOSING STATEMENT
A statement required by Federal law (the Real Estate Settlement Procedures Act) that itemizes all changes imposed on the borrower and seller (if any) in connection with a mortgage secured loan transaction. Also known as a settlement statement, HUD-1 or HUD-1A.

CO-BORROWER
A 2nd borrower on a loan.

COMBINED LOAN TO VALUE (CLTV)
The total of all liens on the subject property divided by the appraised value of the property.

COMBINED MONTHLY HOUSING EXPENSE
Monthly expenses for the customer's primary residence, which include rent or mortgage payments, other financing, hazard and flood insurance, mortgage insurance, real estate taxes, utilities and homeowner association dues.

COMMERCIAL PROPERTY
A property used for business purposes.

COMMUNITY PROPERTY
Property owned equally by a husband and wife. This classification of property is only used in certain states.

CONDOMINIUM (CONDO)
A residential property with 2 or more units where each unit owner holds title to a unit and an undivided interest in the common areas of the project.

CONDOMINIUM ASSOCIATION
An association of owners of condominium units.

CREDIT AUTHORIZATION LETTER
A letter signed by the borrower that authorizes a lender, to conduct a credit investigation.

CREDIT BUREAU
A company that collects and organizes information about an individual's credit and payment habits. The 3 national credit bureaus are Experian, TransUnion and Equifax.

CREDIT HISTORY
The history of whether the borrower has met financial obligations on time in the past.

CREDIT REPORT
A report provided by a credit reporting bureau that provides a detailed account of the applicant's credit history.

CREDIT SCORE
A numerical assessment assigned to the customer by credit bureaus that represents a measurement of the customer's overall credit rating. The scores areweighted and range from approximately 365 to 840. Low scores reflect a "high risk", while higher scores reflect a "lower risk". Each credit bureau has its own credit score system.

CANCELED CHECK
A check that has been cashed by the bank on which the check was drawn.

CASH VALUE
The amount of money one would receive today by selling an asset in the market place.

CASH-OUT
A refinance transaction in which the borrower receives cash that may be used for any purpose.

CASH-OUT EXPLANATION LETTER
A handwritten, signed and dated letter provided by customers who are receiving cash from the loan to explain how they intend to use that cash. Generally used to verify that borrowers aren't planning to use the cash to incur additional debt that will add to their monthly obligations and decrease disposable monthly income.

CHAPTER 13 BK
Chapter 13 is a debt reorganization plan where debts are repaid under a court-supervised repayment plan. Debtors submit part of their income for distribution among creditors. Also known as the wage-earner plan.

CHAPTER 7 BK
A Chapter 7 BK is a straight liquidation bankruptcy where the debtor submits all of their non-exempt assets to the trustee for liquidation; proceeds are disbursed to creditors.

DEBT CONSOLIDATION LOAN
A loan that combines debt obligations into one debt.

DEBT RATIO (DR)
The percentage of the customers' gross monthly income allocated to pay the monthly installments on their debt owing.

DEED OF TRUST
A security instrument used in some states in place of a mortgage by which legal title is conveyed to one or more trustees to secure the repayment of a debt. See TRUST DEED.

DELINQUENCY
Failure to make payments when due.

DEMAND
A letter from a lender showing the total amount due to pay off a mortgage or trust deed, inclusive of unpaid principal, interest, impound amounts, prepayment penalty, etc. Also, known as a Demand for Payoff Request or Beneficiaries Demand Letter.

DIVORCE DECREE
A document issued by the court that dissolves the marriage relation.

DOCS
Abbreviation for mortgage loan documents.

DOWN PAYMENT
The difference between the purchase price and the mortgage amount for home purchase transactions.

DUPLEX
Any building containing 2 separate dwelling units.

EQUITY
Interest or value that an owner has in real estate over and above the liens against it.

EQUITY LINE OF CREDIT
A combination of a line of credit and equity loan secured by real property. A maximum loan amount is established based on credit and equity. A mortgage is recorded against the potential borrower's property for said maximum loan amount. The potential borrower has the right to borrow, as needed, up to the amount of the credit line.

ESCROW
Delivery of something of value by a grantor to a 3rd party for delivery to the grantee upon the happening of a contingent event. In some states, all instruments necessary to the sale are delivered to a 3rd party, with instructions as to their use.

ESCROW INSTRUCTIONS
For purchase transactions, instructions signed by both buyer and seller, which enable the escrow agent to carry out the procedures necessary to transfer real property, a business or other assignable interest.

ESTATE (REAL PROPERTY)
Describes the extent and character of a person's rights and interest in real property. Two types of estates frequently financed by mortgage lenders are the fee simple and the leasehold estate. See FEE SIMPLE ESTATE and  LEASEHOLD ESTATE.

FANNIE MAE
The nation's largest mortgage investor created in 1968 by an amendment to Title III of the National Housing Act. This stockholder-owner corporation, a portion of whose board of directors is appointed by the President of the United States, supports the secondary market in mortgages on residential property.

FEDERAL TAX LIEN
A lien attaching to a property for nonpayment of a Federal tax. A Federal tax lien differs from other liens in that it's not automatically eliminated by a senior lien holder foreclosing on a mortgage or trust deed recorded before the tax lien.

FLOOD INSURANCE
Insurance indemnifying against loss by flood damage. Required in federally designated special Flood Hazard Areas. The insurance is private but federally subsidized.

FORBEARANCE
A lender's act of refraining from taking legal action despite the fact a mortgage is in arrears. It's usually granted when a mortgagor makes a satisfactory arrangement by which the arrears will be paid at a future date.

FORECLOSURE
A proceeding in or out of court, to extinguish all rights, title, and interest, of the owner of property in order to sell the property to satisfy a lien against it.

FOSTER CARE AGREEMENT
A document that designates an individual as the foster parent of a child. These agreements usually state the income the individual will receive for being a foster parent.

FULLY ADJUSTED RATE
The fully indexed rate is equal to the rate index plus the loan's margin and is used with adjustable-rate mortgages. Example: If LIBOR is 6.50% and the margin on the loan is 4.00%, the fully indexed rate is 10.50%..

GRANT DEED
A written instrument used to transfer or convey real property. A grant deed contains warranties against prior conveyances or encumbrances.

GRANTEE
One who received property rights when a grant is made. Generally, the buyer or purchaser of real property.

GRANTOR
One who grants property or property rights to another .

GROSS INCOME (BUSINESS)
The total income earned, either actual or estimated, from a business or property.

GROSS MONTHLY INCOME (BORROWER)
The total amount the borrower earns per month, before any expenses are deducted.

GROSS RENTAL INCOME
The monthly rental income received before mortgage payments, taxes and insurance are deducted.

HAZARD INSURANCE
Insurance protecting real property against loss caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

HOME MORTGAGE DISCLOSURE ACT (HMDA)
This act requires Ameriquest Mortgage Company to report selected information to the Federal government about each application received . HUD (U.S. Department of Housing and Urban Development) uses HMDA to detect discrimination and identify trends in lending patterns.

HOMEOWNERS' ASSOCIATION (HOA)
An association of people who own homes in a given area, formed for the purpose of improving or maintaining the quality of the area. Unpaid HOA dues can become a lien against a property.

HOMEOWNERS' ASSOCIATION DUES
A monthly payment paid to the association for the maintenance and care of the common areas.

HUD-1 (or HUD-1a)
Final statement of the actual settlement costs of the loan and all other disbursements of a loan's proceeds. A Federal requirement under RESPA.

INDEX
A published interest rate against which lenders measure the difference between the current interest rate on an adjustable-rate mortgage and that earned by other investments , which is then used to adjust the interest rate on an adjustable-rate mortgage. Examples include LIBOR, the Prime Rate and Treasury indices. The Wall Street Journal publishes index information.

INSTRUCTIONS TO TITLE
A form that instructs the title company how to record a lien against a property and issue a title insurance policy.

INTEREST RATE
Percentage paid for the use of money, usually expressed as an annual percentage.

INVESTMENT PROPERTY
Property used for investment purposes.

INVOLUNTARY LIEN
A lien imposed against property by law or legal action without the consent of an owner. Examples include taxes, special assessments, federal income tax liens, judgment liens, mechanics liens and materials liens.

LIABILITIES
The debts of a person or business.

LIEN
A secured financial interest or legal encumbrance on a property. For example, a secured loan appears as a lien on the property's title report. See INVOLUNTARY LIEN and  VOLUNTARY LIEN.

LOAN AMOUNT
The amount of money originally lent to a borrower.

LOAN TERM
The loan term is the period of time over which the loan will be paid. First mortgage loans typically have terms of 30, 20 or 15 years.

LOAN TO VALUE RATIO (LTV)
The loan amount in relationship to the appraised value or selling price expressed as a percentage .

BANKRUPTCY (BK)
Court proceedings to relieve the debts of an individual or business unable to pay its creditors. See CHAPTER 13 BK and 

MARKET VALUE
The highest price a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.

MECHANICS LIEN
A lien created by state law for debts owed to a carpenter, contractor, plumber or other entity hired by the property's titleholder for services performed or materials provided to repair or improve the property.

MORTGAGE
A written instrument that creates a lien upon real estate as collateral for the payment of a specified debt. The borrower retains possession and use of the property.

MORTGAGE BANKER
A non-depository financial institution that specializes in originating and servicing loans. They generally sell their loans to investors, but may continue to service them.

MORTGAGE BROKER
A mortgage broker is one who arranges financing for a borrower by placing loans with lenders. Mortgage brokers are paid a fee by the borrower or the lender when the loan closes.

MORTGAGE LATE
More than 1 payment due at the same time the most recent payment is due.

MORTGAGEE
The lender.

MORTGAGOR
The borrower.

NEGATIVE AMORTIZATION
Amortization means that monthly payments are large enough to pay the interest and reduce the principal on a mortgage loan by its maturity date. Negative amortization occurs when the monthly payments do not cover all of the interest cost. The interest cost that isn't covered is added to the unpaid principal balance. This means even after making many payments, a borrower may owe more than was owed at the beginning of the loan.

NET INCOME
The difference between adjusted gross income and operating expenses. May or may not include depreciation.

NON-OWNER OCCUPIED
A property used as a residence by a renter/tenant instead of the owner of the property.

NOTARY PUBLIC
One who is authorized by the state or Federal government to administer oaths and to attest to the authenticity of signatures.

NOTE
An agreement containing an expressed and absolute promise of the signer to pay to a named person or bearer a definite sum of money at a specified date or on demand. Usually provides for interest, and if concerning real property, is secured by a mortgage or trust deed.

NOTICE OF DEFAULT (NOD)
A notice filed with a county records office to show that the borrower under a mortgage or deed of trust is in default .

ORIGINATION FEE
A 1-time setup fee charged by the lender. One of the lender's charges to a borrower for handling a loan transaction.

OWNER OCCUPIED
Designation given to property used as the owner's residence.

PARTNERSHIP
An agreement between 2 or more individuals or entities to go into business or invest together. Either partner may bind the other, within the scope of the partnership. Each partner is liable for all the partnership's debts.

PAYMENT SCHEDULE
This schedule outlines the number of payments due, the amount of each payment and the date payments are due.

PENSION AWARD LETTER
Documentation specifying the frequency and amount of pension payments an individual is eligible to receive.

PITI
Acronym for principal, interest, taxes and insurance. See PRINCIPAL, INTEREST, TAXES & INSURANCE (PITI).

PLAINTIFF
An individual or entity who files a legal action against another.

POWER OF ATTORNEY
An authority by which 1 person authorizes another to act on his or her behalf. A power of attorney can be limited to specific areas or be general.

PRELIMINARY TITLE REPORT (PRELIM)
A report showing all current claims against a property before a sale or loan transaction and identifying those items that must be removed to obtain a 1st lien position. After completion of the transaction, a title insurance policy is issued. See TITLE COMMITMENT.

PREPAID FINANCE CHARGE
The finance charges charged at closing exclusive of interest. Examples include points, processing and application fees, tax certification, etc.

PREPAID INTEREST CHARGE
The portion of interest, added on at loan closing, which covers the time period between funding and the beginning of the first 30-day period covered by the first payment. For example, if the loan closed on 2/15, the first payment due on 4/1 retroactively pays interest from 3/1 to 4/1. The prepaid interest would cover the period from 2/15 to 2/28.

PREPAYMENT PENALTY
A charge which is assessed when the loan is paid before it's due to compensate the investor for the loss of anticipated interest income.

PROPERTY TAXES
Generally, a tax levied on both real and personal property. The amount of the tax is dependent on the value of the property.

PURCHASE AGREEMENT
The agreement made between the buyer and seller of a property, containing the purchase price and contingencies of the sale.

QUITCLAIM DEED
A deed operating as a release; intended to pass any title, interest or claim that the grantor may have in the property, but not containing any warranty that such title is valid, nor containing any warranty or covenants for title.

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
A Federal law that requires lenders to disclose, in advance, an estimate of the costs associated with a loan and prohibits "kickbacks" for referring business to 3rd parties associated with a loan.

REAL PROPERTY
Land and all attachments to the land, such as buildings, crops or mineral rights. Ownership of real property can be divided into various types of interests and rights.

REBUILD LETTER
A letter provided by the appropriate municipality, stating a structure on a specific property can be rebuilt as originally constructed in the case of damage or destruction.

RECISION
The legal remedy for canceling, a contract and restoring the parties to their original positions; a return to status quo.

RELEASE OF LIEN
When a lien against the property is satisfied, the note holder records a document that reflects the discharge of the obligation and releases the lien recorded against the property.

SATISFACTION
Discharge of an obligation by payment of the amount due, as on a mortgage, trust deed or contract or payment of a debt awarded, such as a satisfaction of a judgment.

SECOND MORTGAGE
A 2nd loan, on the same property, that is in a junior lien or subordinate position.

SECONDARY FINANCING
A loan secured by a 2nd mortgage or trust deed of real property. See PIGGYBACK LOAN.

SERVICING
The operations a lender or servicer performs post-origination to manage a loan, such as collection of payments, payment of taxes, insurance, property inspections and so on.

SOCIAL SECURITY AWARD LETTER
Documentation specifying the frequency and amount of Social Security payments an individual is eligible to receive. Social Security Award Letters are re-issued annually.

SOLE OWNERSHIP
Legal title in a single individual or an entity.

SOLE PROPRIETORSHIP
Ownership of a business, with no formal entity as a vehicle or structure. The sole proprietorship reports its tax information on Federal tax form 1040.

SUBMISSION
This refers to a complete loan application package submitted for loan approval.

SUBORDINATE
A lien taking a legal title position junior to another lien that recorded later. For example, if a mortgage lien recorded in 1996, it can subordinate to a lien recorded in 1999. Subordination may apply not only to mortgages, but also to leases, real estate rights and any other type of debt instruments.

SUBORDINATION AGREEMENT
An agreement by which a lienholder agrees to accept a lien position junior to that of a later-recorded lien. For example, when a lienholder agrees to subordinate, a formal agreement must be drawn, signed and recorded to make it a legal transaction. Subordinations may apply not only to mortgages, but also to leases, real estate rights and any other types of debt interests.

TAX LIEN
A lien for outstanding or delinquent property, IRS or state taxes. Tax liens for delinquent property taxes are the most common and attach only to the property upon which the taxes are unpaid. Property tax liens always take priority over other liens.

TEMPORARY DISABILITY AWARD LETTER
A letter issued to employees who are awarded temporary disability benefits because they are unable to work due to medical disability. These employees are expected to return to work once their disability heals.

TITLE
The right or ownership in land; also, the evidence of such ownership.

TITLE CLOSING
The process in which the title company oversees the closing or document signing of the loan in close conjunction with the entity performing the escrow function on the loan. Once the loan documents are signed and all contingencies are satisfied, the title company records the security instrument and releases the proceeds of the loan.

TITLE INSTRUCTIONS
A document that instructs a title company how to record a lien against a property and issue a title insurance policy.

TOTAL MONTHLY INCOME
Gross monthly income from all income sources, after appropriate deductions are taken.

TRUST DEED
An instrument used in many states in place of a mortgage. Grants an interest in the property as collateral for a loan and, when recorded with the county, creates a lien having priority over later-filed mortgages or trust deeds.

TRUTH-IN-LENDING DISCLOSURE
This disclosure is required by law under the Federal Truth in Lending Act, which requires a full disclosure of a loan amount, finance charges and APR.

UNEMPLOYMENT COMPENSATION AWARD LETTER
A letter issued to employees who are awarded unemployment benefits when their employment is terminated through no fault of their own. The benefits they receive are called unemployment compensation.

UNDERWRITING
The analysis of a customer's credit capacity and the loan's collateral upon which a risk is given.

VARIABLE INTEREST RATE
An interest rate that fluctuates as a result of changes in a controlling index rate . With adjustable-rate mortgages, there are usually maximums as to the frequency and amount of fluctuation.

VERIFICATION OF SECONDARY FINANCING FUNDS FORM
A form that must accompany all loans that have secondary financing.

VOLUNTARY LIEN
A secured financial interest in a property that is created by agreement between a creditor and the borrower. Basically, the borrower is agreeing to use the property as collateral for the loan. The most common example of a voluntary lien is the one created by a mortgage given for a home loan.

WARRANTY DEED
A deed used in many states to convey fee title to real property. A deed in which the grantor or seller warrants or guarantees good title is being conveyed as opposed to a quitclaim deed that contains no representation or warranty as to the quality of title being conveyed.

ZONING
The division of a city or county by legislative regulations into areas specifying the permitted uses allowable for the real property in these areas.

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