Addendum: An agreement or list that is added to a contract, agreement, or other document such as a letter of intent. (i.e.) A 6% seller concession for closing costs which is added to the contract after the original contract is signed will be included on addendum.

Adjustable Rate Mortgage (ARM): A mortgage loan or deed of trust which allows the lender to adjust the interest rate in accordance with a specified index periodically and as agreed to the inception of the loan. Can also be referred to as a variable rate mortgage. (i.e.) There are many different types of ARM options in the industry, l yr. Treasury, 5/1, 10/1, 6 month. Each can be based on a different index. 

Adjustment Interval: This term relates to an ARM. It is the interval of time between the changes in the interest rate or monthly payment, typically one, three or five years, depending on the index.

Adjustment Period Cap: The amount that the interest rate is allowed to increase or decrease at the time of adjustment of an ARM. A one year ARM would have on annual cap; since the adjustment period is every one year. 

ALTA: American Land Title Association. This is a national association of title companies, attorneys and abstractors.

Amortization: Repayment of a mortgage debt with periodic payments of both principal and interest, calculated to retire the obligation at the end of fixed period of time. (i.e.) Amortization can be based on may terms such as 360, 240, 1 80, 1 20 months etc. The longer the term the longer it takes for principal to decrease. However, a customer can speed up the amortization of his/her mortgage based on making extra payments toward principle.

Amortization Schedule: A table showing the amounts of principal and interest due at regular intervals and the unpaid mortgage balance after each payment is made.

Annual Percentage Rate (APR): A term defined in section 106 of the federal Truth in Lending Act (15 U.S.C. 1606), which expresses on an annualized basis the charges imposes on the borrower to obtain a loan (finance charges), including interest, discount and other cost such as prepaid items.

Application: The form used to record pertinent information concerning the proposed mortgagor's ability to repay the proposed loan.

Appraisal: An opinion or estimate of value. Also refers to the process by which a value estimate is obtained at arm’s length transaction. A transaction between a willing buyer and a-willing seller with no undue influence imposed on either party and where there is no relationship between the parties except that of the specific transaction.

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 at a specified date, usually the end of the term.

Bankruptcy: Court proceedings to relieve the debts of an individual or business unable to pay its creditors. Bankruptcy may be declared under one of several chapters of the federal bankruptcy code: Chapter 7, which covers liquidation of individual or business assets; Chapter 11 which covers reorganization of bankrupt businesses; Chapter 1 2, which covers certain farm bankruptcies; and Chapter 1 3, which covers workouts of debts by individuals.

Chapter 7: Bankruptcy filing which gives a trustee the power to distribute a debtor's assets to creditors. This is also called a liquidation

Chapter 11: A reorganization by a business allowing the debtor to maintain operating control of the business while restructuring debts and working out a repayment schedule acceptable to the creditors. This is also referred to as "debtor in possession".

Chapter 13: A debt repayment plan where an individual debtor files a budget with the court and agrees to make partial payment to creditors over a three to five year period. Also called a "wage earner plan."

Basis Point: One hundredth of one percent. Used primarily to describe changes in yield or price on debt instruments, including mortgages and mortgage-backed securities.

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

Borrower: Receives funds in the form of loan with the obligation of repaying the loan in full with interest.

Buy-Down Mortgage: A mortgage with a below-market interest rate made by a lender in return for an interest rate subsidy in the form of additional discount points paid by the builder, seller or buyer.

Cash Out Refinancing: When the principal amount of a new mortgage involved in refinancing is greater than the principal amount outstanding of the existing mortgage being refinanced, and all or a portion of the equity is converted to cash.

Certificate of Completion: A document issued by an engineer or an architect stating that construction is complete according to specifications.

Certificate of Occupancy: Written authorization given by a local municipality that allows newly completed or substantially renovated structure to be inhabited.

Chain of Title: A chronology of documents which have transferred title to a parcel of real property from the original owner to the present owner.

Charge Off: Also referred to as a profit/loss write off. This a debt that the grantor has deemed uncollectible. For internal accounting/tax purposes this accounts are written off as bad debt on their balance sheets and financial statements.

Clear Title: Unencumbered title to real property, free of liens or defects

Closing: In real estate, the delivery of a deed, the signing of a note, and the disbursement of funds necessary to consummate a sale or loan transaction.

Cloud on Title: Any outstanding claim or encumbrance which, if valid, would affect or impair title. It can be removed by a quit claim deed, release, or court action. This is also know as "A title defect."

Co-Borrower: Second or additional person equally responsible for payments on a mortgage. A Co-borrower does not have to take title to the property, but usually has to sign the mortgage note.

Collection Account: A delinquent consumer debt which has not been able to be collected by the grantor. This "bad debt" is turned over to a collection agency so that the grantor can recoup a portion of that debt.

Combined Loan to Value (CLTV): The principal balance of all mortgages on the property (including second and third trusts) divided by the value of the property.

Commitment: An agreement, often in writing, between a lender and a borrower, to loan money at a future date, subject to specified conditions. In secondary marketing, an agreement, in writing, between a lender and an investor to buy and sell mortgages under specific terms.

Compensating Factor: A positive characteristic of a mortgage applicant which may offset a negative factor.

Comparables: Comparable properties which are used in the determination of the value of a subject property in an appraisal. Properties of approximate size, location, amenities and quality of construction which have been recently sold are compared to determine the value of the subject property. Various adjustments are made in the value to account for any differences which could be found.

Condominium: A form a property ownership whereby the purchaser receives title to a unit in a multi- unit structure and proportionate interest in common areas.

Conforming Mortgage Loan: A mortgage loan which meets all required (size, type and age) to be eligible for purchase or securitization by federal agencies.

Construction Loan: A short-term, interim loan for financing the cost of construction . The lender advances funds to the builder at periodic intervals as work progresses.

Contract of Sale: A contract between a purchaser and seller of real property to convey title after certain conditions have been met and payments have been made.

Consumer Credit Counseling Service (CCCS): A service which negotiates reduced payments/balances for clients who cannot manage their current debts.

Conveyance:  The act of transferring title or a piece of real property.

Convertible Mortgage: A type of adjustable rate mortgage that may be converted to a fixed-rate mortgage at specified intervals during a predetermined time period.

Cooperative (Co-op): In real estate, a form of multiple ownership in which a corporation of business trust entity holds title to a property. (Usually an apartment complex) and grants occupancy rights to shareholder tenants through proprietary leases.

Corporate resolutions: The affirmative and formal actions by the board of directors of a corporation approving a transaction, activity, or decision.

Cost Approach: An appraisal method estimating the replacement cost of a structure less the depreciation, plus the land value.

Cost of Funds Index (C.O.F.I.): Index used to determine interest rate changes for adjustable rate mortgages. It is based on the cost of funds of the 11th District of the Federal Home Loan Bank.

Credit Rating: A rating given to a person or company that establishes creditworthiness based upon present financial condition, experience and past-credit story

Credit Report: A report run by an independent credit agency which verifies certain information concerning an applicants credit standing.

Debt-To-Income-Ratio (DTI): Relationship of a borrower's monthly payment obligation on long term debts divided by gross monthly income, expressed as a percentage.

Deed: The document by which title to real property is transferred or conveyed from one party to another.

Deed in Lieu: A deed given by the mortgagor to the mortgagee to prevent foreclosure and to satisfy the unpaid balance of the mortgage.

Deed of Trust: A type of security instrument in which the borrower conveys title to real property to a third party (trustee) to be held in trust as security for the lender, with the provision that the trustee shall recover the title upon the payment of the debt, and conversely, will sell the land and pay the debt in the event of a default by the borrower.

Down Payment: The difference between the sales price of a property and the mortgage amount.

Disclosure: Information relevant to specific transactions that is required by law.

Discount Point: Amount payable to the lending institution by the borrower or seller to increase the lender's effective yield. One point is equal to one percent of the loan.

Dry Funding: Any advance of new funds to a mortgage banker for funding or purchasing mortgage loans where the collateral package is in the possession of the collateral agent and is free of liens or bailment.

End Loan: The final mortgage loan to the ultimate purchaser of a properties as opposed to a construction loan or other form of interim financing.

Effective Age: The physical age attributed to a piece of property, as determined by an appraiser, based upon the property's current condition.

Equity: The net value of an assert. In the case of real estate, it would be the difference between the present value of the property and the mortgage amount of the property

Errors and Omissions Insurance (F & 0): Liability insurance coverage for errors, mistakes, and negligence in the usual activities of a mortgage banker, appraiser or attorney. Fraudulent behavior is not included.

Escrow: An item of value, money or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Escrow Payment Fair Market Value: That portion of a mortgagor's monthly payments held by a lender or servicer to pay taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due.

Fair Market Value: The price at which property is transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all the pertinent facts and neither being under any compulsion to buy or sell.

Fannie Mae (FM NA): The nation's largest mortgage investor created in ~ 968 by an amendment to Title Ill of the National Housing Act. This stockholder-owner corporation, a portion of whose board of directors is appointed by the President, supports the secondary market in mortgages on residential property with mortgage purchase and securitization programs.

Federal Housing Administration (FHA): A federal agency with the Department of Housing and Urban Development (HUD) that provides mortgage insurance for residential mortgages and sets standards for construction and underwriting. The FHA does not lend money, nor does it plan or construct housing.

Fee Simple: The greatest possible interest a person have in real estate, including the right to dispose of the property or pass it on to one's heirs.

First Mortgage: A mortgage that gives the mortgagee a security right over all other mortgages of the mortgaged property.

Fixed Rate Mortgage: A mortgage in which the interest rate and payments remain the same for the life of the loan.

Foreclosure: A legal procedure in which a mortgaged property is sold in a legal process to pay the outstanding debt in case of default.

Forward Commitment: A agreement between a buyer and seller for delivery of a specific commodity at a given time in the future, at a strike price determined at present.

Freddie Mae (Federal Home Loan Mortgage): Created by Congress in Title Ill of the Emergency Home Finance Act of 1970. This stockholder- owned corporation, a portion of whose board is appointed by the President, supports the secondary market in mortgages on residential and multi-family properties with purchase and securitization programs.

Full-Doc Loan: This refers to a mortgage loan where the borrower(s) verify all of their personal income.

Fully Amortized Fully Indexed Rate: A mortgage which as a zero balance at the end of the mortgage term. The index plus the margin for the adjustable rate mortgage.

Funding: Payment of loan money by a lender to a borrower so that he or she can purchase real estate. Also the payment of money by investors to lenders in return for mortgages sold to them by the lender.

Gift of Equity: This is a down payment that is gifted to the buyer(s) from the seller(s). It is a paper transfer since the gift is based how much equity the seller(s) current have in the subject property.

Good Faith Estimate (GFE): A document which tells borrowers the approximate cost they will pay at or before settlement, based on common practice in the locality. Under requirements of the Real Estate Settlement Procedures Act (RESPA), the mortgage banker or broker, if any, must deliver or mail the GFE to the applicant within three business days after the application is received.

Gross Income: Total income before any expenses, taxes or other deductions.

Hazard Insurance: Insurance coverage which provides compensation to the insured in case of property loss or damage.

Home Equity Line of Credit: An open-end loan, usually recorded as a second mortgage, that permits borrower to obtain cash advances based on an approved line of credit.

Home Improvement Loan: Mortgage to finance an addition to or rehabilitation of a residence.

Home Mortgage Disclosure Act (HMDA): Federal legislation which requires certain types of lenders to compile and disclose data on where their mortgage and home improvement loans are being made.

Homeowners Insurance: Insurance carried by the homeowner to protect the dwelling against fire and other hazards.

HUD- 1 Uniform Settlement Statement: Standard form to disclose costs at closing. All charges imposed in the transaction, including mortgage broker fees, must be disclosed separately.

Income Approach: An appraisal technique which estimates the value of a piece of property by the capitalization of the net income of the property.

Index: A published interest rate, such as the prime rate, LIBOR, T-Bill rate or 11th District C.O.F.I.. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns. On ARMs, a predetermined margin is added to the index to compute the interest rate adjustment.

Installment Debt: Borrowed money that is repaid in several successive payments, usually at regular intervals, for a specific amount and for a specific term.

Interest: Consideration in the form of money paid for the use of money, usually expressed as an annual percentage. Also a right, share, or title in property.

Interest Rate: Percentage paid for use of money, usually expressed as an annual percentage.

Interest Rate Cap: A limit on interest rate increases and/or decreases during each interest rate adjustment or over the term of the mortgage.

Interest Rate Floor: On a ARM, the lowest the interest rate may go.

Investor: Any person or institution that invests in mortgages or mortgage backed securities.

Investor Purchase: The purchase of a home for the purpose of generating income by renting the property to tenants.

IRS 4506/B 821: IRS Form required by lenders on self employed loan applications. This form allows the lender to pull tax returns on the borrower directly from the IRS, usually-as quality control check.

Judgment: Final determination by a court of the rights and claims of the parties to an action.

Judgment Lien: Lien upon the property of a debtor resulting from a decree of the court.

Junior Mortgage: A mortgage which is subordinate to the claim of prior lien or mortgage. Typically a second or third mortgage.

Jumbo Mortgage: A mortgage which is larger than the legislated purchase limits of Fannie Mae and Freddie Mac.

Land Contract: An agreement to transfer title to a property once conditions of the contract have been fulfilled.

Lease-Purchase: A method of acquiring ownership of real estate through gradual payments under which a lease is substituted for a mortgage obligation. Also referred to as a lease with option to buy.

Leasehold: An estate or interest in real property held by a lease.

Legal Description: A property description which is recognized by law and provides sufficient information to locate and identify the subject property.

Lender: Person or entity that invests in or originates mortgage loans, such as a mortgage banker, credit union, commercial bank, or savings and loan. In single family property usage , the lender is generally whosoever name the loan is in.

LIBOR: The London Interbrain Offered Rate. The rate at which banks in the foreign market lend dollars to one another.

Lien: A legal hold or claim of a creditor on the property of another as security for a debt. Liens may be against real or personal property.

Lis Pendens: A notice recorded in the official records of a county to indicate that there is a pending suit affecting land within the jurisdiction.

Loan Submission: A package of pertinent papers and documents regarding a specific property or properties, delivered to a prospective lender to obtain financing.

Loan-To-Value Ratio (LTV):  The ratio of the amount of the loan to the appraised value or sales price of real property (expressed as a percentage).

Lock-In: The process by which a lender commits to lend at a particular rate as long as the mortgage transaction closes within a specified time period.

Loss Payee Clause: The party named in loss payable clause to whom insurance proceeds are to be paid in the event of damage to property in which the loss payee has an insurable interest.

Manufactured Homes:  Factory-built or prefabricated housing, including mobile homes

Margin: In ARMs it is the difference between the index and the mortgage interest rate.

Market Value: The highest reasonable price that a knowledgeable buyer would pay for a specific piece of property and the lowest price which would be acceptable to a knowledgeable seller.

Metes and Bounds: A description of a property found on deed which describe the property in terms of distance, direction and landmarks.

Mobile Home: A factory-assembled residence consisting of one or more modules, in which a chassis and wheels are an integral part of the structure, and can be readied for occupancy without removing the chassis and/or wheeels.

Modular House:  A factory assembled residence built in units or sections, transported to a permanent site and erected on a foundation. Excludes mobile homes.

Mortgage: A pledge of property, usually real property, as security for a debt. By extension, the document evidencing the pledge. In many states this document is a deed of trust. The document may contain the terms of repayment of the debt. By further extension, " mortgage" may be used to describe both the mortgage proper and the separate promissory note evidencing the debt and providing terms of the debt's repayment.

Mortgage Banker:  An individual, firm or corporation that originates sells/or services loans secured by mortgages on real property.

Mortgage Broker:  A firm or individual who for a commission, matches borrowers and lenders.  A mortgage broker takes applications and sometimes processes loans, but does not use its own funds for closing.

Mortgage Commitment: An agreement between lender and borrower detailing the terms of a mortgage loan such as interest rate, loan type, term and amount.

Mortgage Insurance (MI): Insurance which protects mortgage lenders against loss in the event of default by the borrower. This allows lenders against loss in the event of default by the borrower. This allows lenders to make loans with lower down payments.

Mortgage Note: A written promise to pay a sum of money at a stated interest rate during a specified term.  A mortgage note is secured by a mortgage.

Mortgagee: The lender in the mortgage transaction.

Mortgagee Clause: A clause that may be attached to an insurance policy stipulating that the lender will receive a portion of insurance proceeds sufficient to satisfy the unpaid amount of a loan in the event of a loss.

Mortgagor: The borrower in a mortgage transaction who pledges property as a security for debt.

Negative Amortization:  The unpaid interest which is added to the mortgage principal in the loan where the principal balance increases rather than decreases because the mortgage payments do not cover the full amount of interest due.

No Cash-Out Refinance:  Also known as rate reduction mortgage, a transaction in which the mortgage amount is limited to the sum of the unpaid principal balance of any existing first mortgage(s) and closing costs. Also known as a rate and term refinance.

No-Doc Loan: This refers to a mortgage loan where the borrower does not verify any of their income.

No-Ratio Loan: This mortgage loan requires the borrower(s) not to state or verify any income.

Nonconforming Mortgage: A mortgage loan in which the loan amount, the loan-to-value ratio, the term, loan exceeds permissible limits as specified in agency regulations.

Non-recourse Loan: Type of loan which prohibits the lender from attempting to recover against the security value for the loan falls below the amount required to repay the loan.

Note:  A general term for any kind of paper or document signed by a borrower that is an acknowledgment of the debt, and is, by inference a promise to pay. When the note is secured by a mortgage, it is called a mortgage note and the mortgagee is named the payee.

Origination: Securing a completed mortgage application from a borrower.

Origination Fee: The lender's fee charged a borrower to prepare documents, make credit check, inspect and sometimes appraise a property. Usually stated as a percentage of the face value of the loan.

Owner Occupied Purchase: The purchase of a property for the purpose of the primary residence of the owner.

Par:  Where the face value of the mortgage or bond is equal to its selling price. In the case of mortgage loans this is where there is no discount fee required

Partial Income Loan: A mortgage loan where the borrower(s) verify a portion of their income.

Pipeline: Loan applications in process that have not closed yet

PITY:  Acronym for the items included in a monthly mortgage payment: principal, interest, taxes and insurance.

Planned Unit Developement (PUD):  A comprehensive development plan for a large land area. A POD usually includes residences, roads, schools, recreational facilities, commercial, office, and industrial areas. -Also, a division having lots or areas owned in common and reserved for the use of some or all of the owners of the separately owned lots.

Point:  An amount equal to one percent of the principal amount of a mortgage. (i.e.) One point based on $1 00,000 is $1,000

Portfolio: The collection of loans held for servicing or investment.

Portfolio Lender: A lender who holds loans in their portfolio and does not sell in the secondary market. The lender usually holds these loans until maturity or until the loan is paid off.

Power of Attorney: A legal document authorizing one person to act on behalf of another. (i.e.) A spouse is traveling on business when a closing is being held. The spouse would give the other spouse power of attorney to sign the documents on his/her behalf.

Pre Paid Items:  Costs paid at closing for taxes, interest and insurance. Because prepaid items are recurring costs that do not relate to the acquisition of the property itself, they cannot be financed. Can also be referred to "life of loan" charges.

Pre Paid Interest: Mortgage interest that is paid in advance of when it is due to obtain tax advantages. (i.e.) points paid to buy down the quoted mortgage rate.

Prepayment:  The payment of all or part of a mortgage debt before it is due.

Prepayment Penalty / Prepayment Premium: A charge the mortgagor, (borrower), pays the mortgagee for the privilege to prepay the loan.

Primary Residence:  Residence which the owner physically occupies and uses as his/her home.

Principal: The original balance of money lent, excluding interest. Also the remaining balance of a loan, excluding interest.

Private Mortgage: A mortgage that is granted to a borrower with private moneys, Typically these types show on the borrowers credit report and may not appear on title.

Private Mortgage Insurance (PMI):  Insurance written by a private company protecting the mortgage lender against financial loss occasioned by the borrower defaulting on the mortgage. 

Processing: The completion of a mortgage loan application and supporting documents for underwriting. 

Profit and Loss Statement (P&L): A financial statement provided by the applicant which reports the income and expenses for a business during a certain time period. The statement would be required of self-employed applicants.

Profit / Loss (Write Off): See definition of charge off

Purchase Agreement: A written agreement between a buyer and seller of real property, setting forth the price and terms of the sale. A. K. A.: Contract of Sale

Purchase Money Mortgage: A mortgage given to a borrower who is purchasing a home.

Qualification: The process which determines whether-an applicant can be approved for a mortgage loan.

Quality Control: Policies and procedures designed to maintain optimal levels of quality, accuracy and efficiency in the production, selling and servicing of mortgage loans. 

Quitclaim Deed: A deed relinquishing all interest, title or claim an owner has in a property.

Rate/ Term Refinance:  A refinance of an existing mortgage in which the borrower only enters into the loan to change his/her terms and conditions. No cash out to the borrower is provided.

Real Estate Owned (REO): Property a lender acquires as the result of a foreclosure.

Real Estate Settlement Procedures Act (RESPA): Federal law which regulates the settlement practices within the real estate industry. This law requires the provision of Good Faith Estimates of Closing Costs, prohibits kickbacks for referrals of related services, and standardizes the closing with a required form and format (HUD-1).

Real Estate Taxes: Local government taxes levied on the ownership of real estate. A.K.A. Property Taxes.

Red Flag: A warning term used to indicate further analysis is warranted.

Red Lining: Arbitrary denial of real estate loan applications in certain geographical areas, without considering individual applicant qualification.

Refinancing: The repayment of a debt form the proceeds of a new loan using the same property as security.

Regulation B: Federal Reserve regulation prohibiting .discrimination against consumer credit applicants, and establishing guidelines for collecting and evaluating credit information.

Regulation Z:   Regulation written by the Federal Reserve Board to implement the Truth-In-Lending Act, requiring full written disclosure of the credit portion of a purchase, including the annual percentage rate.

Replacement Cost: The cost to replace a structure with one of equivalent value and function, but not necessarily identical in design or materials.

Rescission: The cancellation of a transaction or contract by law or by mutual consent. (i.e.) On a refinance of an owner occupied property the transaction is not funded until three business days from the closing.

Reserve: Moneys that a borrower has in liquid or semi-liquid assets after all costs associated with a closing are paid. 

Revolving Credit: Open lines of credit which are subject to variable payments in accordance with the balance. Credit cards are examples of revolving credit.

Rider: An addendum or amendment to a contract.

Right of Recession: Period of three full days after closing in which the consumer is allowed to negate an owner occupied refinance transaction:

Rolling Delinquency: This refers to any delinquent payment whose delinquency remains constant month after month. For example, if an individual misses a payment in January, but makes only one payment a month for the next three months they still are one payment behind. They cannot become current again until they make two payments in one month.

Sales Concession (seller):  Something a seller pays of value to a purchaser in order to entice the purchaser to buy the home. Another term for seller contribution. Typically these concessions are used to buy down a rate or for paying for closing costs

Sales Contract: A written agreement between buyer and seller stating terms and conditions of sale or exchange of property

Satisfaction: The discharge of an obligation by paying a party what it is due. (i.e.) liens and judgments

Satisfaction of Mortgage: The recorded instrument the lender provides to evidence payment in full of the mortgage debt.

Seasoned Mortgage: A mortgage on which payments have been regularly for a year or longer.

Second Mortgage, (Second Position): A mortgage that has rights subordinate to a first mortgage. Also called "second trust".

Second Trust: Another term for a second mortgage.

Secondary Financing: A funding method using a loan secured by a second mortgage on a property. Sometimes used to refer to any financing technique other than equity and first mortgage debt.

Secondary Mortgage Market:  The market where lenders and investors buy and sell existing mortgages or mortgage backed securities, thereby providing greater availability of funds for additional mortgage lending.

Securitization:  The process of pooling loans into mortgage-backed for sale into the secondary mortgage market.

Security Instrument: Mortgage or deed of trust evidencing the pledge of real estate as collateral for the loan.

Self-Employment: A person who owns at least 25% of the entity for which generates income for that person. Can be a partner in a firm, sole proprietor, independent contractor etc.

Seller Contributions:  Payment by the seller or any other interested party of some or all of the purchaser's usual closing costs. Investors, sometime limit the amount of seller contribution.

Senior Mortgage:  A first mortgage.

Servicing Fee/ Servicing Rate: The fee earned by a servicer for administering a loan for an investor usually expressed as a percentage of the unpaid principal of loan and deducted from the monthly mortgage payment.

Servicing Release: A stipulation in the agreement for the sales of mortgages in which the seller is not responsible for loan administration

Servicing Retained: A stipulation in the agreement for the sale of mortgages in which the seller is not responsible for loan administration.

Settlement: he closing of a mortgage loan

Settlement Agent: A person or entity which coordinates or conducts a closing or settlement.

Settlement Costs:  Money paid by borrowers and sellers to effect the closing of a mortgage loan, including payments for title insurance, survey, attorney fees and such prepaid items as taxes and insurance escrow.

Site Value:  Money paid by borrowers and sellers to effect the closing of a mortgage loan, including payments for title insurance, survey, attorney fees and such prepaid items as taxes and insurance escrow.

Stipes: Also known as conditions. This is documentation that an underwriter requests based on guidelines

Straw Buyer: One who purchases property for another to conceal the identity of the real purchaser.

Subordinate Lien:  A lien or encumbrance (for example a second mortgage or mechanics lien) on real estate whose priority is inferior to another's recorded interest in the same property.

Subordination Agreement: A document by which parties acknowledge, by written record, that the debt of one is inferior to the debt or interest of another in the same property. Subordination may apply not only to mortgage, but to leases, real estate rights, and any other types of debt interests.

Survey: A measurement of land, prepared by registered land surveyor, showing the location of the land with reference to known points, its dimension, and the location and dimensions of any improvements.

Table Tabling Funding: Mortgage transaction where the broker or third party originator closes the mortgage in its own name for simultaneous assignment to an investor who advanced money to the funding.

Tax Lien: A claim against property for unpaid taxes.

Tax Sale: The sale of property by a taxing authority or an officer of the court acting on a judgment to satisfy the payment of delinquent taxes.

Teaser Rate: A starting rate which is far below the fully indexed rate on an adjustable rate mortgage.

Tenancy by Entirety: A form of ownership in which husband and wife are co-owners with rights of survivorship.

Tenancy in Common:  A form of undivided ownership interest by two or more persons that provides for no right of survivorship. The interest need not be of equal percentage.

Tenancy in Partnership:  Ownership whereby real estate is held in the name of a corporation.

Term: The period of time between the commencement date and termination date of a note, mortgage, legal document, or other contract.

Title: Written evidence of the right to ownership in property. In the case of real estate , the documentary evidence of ownership is the title deed that specifies in whom the legal is vested and the history of ownership and transfers. Title may be acquired through purchase, inheritance, devise, gift or though foreclosure of a mortgage.

Title Binder: Written evidence of temporary title insurance coverage that runs for a limited time and must be replaced by a permanent policy.

Title Defect: Any legal right held by others to claim property or to make demands upon an owner.

Title Exception: An exclusion appearing in a title insurance policy against the insurance company does not insure.

Title Insurance Policy: A contract by which the insurer agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser. Mortgagee, or otherwise.

Title I Loan: Under the Title I loan insurance program established by Title I of the National Housing Act of 1934, lenders make loans from their own funds, and HUD insures the -lender against--loss if borrower defaults on the loan. Title I loans are made for property improvement or manufactured home and lot purchase. Title I loan are also used as part of state and local community revitalization programs.

Title Searching: An examination of public records, laws, and court decisions to ensure that no one except the seller has a valid claim to the property and to disclose past and current facts regarding ownership of the subject property.

Townhouse: A row house on a small lot which has exterior limits common to other similar units. Title to the unit and its lot is vested in the individual buyers with a fractional interest in the common areas, if any.

Transmittal Form: Form which summarizes the data contained within the loan application.

Trust: A fiduciary relationship whereby legal title to a property is transferred to a trustee with the intention that such property be administered by the trustee for the benefit of another, the beneficiary, who holds equitable title to such property.

Trustee in Bankruptcy:. An agent of the court authorized to liquidate and protect the assets of the bankrupt, and bring them to court for final distribution for the benefit of the bankrupt and creditors.

Truth and Lending Act (TIM): Federal law which requires a truth in lending statement to be disclosed for consumer loans. This statement would include disclosure of the annual percentage rate, or APR, as well as other facets of the mortgage program. The law also requires the right of recession period which follows the closing of refinances.

Underwriting: n mortgage banking, the analysis of the risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves the evaluation of the property as outlined in the appraisal report of the borrower's ability and willingness to repay the loan.

Underwriting Conditions: Also know as stips or stipulations. These are requests for more information than originally proved to an underwriter. They could be requested for many reasons including; to verify income, to explain past or current delinquencies, etc.

Uniform Commercial Code (UCC):  A comprehensive code of laws regulating important legal aspects of business and financial transactions. The code has been accepted by every state except Louisiana.

Uniform Settlement Statement (HUD-1): Settlement summary form required by RESPA to be used by closing agents.

Unimproved Land: Raw land.

URLA: Uniform Residential Loan Application or 1003.

Usury: The act of charging borrowers a rate of interest greater than that permitted by law.

Vacancy Factor: The percentage of gross rental income that represents vacant units

VA Loan: Mortgage loan made by an approved lender and guaranteed by the Department of Veterans Affairs. VA loans are made to eligible veterans and those currently serving in the military, and can have a lower down payment than other types of loans.

Verification of Deposit (VOD): A form that requests and secures verifications of amounts on deposit at financial institutions.

Verification of Employment (VOE):  A form that requests and secures documentation of a mortgage applicants work history and or occupation, to assist in the lender's credit investigation

Verification of Mortgage (VOM): A form that requests and secures documentation of a mortgage applicants work history and or occupation, to assist in the lender's credit investigation

W-2:  IRS form which reports income paid and taxes withheld by an employer for a particular employee during a calendar year

Warehouse Lender: A short term lender for mortgage bankers. Using the note as collateral , the warehouse lender provides interim financing until the mortgage is sold to a permanent investor.

Warehousing:  Short-term borrowing of funds by mortgage bankers using permanent mortgage loans as collateral. The money borrowed is used to make additional mortgage loans. This interim financing is used until the mortgages are sold to a permanent investor.

Warranty Deed:  A deed in which the grantor guarantees that there is good and clear title being conveyed

Weighted Average Coupon (WAC):  The weighted average of the gross interest rates of the mortgages in a mortgage pool, as of the issue date, with the balance of each mortgage used as a weighting factor.

Weight Average Maturity (WAM): The weighted average of the remaining terms to maturity of the mortgages in a mortgage pool as the issue date.

Wholesale Origination: A loan origination strategy by which loans are purchased from mortgage brokers, mortgage bankers, or other loan originators (banks, thrift, etc.). The loan may be purchased prior to closing, at closing or after the loans are closed depending on the arrangement between the originator and the wholesale lender. Wholesale origination enables a lender to acquire mortgage servicing rights without incurring the fixed costs associated with a retail origination strategy.

Without Recourse: A mortgage in which the lender will not pursue personal liability against the borrower. The lender's security is the real estate being financed.

Yield: The ratio of investment income to the total amount invested over a given period of time

Zoning: The creation of districts by local governments in which specific types of property uses are authorized.

1099: An IRS form, which is similar to a W-2, which reflects the amount of non taxed income that was paid to an individual during the previous calendar year.

1040's: Personal federal income tax forms that report earnings an individual receives in a given year.