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Mortgage Loan Brokering and Lending

Terms in this set (241)

Ability to Repay
a federal standard for determining an applicant's ability to repay a consumer mortgage.
acceleration
a demand for immediate payment of all amounts remaining unpaid on a mortgage or extension of credit by a lender or carryback seller.
active license
a license status which allows an individual Department of Real Estate (DRE) licensee to perform mortgage loan originator (MLO) services as an employee of a Department of Business Oversight (DBO) MLO.
adjustable rate mortgage (ARM)
a variable intereste rate note, often starting out with an introductory teaser rate which resets in a few months or years based on a particular index.
advance fee
a fee paid in advance of any services rendered
adverse action notice
A disclosure notifying the applicant a negative action has been taken on their consumer mortgage application due to an unfavorable credit history, as required by the Fair Credit Reporting Act (FCRA)
affiliated business arrangements
a business arrangement in which a broker may lawfully profit from referring a client to a service provider the broker owns; requires a broker to make a disclosure of their ownership interest to the client.
all inclusive trust deed (AITD)
A note entered into by a buyer in favor of the seller to evidence the amount remaining due on the purchase price after deducting the down payment, an amount inclusive of any specified mortgage debts remaining of record with the seller retaining responsibility for their payment.
allonge
an attachment to a note occuring between preparation of the note and closing the transaction providing information necessary to update entries on the note at the time it becomes effective.
anti-deficiency
a limitation placed on a mortgage lenders ability to recover losses on default when the secured property's value is insufficient to satisfy the mortgage debt.
Articles of Incorporation
An instrument setting forth the basic rules and purposes under which a private corporation is formed.
appraisal
An appraisers opinion or estimate of a property's value on a specific date, reduced to writing in an appraisal report.
appraisal report
Documentation of an appraiser's findings, including the purpose and scope of the appraisal.
appraised value
The fair maket value (FMV) arrived at by an appraiser.
Back End (Debt to Income Ratio)
The percentage of monthly gross income that goes towards paying non-mortgage debt.
Balance sheet
An itemized, dollar-value presentation for setting an individuals net worth but subtracting debt obligations (liabilities) from asset values.
balloon payment
Any final payment on a note which is greater than twice the amount of any one of the six regularly scheduled payments immediately preceding the date of the final/balloon payment.
balloon-payment qualified mortgage
A type of qualified mortgage which allows small lenders to include a balloon feature.
beneficiary statement
A written disclosure made by a mortgage holder regarding the condition of a debt owed to them, usually evidenced by a trust deed note.
blind pool investment
An investment which involves receipt of investor contributions in a group investment program before the syndicator identifies and discloses the real estate interest the investors funds will be used to acquire, an activity controlled by security law.
bona fide purchaser
a buyer who purchases a property for valuable consideration in good faith without notice or knowledge of pre-existing encumbrances or conditions affecting their right to full ownership
broker associate
a Department of Real Estate (DRE) licensed broker who works in the employment of another DRE broker.
business activity report
A report notifying the Department of Real Estate (DRE) of an employing broker's mortgage activities during the fiscal year.
business mortgage
A debt incurred primarily for other than personal, family or household purposes, whether secured or unsecured.
buyer mortgage capacity
A buyer's ability to make mortgage payments based on their debt-to-income ratios (DTI).
call
A mortgage holder's demand for the balance of the loan to be immediately paid in full.
Capitalization approach
An appraisal method used by an appraiser to arrive at a property's value based on the present worth of a property's future net operating income.
carryback mortgage
a note and trust deed executed by a buyer of real estate in favor of the seller for the unpaid portion of the sales price on closing, also known as an installment sales, credit sale or seller financing.
certificate of sale
A certificate issued to the successful bidder on the completion of a judicial sale of a property.
Changed Circumstances
extraordinary events defined by federal mortgage law which may be the basis for the costs provided in the Loan Estimate.
closed end mortgage
a mortgage in which the funds are disbursed once and paid off over time.
closing disclosure
A disclosure of the buyers final settlement charges and mortgage terms handed to the buyer on a standard form within three business days before mortgage closing.
collateral assignment
and agreement providing additional, cumulative and concurrent security for a debt, in the form of personal property, to secure the property owners performance under the debt.
commercial communication
anything written or spoken used to attract homeowners to a service.
commingling
the mixing of personal funds with client or third party funds held in trust.
comparable property
a recently sold or listed property which has characteristics similar to the subject property being evaluated.
comparative market approach
an appraisal method used by an appraiser to arrive at a property's value based on the current selling prices of similar properties.
compensating factors
postive factors which compensate for a high debt load.
Computation Period
For impound account analysis, the 12 month period beginning on the date of the initial impound deposit during which monthly deposits, disbursements and any applicable interest occur.
Conforming mortgage
A conventional mortgage with terms, conditions and a maximum principal amount set by Fannie Mae and Freddie Mac.
consumer mortgage
a debt occurred primarily for personal, family, or household purposes and secured by a parcel of real estate containing one-four residential units.
consumer mortgage application
a consumer mortgage application is a request for an offer of consumer mortgage terms.
consumer purpose
a primarily personal, family or household use.
consumer reporting agency
companies that compile debt information from credit bureaus and other credit sources and sell credit reports to consumers or lenders
contract collection
the collection and accounting for payments on a promissary note for a fee.
conventional mortgage
a mortgage that is not made, insured or guaranteed by the federal government.
conversion
the unlawful appropriation of another's property, as in the conversion of trust funds.
conversion adjustable rate mortgage (ARM)
An adjustable rate mortgage (AEM) which may be converted to a fixed rate mortgage (FRM) during the mortgage term.
cost approach
an appraisal method used by an appraiser to arrive at a property's values based on the present cost of constructing the present improvements and acquisition of the land.
credit repair
a service purporting to raise credit scores and remove bad credit.
credit repair organization
a person or company that offers to improve a buyer's credit history, record or rating in exchange for a fee.
Credit Repair Organization Act (CROA)
A federal law protecting credit repair consumers from fraud perpetrated by credit repair organizations.
credit report
a compilation of the credit history of an individual or business
credit score
a numerical representation of a borrowers creditworthiness, based on credit information obtained by a credit bureau.
credit score disclosure
a disclosure of a consumers credit score information as required by the Fair Credit Reporting Act (FCRA)
credit score exception notice
a risk-based notice disclosure provided to the consumer to fulfill the credit score disclosure and the Notice to Home Loan Applicant under the Fair Credit Reporting Act (FCRA).
creditworthiness
an individual's likelihood of repaying a mortgage, determined by their present income, wealth and previous debt payment history.
debt to income ratio (DTI)
the percentage of monthly income that goes towards paying a debt.
declaration of default and demand for sale
a document delivered to the trustee under a power of sale provision by the mortgage holder instructing the trustee to initiate foreclosure on the secured real estate by recording a notice of default (NOD)
deficiency
losses experienced by a mortgage holder at a foreclosure sale due to insufficient value of the mortgaged property to satisfy the mortgage debt.
desk review
a second appraisers review of an appraisal report to verify and evaluate the findings.
Desktop Underwriter (DU)
Fannie Mae's automated underwriting (AU) system.
discount point
The amound of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate.
Dodd-Frank Wall Street Reform and Consumer Protection Act
A 2010 enactment of significant changes to US financial regulation in response to the 2007 financial crisis.
draw period
The time period during which the homeowner may draw on the funds in a home equity line of credit (HELOC).
dwelling
A building or personal property occupied or designed to be occupied as a residence by one or more families.
due-on-clause
A trust deed provision used by lenders to call the loan immediately due and payable, a right triggered by the owner's transfer of any interest in the real estate, with exceptions for intra-family transfers of their home.
eligible non-borrowing spouse
a non-borrowing spouse is eligible to defer repayment of a home equity conversion mortgage (HECM) and remain on the property after the borrower's death.
end of draw (EOD) period
The time period following the draw period during which the home equity line of credit (HELOC) resets and the homeowner begins making monthly payments of principal and interest.
Energy-Efficient Mortgage (EEM)
A Federal Housing Administration (FHA) mortgage which finances energy-efficient improvements.
entitled person
The original borrower on a note and trust deed, their successor-in-interest or an authorized agent of either who may request, in writing, a beneficiary statement or payoff demand statement.
Errors and Omissions (E&O) Insurance
An insurance policy protecting brokers and agents from negligent conduct when acting as a licensee.
Equal Credit Opportunity Act (ECOA)
A federal law which prohibits disciminatory and unfair lending practices.
exculpatory clause
A provision in a note secured by a trust deed which converts a recourse debt into nonrecourse debt to bar recovery by a money judgement against a borrower.
Fair Credit Reporting Act (FCRA)
A federal law controlling the collection and use of consumer credit reports, including the delivery of disclosures to credit consumers.
Fair Market Value (FMV)
The price a reasonable, unpressured buyer would pay for property on the open market.
fair value hearing
The court proceeding at which a money judgment is awarded for any deficiency in the secured property's fair market value (FMV) at the time of the judicial foreclosure sale to fully satisfy all debt obligations owed the mortgage holder.
federally registered mortgage loan originator (MLO)
A mortgage loan originator (MLO) employed by a federally regulated bank, credit union or financial company.
federally regulated mortgage
A consumer mortgage made, insured, guaranteed, assisted or otherwise connected to the federal government, controlled by the Real Estate Settlement Procedures Act (RESPA)
field review
a second appraisers independent visual inspection of the property to verify and evaluate the findings of the original appraisal report.
first point of contact materials
materials used to solicit or create a client relationship with prospective mortgage borrowers.
foreclosure consultant
An individual offering services which claim to aid homeowners with mortgage related issues for a fee.
foreclosure decree
Decree by a court ordering the sale of the mortgaged property and the payment of the debt owing to the lender out of the proceeds.
fractionalizing
Selling a share of interest in one note to multiple investors.
freeze
A prohibition against additional extensions of credit under a home equity line of credit (HELOC).
front-end-debt-to-income-ratio (DTI)
The percentage of monthly gross income that does towards paying mortgage debt.
full credit bid
The maximum amount the foreclosing mortgage holder may bid at a trustee's sale without adding cash, equal to the debt secured by the property being sold, plus trustee's fees and foreclosure expenses.
fully indexted rate
The highest possible rate on the adjustable rate mortgage (ARM) during the first five years of its term.
Future Advance Clause
a trust deed provision authorizing a mortgage holder to advance funds for payment of conditions impairing the mortgage holders security interest in the mortgaged property, such as delinquent property taxes, assessments, improvement bonds, mortgage insurance premiums or elimination of waste.
Garn-St. Germain Federal Depository Institutions Act of 1982
a federal law which preempts state level limitations on a mortgage holders enforcement of the due on clause contained in mortgages.
general qualified mortgage
A consumer mortgage conforming to safe harbor status under the federal ability to repay (ATR) rules.
good faith deposit
A money deposit made by a buyer to evidence their good faith intent to buy when making an offer to acquire property, also called earnest money.
government related mortgage
a mortgage that is made, insured or guaranteed by the federal government
government monitoring information (GMI)
Demographic information collected from mortgage applications used to monitor lenders compliance with anti-discrimination laws.
guaranty entitlement
The portion of a veterans mortgage guaranteed by the US Department of Veterans Affairs (VA)
Hard Money Mortgage
Real estate mortgages made by private lenders
holder in due course
One who has taken a note, check or bill of exchange in due course: 1. before it was overdue; 2. in good faith and for value; and 3. without knowledge that it has been previously dishonored and without notice of any defect at the time it was negotiated to him or her.
home equity conversion mortgage (HECM) program
The Federal Housing Administration (FHA)'s reverse mortgage program.
home equity line of credit (HELOC)
a mortgage fiving a homeowner access to draw on their homes equity.
Home Mortgage Disclosure Act (HMDA)
A federal law mandating data collection on mortgage originations and applications of lenders who meet Home Mortgage Disclosure Act (HMDA) threshold requirements.
hypothecation
The pledging of something as security without the necessity of giving up possession of it.
hybrid adjustable rate mortgage (ARM)
A type of adjustable rate mortgage (ARM) which features a fixed rate for an introductory period and thereafter a periodically adjusted interest rate based on a predetermined formula.
impound account
a money reserve funded monthly by the property owner and maintained by the mortgage holder to pay annual re-ocurring ownership expenses. (taxes & insurance)
impound account provision
A trust deed provision establishing a reserve of the owners funds for the payment of annually recurring ownership expenses.
index
A regularly issued composite market interest rate for an investment such as Treasury Securities or inter-bank loans used to set the basis for periodic interest rate adjustments.
individual mortgage loan originator (MLO)
A natural person who meets the definition of a mortgage loan originator (MLO)
initial interest rate cap
a limit on the amound the interest rate may change on the first adjustment of an adjustable rate mortgage (ARM)
institutional lender
a lender which pools deposits and invests them by making mortgages, e.g. banks, credit union or insurance company.
inter vivos trust
A title holding arrangement used as a vesting by a property owner for probate avoidance on death.
Interest Rate Reduction Refinance Loan (IRRRL)
A U.S. Department of Veterans Affairs (VA) guaranteed refinance that lowers the interest rate of an existing VA guaranteed mortgage.
interest only adjustable rate mortgage (ARM)
a type of adjustable rate mortgage (ARM) which features an initial period of interest only payments
introductory interest rate
the initial rate of interest on an adjustable rate mortgage (ARM) typically lower that the fully indexed note rate and lasting for a set introductory period. Also known as a teaser rate.
jumbo mortgage
a conventional mortgage with a principal amount exceeding the conforming or super conforming mortgage limits set by Fannie Mae and Freddie Mac.
judicial foreclosure
the court ordered sale by public auction of the mortgaged property. Also know as a sherrif's sale.
kickback
A fee improperly paid to an transaction agent (TA) who renders no service beyond the act of referring in exchange for a referral fee when the agent is already providing another service in the transaction for a fee.
lender overlay
Lender imposed standards on consumer mortgages to be met by applicants in addition to standards set by mortgage insurers and investors.
lender paid mortgage insurance (LPMI)
Default mortgage insurance provided by private insurers in which the lender pays the mortgage insurance premium and recovers the cost through a higher interest rate.
life expectancy set-aside
A lender mandated portion of a home equity conversion mortgage (HECM) set aside for the payment of property charges.
lifetime interest rate cap
a limit on the amount the interest rate can increase over the life of an adjustable rate mortgage.
line of credit payment
a home equity conversion mortgage (HECM) payment option in which the homeowner may choose when and how much money to withdraw from their line of credit until they reach their principal limit.
lis pendens
A notice recorded for the purpose of warning all persons that the title or right to possession of the described real property is in litigation; literally suit pending; recorded to give constructive notice of pending litigation.
litigation guarantee
A title insurance policy which lists all parties with a recorded interest in a property and their addresses of record, ensuring that all persons with a recorded interest in a property are named and served in litigation.
Loan Application Register (LAR)
The electronic form used to collect Home Mortgage Disclosure Act (HMDA) data.
Loan Estimate (LE)
An estimate of a buyers settlement charges and mortgage terms handed to the buyer on a standard form within three business days following the lenders receipt of mortgage application.
Loan-level price adjustment (LLPA)
Adjusted interest rates or fees based on the risk of default a mortgage poses.
Loan Prospector (LP)
freddie macs automated underwriting system
loan to value ratio (LTV)
a ratio stating the outstanding mortgage balances as a percentage of the mortgaged property's fair market value. (FMV)
long term rate
An interest rate fixed for the duration of the loan.
lump sum option
a home equity conversion mortgage (HECM) payment option in which the homeowner receives one payment after closing.
mandatory obligation
The costs associated with originating and closing a home equity conversion mortgage (HECM)
margin
The interest points added to an index by a lender as profit on the adjustment of an adjustable rate mortgage (ARM)
maximum claim amount
The ceiling amount for how much the homeowner is responsible for repaying once a home equity conversion mortgage (HECM) becomes due.
Metropolitan Statistical Area (MSA)
A large region connected by common economic ties, considered as a unit for statistical purposes.
Money judgement on foreclosure
An award for any unpaid balance remaining after a judicial foreclosure sale due to the secured property's insufficient fair market trade value (FMV) on the date of sale to satisfy the debt owed, also called a deficiency.
Mortgage Acts and Practices
A federal law governing consumer mortgage advertisements.
Mortgage Assistance Relief Services (MARS) rule
A federal regulation protecting homeowners by controlling the activities of mortgage assistance relief providers.
mortgage backed loan (MBL)
A loan secured by the assignment of an existing note and trust deed.
mortgage call report
a quarterly report on consumer mortgage data provided to the Nationwide Mortgage Licensing System (NMLS), used to enhance regulatory oversight.
Mortgage Loan Disclosure Statement (MLDS)
A California disclosure provided to a borrower by a mortgage broker who negotiates a mortgage on the borrowers behalf.
Mortgage Insurance Premium (MIP)
Default insurance premiums required on a Federal Housing Administration (FHA) insured mortgage, paid both up-front and annually.
mortgage loan activity notification
A report notifying the Department of Real EState (DRE) when a licensee comences offering mortgage loan originator (MLO) services.
Mortgage Loan Originator (MLO)
A mortgage loan originator (MLO) who is other than a natural person, such as a corporate broker.
Mortgage processing
The receipt of a mortgage application and the organization, preparation and confirmation of supporting documentation by the lender's mortgage processor for submission to the lender.
Mortgage shopping worksheet
A worksheet designed for use by buyers when submitting applications for a consumer mortgage to compare mortgages offered by different lenders based on a list of all the variables commonly occurring as costs at the time of origination and over the life of the mortgage.
mortgage steering
A mortgage loan originator (MLO) practice of directing a homebuyer to a consumer mortgage with less favorable terms in order to obtain greater compensation.
Nationwide Mortgage Licensing System (NMLS)
The national registery of consumer mortgage loan originators (MLOs)
Negative Amortization
The addition of unpaid interest to the principal balance of a mortgage due to insufficient monthly interest payments.
Nationwide Mortgage Licensing System (NMLS) identification number (ID)
A unique number identifying a consumer mortgage loan originator (MLO) in the Nationwide Mortgage Licensing System (NMLS)
nonjudicial foreclosure
When property is sold at a public auction by a trustee as authorized under the power of sale provision in a trust deed.
nonrecourse debt
A debt recoverable on default solely through the value of the security interest in the secured property.
nontraditional credit
Accounts other than traditional mortgage, loan, credit card and bank accounts, used to analyze a consumers ability to repay debt
note rate
The interest rate agreed to between the homebuyer and the lender on the promissory note. Contrast with real interest rate.
notice of action taken
A notice disclosing to the applicant the specific reasons for denial of credit, as required by the Equal Credit Opportunity Act (ECOA)
notice of default (NOD)
The notice filed to begin the nonjudicial foreclosure process. Generally, the NOD is filed following three or more months of delinquent mortgage payments.
notice of incompleteness
A notice requesting additional information to complete a mortgage application, as required by the Equal Credit Opportunity Act (ECOA)
notice of right to rescind
A disclosure notifying a homeowner of their right to cancel a non-purchase money consumer mortgage secured by their principal residence, the circumstances allowing the homeowner to cancel and the effects of the rescission.
notice of trustee's sale (NOTS)
The notice recorded, posted and mailed to evidence an impending trustee's sale to the property owner and potential bidders.
Notice to Home Loan Applicant
A disclosure of the consumers right to credit score disclosures and how consumer credit scores are used, as required by the Fair Credit Reporting Act (FCRA)
novation
An agreement entered into by a mortgage holder, buyer, and seller to shift responsibility for a mortgage obligation to the buyer by an assumption and release the seller of liability.
novation agreement
An agreement entered into by a mortgage holder, buyer and seller to shift responsibility for a mortgage obligation to the buyer by and assumption and release the seller of liability.
open end mortgage
A mortgage which gives the borrower the ability to withdraw funds in a line of credit.
open adjustable rate mortgage (ARM)
An adjustable rate mortgage (ARM) giving the borrower the choice of a full monthly payment, an interest only payment, and a minimum payment typically less than the interest due.
overage
A surplus amount in a trust account exceeding the amount of trust funds held in all the subaccounts for individuals.
payment cap
a limit on the amount of an increase in the borrowers monthly principal and interest at the payment adjustment date on an adjustable rate mortgage (ARM)
payoff demand
A written demand, prepared by a mortgage lender, for the total dollar amount require on the date of preparation to pay off the mortgage as a requisite for recording a reconveyance of their trust deed lien on a property.
periodic interest rate cap
A limit on the amount the interest rate can increase with each future adjustment of an adustable rate mortgage (ARM)
pledge
To offer an asset (such as an existing carryback note) as collateral or security for another, unrelated debt.
portfolio category income
Unearned income from interest on investments in bonds, savings, income property, stocks, and trust deed notes.
portfolio lender
A lender who both funds and holds a mortgage to collect the interest income.
power-of-sale provision
A trust deed provision authorizing the trustee to initiate a non-judicial foreclosure sale of the described property on instructions from the beneficiary.
pre-foreclosure workout
Negotiations between a mortgage holder and defaulting property owner with the purpose of exploring options to avoid foreclosure.
preliminary title report
A report constituting a revocable offer by a title insurer to issue a policy of title insurance used by a buyer and escrow to initially establish the current vesting and encumbrances attached to title of a property as reflected by public record.
prepayment penalty
A levy charged by a mortgage holder to a borrower who pays off the outstanding principal balance on a mortgage prior to its maturity.
Principal, Interest, Taxes, Insurance (PITI)
The four components of monthly mortgage debt.
principal limit
The maximum mortgage amount available to the homeowner on a home equity conversion mortgage (HECM)
private lender
An individual or non-government organization that lends money.
Private Mortgage Insurance (PMI)
Default mortgage insurance coverage provided by private insurers for conventional loans with loan-to-value ratios higher than 80%.
probate referee (on foreclosure)
An appraiser appointed by the court in a judicial foreclosure action to advise the court on a property's fair market value (FMV) on the date of the judicial foreclosure sale.
promissary note
A document given as evidence of a debt owed by one person to another.
property charges
on a home equity conversion mortgage (HECM), a collective term for property taxes, insurance use restrictions and comparable sales data.
purchase money paper
A nonrecourse note evidencing a debt for the purchase of a one to four unit residential property the buyer is going to occupy, or a seller carry-back note and trust deed as an extension of credit to a buyer of any type of real estate which is secured solely by the property sold.
Real Estate Settlement Procedures Act (RESPA)
A federal law governing the behavior of service providers on a federally related mortgage which prohibits them from giving or receiving unlawful kickbacks.
recast
A mortgage holders demand to modify the note terms and receive payment of additional fees in exchange for waiving the due-on clause in their mortgage.
reconveyance
A document executed by a trustee named in a trust deed to release the trust deed lien from title to real estate, used when the secured debt is fully paid.
recourse debt
A debt for which the debtor may be personally liable if a sale of the secured property does not fully satisfy the debt on a default.
redemption
A property owner or junior lien-holders right to clear title to property of a mortgage lien prior to the completion of a trustee's sale or following a judicial foreclosure sale by paying all amounts due on the mortgage debt, including foreclosure charges.
redlining
Failure to provide financing in certain communities based on the demographics of that community.
regular financier
A lender subject to Truth in Lending Act restrictions by making more than a set threshold of consumer purpose loans or mortgage in a calendar year.
Regulation Z
A federal regulation implemeting the Truth and Lending Act (TILA)
reinstatement
A property owner or junior lien-holders right to reinstate a mortgage and cure any default prior to five business days before the trustee's sale by paying delinquent amounts due on the note and trust deed, plus foreclosure charges.
recission
The homeowners termination of a non-purchase money consumer mortgage, restoring the lender and homeowner to their original positions.
reserve requirement
A requirement to hold cash in reserve as a buffer against default in case of a life changing event
residential mortgage credit report (RMCR)
A detailed account of a buyers credit, employment and residence history.
residential mortgage loan report
A report filed by the Department of Real Estate (DRE) licensed mortgage brokers who act as direct lenders.
residual income
On a US Department of Veterans Affairs (VA) guaranteed mortgage, an analysis of a veterans monthly debt obligations from their gross income to ensure the veteran is able to meet minimum living expenses.
reverse mortgage
A mortgage which allows senior homeowners to use their home equity as a stream of income.
risk layering
The increased risk of default posed by sumulative smaller risks.
section 32 mortgage
A consumer mortgage subject to additional disclosures and restrictions due to its high points and fees or an annual percentage rate (APR) or prepayment penalty duration which exceeds thresholds set by the federal Truth in Lending Act (TILA)
Section 35 mortgage
A closed end consumer mortgage secured by a principal residence and subject to mandatory impounds, appraisal requirements and restrictions due to an annual percetage rate (APR) which exceeds thresholds set by the federal Truth in Lending Act (TILA)
Section 609 credit dispute
A credit repair tactic which disputes outdated and unverifiable derogatory information.
Secure and Fair Reinforcement for Mortgage Licensing Act (SAFE Act)
A federal consumer protection law which created a uniform national licensing and registration scheme for mortgage loan originators (MLO's)
servicer
An individual responsible for receiving scheduled payments from a homeowner by arrangement with the mortgage holder.
service provider
An individual or company which offers services connected with a prospective or actual consumer mortgage origination.
settlement service
Any service provided in connection with a prospective or actual consumer mortgage origination.
short term rate
A variable interest rate which changes often, driven by Federal Reserve actions to keep inflation and deflation in check.
small lender
In 2018 a lender with assets of $2112 billion or less which made 2,000 or fewer first lien consumer mortgages in the preceding calendar year (two years, for applications received before April 1).
small lender qualified mortgage
A type of qualified mortgage which allows small lenders to include features otherwise prohibited in consumer mortgages.
small mortgage
A first trust deed debt not exceeding $30,000 or a junior trust deed debt not exceeding $20,000
sole proprietor
A broker who conducts business as an individual rather than through a licensed corporate entity.
Special Information Booklet
A required Truth in Lending Act (TILA) disclosure containing information about the consumer mortgage process, morgage features and costs.
stacking order
The order of mortgage application documents requested by a lender.
state licensed mortgage loan originator (MLO)
A mortgage loan originator (MLO) licensed and regulated by a state agency.
subaccount ledger
An accounting document or file identifying the owner of trust funds and the amount held for the owner.
subordination
An agreement entered into by a mortgage holder to permit their security interest in title to the morgaged property to take a junior postion to another encumbrance.
super conforming mortgage
A conforming mortgage with a maximum principal amount adjusted for a high cost area.
surplus funds
The price paid for property by the successful bidder at a trustees sale in excess of the amount of debt and costs due under the foreclosed trust deed.
temporary qualified mortgage
A transtional qualified mortgage for lenders originating mortgages insured or guaranteed by the federal government or sold to Fannie Mae or Freddie Mac.
tenure payment
A home equity conversion mortgage (HECM) payment option in which the homeowner receives equal monthly payments until they die or sell the property.
term payment
A home equity conversion mortgage (HECM) payment option in which the homeowner receives equal monthly payments for a fixed period of time.
Three C's of Underwriting
The three major components of mortgage applicant review by an underwriter: credit, capacity, and collateral.
threshold broker
A private lender in the business of making mortgages or a mortgage broker who annually negotiates or services an aggregate dollar amount of mortgages above a statutory threshold.
tolerances
Acceptable ranges of deviation for changes to fees and amounts disclosed on a Loan Estimate, set by type of charge.
transaction agent (TA)
The term lenders use to identify the buyer's agent in a sales transaction which is contingent on the buyer obtaining a mortgage to fund the purchase price.
transitional license
A provisional mortgage loan originator (MLO) license which allows an MLO moving to another state to perform MLO services for a short period of time whil they fulfill requirement to obtain an MLO license in the new state.
triggering terms
Words and phrases in consumer mortgage advertisements which trigger the need for additional disclosures.
trust funds
Items which have or evidence monetary value held by a broker for a client when acting in a real estate transaction.
trustee (on a mortgage)
A party to a mortgage who, as a legal fiction, holds title to property as security for the performance of an obligation with the authority to sell the property or reconvey the trust deed on instructions from the mortgage holder.
trustee's sale guarantee
A policy issued by a title insurance company to a trustee before or at the time the notice of default is recorded providing coverage for the trustee should they fail to serve notices on any party of record due to an omission in the guarantee.
trustor's offset statement
Statement by the owner of the property or owner of lien against property setting forth the present status of liens against said property.
Truth in Lending Act (TILA)
A federal consumer mortgage law which controls the terms of a consumer mortgage and requires lenders to disclose mortgage rates and changes.
US Department of Veterans Affairs (VA) automatic
A lender authorized to certify a mortgage conforms to US Department of Veterans Affairs (VA) regulations.
underwriting
The analysis of the risk of default posed by the information in a complete mortgage application and documentation.
Uniform State Test (UST)
A standardized test fulfilling both national and state components of the mortgage loan originator (MLO) exam.
Uniform Residential Loan Application (URLA)
A standardized mortgage application completed by the buyer with the assistance of the transaction agent and the mortgage lenders representative.
unusable credit
Freddie Mac's designation of credit other than usable credit, e.g. non traditional debt.
upcharging
The practice of marking up the price of a third party service and keeping the difference.
usable credit
Freddie Mac's designation that an applicant has enough accurate traditional credit history to generate a valid credit score.
usury
A limit on the lenders interest rate yield on nonexempt real estate mortgages.
waiver agreement
An agreement in which a mortgage holder consents to the owner's present or future transfer of an interest in the mortgaged property as a waiver of the mortgage holder's due-on rights. Also known as an assumption agreement
warehouse lender
A lender who fund a mortgage under an agreement to immediately resell the mortgage in the secondary mortgage market.
yield
The interest earned by an investor on an investment (or by a bank on the money it has loaned). Also, called return.
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