Mortgage Glossary

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Many of our customers find the terms used in mortgage servicing confusing, leading to frustration and miscommunication. To avoid this problem, we've created a list of important lending terms for borrowers to educate themselves on one of the most important financial decisions they will ever make: 

  • Adjustable Rate Mortgage (ARM): A mortgage in which the interest rate is adjusted periodically based on a pre-selected index. This product generally comes with a lower initial interest rate than 30 year fixed products.
  • Alternative Documentation: The use of pay stubs, W-2 forms, and bank statements in lieu of Verifications of Employment (VOE) and Verifications of Deposit (VOD) to qualify a borrower for a mortgage.
  • Amortization: Means loan payment by equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance. Most loans are amortized over 30, 20 or 15 years.
  • Annual Percentage Rate (APR): An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points and other credit costs.
  • Appraisal: An estimate of the value of property, made by a state certified professional called an 'appraiser'.
  • Appraisal Amount or Appraised Value: The fair market value of a home determined by an independent appraisal. The appraisal uses local real estate market sales activity as a major basis for valuation.
  • Appreciation: An increase in the value of a property due to market conditions or other causes. The opposite is depreciation.
  • Balloon (Payment) Mortgage: Usually a short-term fixed-rate loan that involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.
  • Bankruptcy:  Legal relief from the payment of all debts after the surrender of all assets to a court-appointed trustee. Assets are distributed to creditors as full satisfaction of debts, with certain priorities and exemptions. A person, firm or corporation may declare bankruptcy under one of several chapters of the U. S. Bankruptcy Code: Chapter 7 covers liquidation of the debtor's assets; Chapter 11 covers reorganization of bankrupt businesses; Chapter 13 covers payment of debts by individuals through a bankruptcy plan.
  • Broker: An individual in the business of assisting in arranging funding or negotiating contracts for a client but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.
  • Caps: Limits on the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.
  • Cash-out Refinance:  To refinance the mortgage on a property for more than the principal owed. This allows the borrower to get cash from the equity in their home. Loan products may vary on how much can be borrowed on a cash-out refinance.
  • Closer: The person who coordinates the closing time with the Client Coordinator and reviews and prepares the necessary closing documents.
  • Closing: The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement meeting.
  • Closing Costs: The costs associated with procuring and funding a mortgage loan. These may include one or all of the following: an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other miscellaneous costs. Closing costs usually are about 3 percent to 5 percent of the mortgage amount.
  • Closing Statement: An accounting of the debits and credits incurred at closing. All FHA, VA and Conventional financing loans use a Uniform Closing or Settlement Statement commonly referred to as the HUD-1.  
  • Co-Borrower: A party who signs the mortgage note along with the primary borrower, and who also shares title to the subject real estate. 
  • Collateral: Property pledged as security for a debt. For example, real estate that secures a mortgage. Collateral can be repossessed if the loan is not repaid.
  • Combined Loan To Value (CLTV): The mathematical relationship between the total of all loan amounts (first mortgage plus subordinate liens) and the value of the subject property.
  • Community Reinvestment Act (CRA): This act requires financial institutions to meet the credit needs of their community, including low and moderate-income sections of the local community. It also requires banks to make reports concerning their investment in the areas where they do business.
  • Condominium:  A form of property ownership in which the homeowner holds title to an individual dwelling unit, an undivided interest in common areas of a multi-unit project, and sometimes the exclusive use of certain limited common areas. All condominiums must meet certain investor requirements.
  • Conforming Loan: A loan with a mortgage amount that does not exceed that which is eligible for purchase by FNMA or FHLMC. All loans are considered as conforming or non-conforming, also known as jumbo.
  • Construction Loan: A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses.
  • Conventional Loan: A fixed- or adjustable-rate, fully amortized loan secured by a mortgage or deed of trust that is not insured or guaranteed by an agency of the federal government (such as FHA or VA).
  • Conversion Option: Options to convert an adjustable rate mortgage or balloon loan to a fixed rate mortgage under specified conditions.
  • Co-Signer: A party who signs the mortgage note along with the borrower, but who does not own or have any interest in the title to the property.
  • Creditor: A person to whom debt is owed by another person who is the "debtor".
  • Credit Rating: A rating given a person or company to establish credit-worthiness based upon present financial condition, experience and past credit history.
  • Credit Report: A document completed by a credit-reporting agency providing information about the buyer's credit cards, previous mortgage history, bank loans and public records dealing with financial matters.
  • Deal Structure: An Underwriters review of certain aspects of a loan application that do not meet standard guidelines.
  • Debt to Income Ratio: Compares the amount of monthly income to the amount the borrower will owe each month in house payment (PITI) plus other debts. The other debts may include but not limited to car payment, credit cards, alimony, child support, and personal loans. This ratio is commonly used to see if the borrower has the capacity to repay the debt.
  • Deed of Trust:  A legal document that conveys title to real estate to a disinterested third party (trustee) who holds the title until the owner of the property has repaid the debt. In states where it is used, a Deed of Trust accomplishes essentially the same purpose as a Mortgage. 
  • Default: Failure to comply with the terms of any agreement. In real estate, generally used in connection with a mortgage obligation to refer to the failure to comply with the terms of the Promissory Note. Most often this default is a failure to make payments; however, there are other means by which a borrower may default, such as the failure to pay real estate taxes. 
  • Delinquency: Failure to make payments on time. This can lead to foreclosure.
  • Depreciation: A decline in the value of property. The opposite of appreciation.
  • Discount Points: Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. one point on a $100,000 mortgage would cost $1,000). A percentage of the loan amount which is charged or credited by the lender upon making a mortgage loan. Loans that are made at the present market rate, with no points, are considered to be made at "par." Because of the lender's ability to charge or credit points on an individual loan, the lender is able to tailor a loan program and interest rate to fit the needs of each individual borrower. Discount points can be negotiated in the Purchase Contract to be paid by either the seller or the borrower. 
  • Down Payment: The borrower's initial equity investment in the home. Or money paid to make up the difference between the purchase price and mortgage amount. Down payments generally vary from zero percent to 50 percent of the sales price.
  • Earnest Money: Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.
  • Equal Credit Opportunity Act (ECOA): Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.
  • Equity: The difference between the fair market value of a home and the balance of the mortgage.
  • Escrow: Escrow refers to an account held by the lender into which the homebuyer pays money for tax or insurance payments.
  • Fair Credit Reporting Act: Regulated the collection and distribution of information by the consumer credit reporting industry. It also affects how financial institutions collect and convey credit information about loan applicants or borrowers. 
  • Fair Housing Act: Prohibits the denial or variance of the terms of real estate related transactions based on race, color, religion, sex, national origin, disability, or familiar status of the credit applicant. Real estate related transactions include a mortgage, home improvement, or other loans secured by a dwelling.
  • Federal Home Loan Mortgage Corporation (FHLMC): Also called Freddie Mac, is a quasi-governmental agency that purchases conventional mortgages from insured depository institutions and HUD-approved mortgage bankers.
  • Federal National Mortgage Association (FNMA): Also known as Fannie Mae. A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.
  • FICO Score: A credit score given to a person that establishes creditworthiness based on present financial condition, experience and past credit history.
  • Finance Charge:  The cost of credit as a dollar amount (i.e. total amount of interest and specific other loan charges to be paid over the term of the loan and other loan charges to be paid by the borrower at closing). Loan charges include origination fees, discount points, mortgage insurance, and other applicable charges. If the seller pays any of these charges, they cannot be included in the finance charge.
  • Financial Statement: A summary of facts showing an individual's or companies financial condition. For individuals, it states their assets and liabilities as of a given date. For a company it should include a Profit and Loss Statement (P&L) for a certain period of time and balance sheet, stating assets and liabilities as of a given date.
  • First Mortgage: A real estate loan that creates a primary lien against real property.
  • First Rate Adjustment -- First rate adjustment after: In association with an Adjustable Rate Mortgage loan, this is the number of months after which the loan has closed when the first interest rate adjustment will occur.
  • First Rate Adjustment -- Maximum rate decrease: In association with an Adjustable Rate Mortgage loan, this is the most the interest rate can decrease during the first adjustment period.
  • First Rate Adjustment -- Maximum rate increase: In association with an Adjustable Rate Mortgage loan, this is the most the interest rate can increase during the first adjustment period.
  • Fixed-Rate Mortgage: A mortgage on which the interest rate is set for the term of the loan.
  • Floating: The term used when a purchaser elects not to lock-in an interest rate at the time of application.
  • Flood Insurance: Insurance that compensates for direct physical damages by or from flood to the insured property subject to the terms, provisions, conditions and losses not covered provision of the policy. It is required for mortgages on properties located in federally designated flood areas.
  • Foreclosure: A legal procedure in which property securing debt is sold by the lender to pay a defaulting borrower's debt.  
  • Gift Letter: A letter or affidavit that indicates that part of a borrower's down payment is supplied by relatives or friends in the form of a gift and that the gift does not have to be repaid.
  • Good Faith Estimate (GFE): An estimate of settlement charges paid by the borrower at closing. The Real Estate Settlement Procedures Act (RESPA) requires a Good Faith Estimate of settlement charges be provided to the borrower.
  • Gross Monthly Income: The total amount the borrower earns per month, before any expenses (taxes, medical, insurance, etc.) are deducted.
  • Hazard Insurance: A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.
  • Home Maintenance: Costs associated with maintaining a home. This may include, but not limited to, general repairs, replacement or repair of furnace, air conditioning, roof, plumbing and electrical systems.
  • Home Mortgage Disclosure Act (HMDA):  Also known as Regulation C. The purpose of HMDA is to provide disclosure of mortgage lending application activity (home purchase or improvement) to regulators and the public. Information is collected on each application, and is recorded on a log that is compiled to produce a report on application activity by geographic designation (census tract). 
  • Homeowners Association (HOA): A non-profit corporation or association that manages common areas and services of a Condominium or Planned Unit Development (PUD).
  • Homeowners Insurance: Insurance that covers damage to the insureds' residence and liability claims made against the insured subject to the policy terms, conditions, provisions, losses not insured provision and exclusions.
  • Housing Expense Ratio: Ratio used to determine the borrowers capacity to repay a home loan. The ratio compares monthly income to the house payment (Principal, Interest, Taxes and Insurance). 
  • 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 (such as one- three-, and five-year U.S. Treasury Security yields), which is then used to adjust the interest rate on an adjustable mortgage up or down.
  • Initial Interest Rate: The beginning interest rate at the start of an adjustable rate mortgage (ARM). It may be lower than the fully indexed rate or "going market rate" and it will remain constant until it is adjusted up or down on the adjustment date.
  • Interest: The amount paid by a borrower to a lender for the use of the lender's money for a certain period of time.  The amount paid by a bank on some deposit accounts.
  • Interest Income: The potential income from funds which would have been used for the down payment, closing costs, and any difference (increase) between monthly rental payment and monthly mortgage payment.
  • Interest Rate: The percentage of an amount of money that is paid for its use for a specific time; usually expressed as an annual percentage.
  • Judgment: Decree of a court declaring that one individual is indebted to another and fixing the amount of such indebtedness.
  • Jumbo Loan: A loan which is larger (more than $ 359,950) than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.
  • Late Charge:  An additional charge a borrower is required to pay as a penalty for failure to pay a regular mortgage loan installment when due; a penalty for a delinquent payment.
  • Lien: A claim upon a piece of property for the payment or satisfaction of a debt or obligation.
  • Life of Loan -- Maximum rate decrease: In association with an Adjustable Rate Mortgage loan, this is the most the interest can decrease over the life of the mortgage loan.
  • Life of Loan -- Maximum rate increase: In association with an Adjustable Rate Mortgage loan, this is the most the interest can increase over the life of the mortgage loan.
  • Loan Application: A source of information on which the lender bases a decision to make or not make a loan; defines the terms of the loan contract, gives the names of the borrower(s), place of employment, salary, bank accounts, credit references, real estate owned, and describes the property to be mortgaged.
  • Loan Balance: The amount of remaining unpaid principal balance owed by the borrower. 
  • Loan Commitment: An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.
  • Loan Term: Number of years a loan is amortized. Mortgage loan terms are generally 15, 20, or 30 years.
  • Loan-To-Value Ratio (LTV): The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. For purchases, the value of the property is the lesser of the purchase price or the appraised value. For refinances, the value is determined by the appraisal.
  • Lock-In: A written agreement between the lender and borrower for a specified period of time in which the lender will hold a specific interest rate, origination and/or discount point(s).
  • Margin: The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.
  • Market Value: The highest price that 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.
  • Monthly Assessment: Any additional monthly payments that will be applied to the property (ex. common charges, condo fees, etc.)
  • Mortgage: The written instrument used to pledge a title to real estate as security for repayment of a Promissory Note.
  • Mortgage Insurance: Money paid to insure the mortgage when the down payment is less than 20 percent. Insurance written in connection with a mortgage loan that indemnifies the lender in the event of borrower default. In connection with conventional loan transactions, this insurance is commonly referred to as Private Mortgage Insurance (PMI).
  • Mortgage Note: A written promise to pay a sum of money at a stated interest rate during a specified term. It is typically secured by a mortgage.
  • Mortgage Servicing: Controlling the necessary duties of a mortgagee, such as collecting payments, releasing the lien upon payment in full, foreclosing if in default, and making sure the taxes are paid, insurance is in force, etc. The lender or a company acting for the lender, for a servicing fee, may do servicing. (Also called Loan Servicing.)
  • Mortgagee: The institution, group, or individual that lends money on the security of pledged real estate; the association, the lender.
  • Mortgagee Clause: This is the clause that is typically used for hazard insurance and flood insurance.
  • Mortgagor: The owner of real estate who pledges his property as security for the repayment of a debt; the borrower.
  • Net Income: The difference between effective gross income and expense including taxes and insurance. The term is qualified as net income before depreciation and debt.
  • Non-Conforming: A loan with a mortgage amount that exceeds that which is eligible for purchase by FNMA or FHLMC. All other loans above this amount are considered to be non-conforming or jumbo loans.
  • Non-Owner-Occupied Property:  Property purchased by a borrower not for a primary residence but as an investment with the intent of generating rental income, tax benefits, and profitable resale.
  • Note: A written promise by one party to pay a specific sum of money to a second party under conditions agreed upon mutually. Also called "promissory note."
  • Note Rate: The interest rate on the mortgage loan.
  • Origination Fee: This fee is usually known as a loan origination fee but sometimes is called a “point” or “points”. It covers the lender’s administrative costs in processing the loan. Often expressed as a percentage of the loan, the fee will vary among lenders. Generally, the buyer pays the fee, unless otherwise negotiated.
  • Origination Process: Process, in which a lender solicits business, gathers required information and commits to loan money, for the purchase of real estate.
  • Owner-Occupied Property: The borrower or a member of the immediate family lives in the property as a primary residence.
  • PITI: Principal, interest, taxes, and insurance. Also called monthly housing expense.
  • PITI Ratio: Compares the amount of the monthly income to the amount the borrower will owe each month in principal, interest, real estate tax and insurance on a mortgage. Lenders use it in deciding whether to give the borrower a loan. Also called "income-to-debt" ratio. 
  • Planned Unit Development (PUD): A housing project that may consist of any combination of homes (one-family to four-family), condominiums, and various other styles. In a PUD, often the individual unit and the land upon which it sits are owned by the unit/homeowner; however, the homeowner's association owns common facilities.
  • Power of Attorney: A legal document authorizing one person to act on behalf of another.
  • Pre-Approval: A process in which a customer provides appropriate information on income, debts and assets that will be used to make a credit only loan decision. The customer typically has not identified a property to be purchased, however, a specific sales price and loan amount are used to make a loan decision. (The sales price and loan amount are based on customer assumptions)
  • Pre-Qualification: A process designed to assist a customer in determining a maximum sales price, loan amount and PITI payment they are qualified for. A pre-qualification is not considered a loan approval. A customer would provide basic information (income, debts, assets) to be used to determine the maximum sales price, etc. 
  • Prepaid Expenses or Prepaids: Expenses necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments. The term used to describe the funds the Lender requires to be deposited to establish the escrow account for taxes and insurance at the time of closing (also refers to Prepaid Interest).
  • Prepaid Interest: Interest that the borrower pays the lender before it becomes due.
  • Prepayment: A privilege in a mortgage permitting the borrower to make payments in advance of their due date.
  • Prepayment Penalty: Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia. A penalty under a Note, Mortgage or Deed of Trust imposed when the loan is paid before its maturity date.
  • Principal: The amount of debt, not counting interest, left on a loan.
  • Principal and Interest: Two components of a monthly mortgage payment. Principal refers to the portion of the monthly payment that reduces the remaining balance for the mortgage. Interest is the fee charged for borrowing money.
  • Principal, Interest, Real Estate Tax, Insurance Payment: The total mortgage payment which includes principal, interest, taxes and insurance.
  • Principal Balance: The outstanding balance of a mortgage, not counting interest. 
  • Private Mortgage Insurance (PMI): In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment-as low as Zero percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Insurance against a loss by a lender in the event of default by a borrower (mortgagor). A private insurance company issues this insurance. The premium is paid by the borrower and is included in the mortgage payment.
  • Processing: Gathering the loan application and all required supporting documents (including the property appraisal, credit report, credit history, and income and expenses) so that a lender can consider the borrower for a loan.
  • Promissory Note:  A document in which the borrower promises to pay a stated amount on a specific date. The note normally states the name of the lender, the terms of payment and any interest rate.
  • Property Taxes: Taxes assessed on real estate. Property taxes are based on valuations by local and or state governments.
  • Purchase Agreement: A written agreement between a buyer and seller of real property, that states the price and terms of the sale.
  • Purchase Price: The total amount paid for a home.
  • Qualifying Income Ratios: Income analysis used by lenders in deciding whether to offer the borrower a loan. One type of analysis compares only the amount of the proposed monthly mortgage payment to the monthly income. Another compares the amount of the total monthly payments (for example car, credit card and proposed mortgage payments) to the monthly income.
  • Rate Index: An index used to adjust the interest rate of an adjustable mortgage loan.
  • Ratio: The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income.
  • Real Estate Appreciation Rate: Percentage increase in the value of real estate, expressed at an annual rate. 
  • Real Estate Settlement Procedures Act (RESPA): A consumer protection law that requires, among other things, lenders to give borrowers advance notice of closing costs.
  • Realtor®: A person licensed to negotiate and transact the sale of real estate on behalf of the property owner. A real estate broker or associate must hold active membership in a real estate board affiliated with the National Association of Realtors.
  • Recording Fee: The amount paid to the recorder's office in order to make a document a matter of public record.
  • Recording Fees: Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records. 
  • Regulation Z: Federal Reserve regulation issued under the Truth-in-Lending Act, which, among other things, requires that a credit purchaser be advised in writing of all costs connected with the credit portion of the loan.
  • Rental Payment: A payment made to use another's property. The amount of the rent is determined in a contract and is typically paid monthly.
  • Renters Insurance: Insurance against perils which are commonly covered in policies described as a "Renters Policy".
  • Repayment: The payment of a mortgage loan over a period of time established when the loan is originated.
  • Rescind/Rescission: The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.
  • Sales Contract: A written agreement between parties stating all terms and conditions of a sale.
  • Secondary Market: An informal market where existing mortgages are bought and sold. It is the traditional aftermarket for mortgage loans that brings together lenders that sell mortgages with lenders, investors and agencies that buy mortgages.
  • Seller Contribution: The seller may be paying some or all of the borrower's cost. The amount of the contribution has limitations. 
  • Selling Costs: The costs incurred in selling a home. This could include Realtor expenses and other miscellaneous expenses such as painting or minor repairs to prepare the home for sale.
  • Servicing: All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections, and the like.
  • Servicing Released: A stipulation in the agreement for the sale of mortgages in which the Lender is not responsible for servicing the loan.
  • Servicing Retained: A loan sale in which the original lender's servicing department continues to service the loan after the sale to a secondary institution or investor.
  • Settlement Statement:  Also referred to as a HUD-1 Settlement Statement. The complete breakdown of costs involved in the real estate transaction for both the seller and buyer.
  • Single-Family Attached Home: A single-family dwelling that is attached to other single-family dwellings.
  • Single-Family Detached Home: A freestanding dwelling for a single family 
  • Subordinate Financing: An additional lien against the real estate securing borrowers first mortgage. This lien takes second priority to the first mortgage.
  • Subsequent Rate Adjustment -- Maximum rate decrease: In association with an Adjustable Rate Mortgage loan, this is the most the interest rate can decrease when it is scheduled for reevaluation and possible adjustment.
  • Subsequent Rate Adjustment -- Maximum rate increase: In association with an Adjustable Rate Mortgage loan, this is the most the interest rate can increase when it is scheduled for reevaluation and possible adjustment.
  • Subsequent Rate Adjustment -- Next ARM Adjustment Date: In association with an Adjustable Rate Mortgage loan, this is the date scheduled for the next reevaluation and possible adjustment.
  • Subsequent Rate Adjustment -- Rate Change Frequency: In association with an Adjustable Rate Mortgage loan, this is the frequency in which possible adjustments may be made to the interest rate amount for Adjustable Rate Mortgages after the initial adjustment.
  • Survey: A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any building, plus dimensions of any improvements. 
  • Title: A document that gives evidence of an individual's ownership of property. In the case of real estate, the documentary evidence of ownership is the title deed, which specifies in whom the legal state is vested and the history of ownership and transfers. Title may be acquired through purchase, inheritance, devise, gift or through the foreclosure of a mortgage.
  • Title Insurance: A policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. A contract by which the insurer, usually a title company, indicates who has legal title and agrees to pay the insured a specific amount of any loss caused by clouds, claims or defects of title to real estate, which the insured has an interest as owner, mortgagee or otherwise.
    (a) Owner's Title Policy: Usually issued to the landowner himself. The owner's title insurance policy is bought and paid for only once and then continues in force without any further payment. Owner's Title Insurance policies are not assignable.
    (b) Mortgagee's Title Policy: Issued to the mortgagee and terminates when the mortgage debt is paid. In the event of foreclosure, or if the mortgagee acquires title from the mortgagor in lieu of foreclosure, the policy continues in force, giving continued protection against any defects of title which existed at, or prior to, the date of the policy.
  • Title Search: An examination of municipal records to determine the legal ownership of property. Usually performed by a title company.
  • Treasury Bills: Interest bearing U.S. Government obligations sold at a weekly sale. The change in interest rates paid on these obligations is frequently used as the Rate Index for Adjustable Mortgage Loans.
  • Truth in Lending (TIL): The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to ensure that prospective borrowers of credit receive credit and cost information before concluding a loan transaction.
  • Underwriting: The decision whether to make a loan to a potential homebuyer based on credit, income, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount. The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's creditworthiness and the quality of the property itself.
  • Verification of Deposit (VOD): A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.
  • Verification of Employment: A document signed by the borrower's employer verifying his/her position and salary.
  • Verification of Mortgage (VOM): Form used in mortgage lending to verify the existing mortgage balance, monthly payments and late payments, if any.
  • Verification of Rent: Form used in mortgage lending to verify monthly rents paid and late payments, if any.