| Debt
Ratio |
| The allowable percentage of
debt in relationship to a borrower's monthly income, it is used as an
assessment for qualification for mortgage loans. |
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| Deed |
| The legal document conveying
title of property from one owner to another. |
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| Deed
Of Trust |
| An instrument used in many
states in place of a mortgage. Title is transferred to a trustee by the
borrower, with the lender as beneficiary, until the loan balance has been
paid. This document gives a lender the right to foreclose on a piece of
property if the borrower defaults on the loan. |
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| Default |
| Failure to meet an obligation
of duty, such as to comply with timely requirements of a mortgage. |
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| Deferred
Interest Mortgage |
| A mortgage in which the payment
is not sufficient to cover the principal and the interest and the payment
portion of the interest is postponed until a certain date at which time
the interest postponed is added to the principle owing. |
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| Deficiency
Judgment |
| A Court order against a borrower
if the lender loses money as a result of a foreclosure. The deficiency
judgment would be for the difference of the mortgage debt and the amount
recovered in a foreclosure sale. |
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| Deposit
|
| A sum of money given to bind
a sale of real estate in advance of a larger amount being expected in
the future. Also known as earnest money. |
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| Depreciation
|
| A decline of value in real
property brought about by age, physical deterioration, functional or economic
obsolescence. |
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| Discount
Buydown |
| The paying of discount points
to lower the interest rate temporarily or permanently for a home purchaser. |
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| Discount
Points |
| A device used to equalize
interest rate yields for lenders and investors. A "point" is
one percent of the loan amount. Each discount point paid on a 30-year
Fixed Rate Mortgage increases to lenders yield by approximately one fifth
of a perfect in interest. |
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| Discounted
Loan |
| When the note rate on a loan
is less than the market rate, additional points may be required by the
lender to raise the yield on the loan to the market rate. |
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| Disintermediation
|
| A condition that occurs when
funds are being withdrawn from savings institutions by depositors who
are in turn investing in instruments yielding a higher return. The result
is less mortgage money available for loans, since the short-term instruments
being purchased are normally not made available for real estate loans.
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| Down
Payment |
| The initial investment in
purchasing a property, usually a percentage of the sale price, that the
buyer pays in cash and does not finance with a mortgage |
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| Earnest
Money |
| A sum of money given to bind
a sale of real estate in advance of a larger amount being expected in
the future. Also known as a deposit. |
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| Effective
Age |
| An appraisal term for the
age of a structure as estimated by its condition rather than actual age
which takes into consideration rehabilitation and maintenance. The actual
age of a building may be shorter or longer than its effective age. |
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| Equal
Credit Opportunity Act (ECOA) |
| U.S. Federal law, under the
Consumer Credit Protection Act, affording people of all races, genders,
religions, ages, marital status, etc. an equal chance to borrow money.
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| Equity |
| A determination of the value
a property owner has in real estate once the obligations and costs of
selling are deducted. |
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| Equity
Participation |
| An investor or lender may
offer lower interest rates to a borrower in return for sharing in the
appreciation or expected equity gain. This concept is very common in commercial
real estate. |
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| Equity
Sharing |
| Any two or more purchasers
that wish to purchase real estate together can divide the property's appreciation.
A lender or investor can also offer a lower interest rate in return for
a share of anticipated equity. |
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| Escrow
|
| In general, a procedure whereby
a disinterested third party handles legal documents and/or funds on behalf
of a seller or buyer. These funds are set aside in an escrow account and
held in trust usually to pay taxes and insurance on real estate. |
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| Federal
Home Loan Mortgage Corporation (FHLMC) |
| The Federal National Mortgage
Association, which is a congressionally chartered, shareholder-owned company
that is the largest national supplier of home mortgage funds.It is commonly
known as Freddie Mac. The company buys mortgages from lending institutions,
pools them with other loans, and sells shares to investors. Detailed information
may be found at http://www.freddiemac.com. |
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| Federal
Housing Administration (FHA) |
| An agency of the federal government,
the Division of the Department of Housing and Urban Development, both
sets standards for the underwriting of private mortgages and insures residential
mortgages made by private lenders. |
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| Federal
Housing Administration (FHA) Loans |
| Federal Housing Administration
(FHA) low-rate loans are available to Americans with smaller incomes who
are interested in modestly priced homes. Down payment requirements are
usually lower than the prevailing ones. |
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| Federal
National Mortgage Association (FNMA) |
| The U.S.'s largest supplier
of mortgages to home buyers and owners, a corporation established by Congress
and owned by stockholders. It is commonly referred to as 'Fannie Mae,'
this government-sponsored enterprise is chartered by Congress. This federally
chartered agency buys mortgages from lending institutions, pools them
with other loans, and sells shares to investors. Detailed information
may be found at http://www.fanniemae.com |
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| Firm
Commitment |
| A promise from a lender to
make a mortgage loan with a specified amount of money on specific terms.
A promise by the FHA to insure a mortgage for a specific property and
purchaser. |
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| Fixed-Rate
Mortgage |
| The interest rate you pay
and the monthly principal and interest payments are agreed upon from the
outset and will not change throughout the entire term of the mortgage. |
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| Foreclosure |
| A legal process by which the
lender under a defaulted mortgage forces a sale of mortgaged property
because the borrower has not met the terms of the mortgage. |
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| Free
Standing Store |
| A commercial building meant
to be occupied by a single user. It is often found near major shopping
centers, on major routes, and fills a specific need in the community |
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| Fully
Indexed Note Rate |
| The index plus the lenders
gross profit margin. If the index is 10% and the lenders profit margin
is 2%, the fully indexed note rate would then be 12%. |
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| Garden
Apartments |
| Apartment buildings that offer
a unit that enjoys direct access to a lawn, courtyard or other garden-like
area. |
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| General
Warranty Deed |
| A deed containing a binding
agreement whereby the seller agrees to protect the buyer against being
dispossessed because of any adverse claim against the property. |
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| Government
National Mortgage Association (GNMA) |
| A government-owned corporation
within the U.S. Department of Housing and Urban Development, it is also
referred to as 'Ginnie Mae,’. This government agency guarantees the
payment of principal and interest on all of its pass-through securities,
and its guarantee is backed in turn by the full faith and credit of the
U.S. Government. |
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| Graduated
Payment Mortgage (GPM) |
| A mortgage that usually starts
the borrower with low payments that are gradually increased over five
to ten years, before leveling off for the remainder of the term of the
loan until the loan is fully amortized. Negative amortization usually
occurs until the payment reaches the level payment stage. Usually government
insured loans (VA or FHA) |
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| Graduated
Payment Adjustable Rate Mortgage (GPARM) |
| A conventional mortgage that
would start the borrower out with low payments which are gradually increased
over three to six years, until the loan is fully amortized. Negative amortization
usually occurs until the payment reaches the level payment stage. |
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| Gross
Margin (Profit Margin) |
| The difference between the
interest rate chargeable on an Adjustable Rate and the rate set by the
index rate upon which the mortgage rate is based. This is the lender's
profit margin. |
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| Growing
Equity Mortgage (GEM) |
| This is a long-term mortgage
whereby the borrower agrees to increase his payment each year by an agreed
amount. The added money per payment is applied directly to the outstanding
principal on the mortgage. The mortgage thereby is paid off in a shorter
number of years. |
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