EDUCATIONAL: Escrow Glossary of Terms
Real Estate, Mortgage, Title and Escrow
Abandonment (top) The voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with an intent to abandon (give up the interest).
Abstract A summary.
Abstract of Judgment A summary of money judgment obtained in court. (When this summary or abstract is recorded in the county recorder�s office, in some states the judgment becomes a lien on the debtor�s property, both presently owned or after-acquired.)
Abstract of Title A summary prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located. An abstract in some states or areas is reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document.
Abatement A reduction or decrease. Usually applies to a decrease of assessed valuation of ad Valorem taxes after the assessment, and levy.
Acceleration Clause Clause in a deed of trust or mortgage, which �accelerates,� or hastens, the time when the indebtedness becomes due. For example, some deeds of trust contain a provision (an acceleration clause) stating that the note shall become due immediately upon the sale of the land or upon failure to pay interest or an installment of principal and interest.
Accommodation Recording Recording of instruments with the county recorder by a title company merely as a convenience to a customer and without assumption of responsibility for correctness or validity.
Acknowledgement A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.
Adjustable Mortgage Loans (AMLs) Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan. Also called Adjustable Rate Loans, Adjustable Rate Mortgages (ARMs), Flexible Rate Loans, Variable Rate Loans. See also Indexing, Rate Index.
Administrator A person appointed by the probate court to carry out the administration of a decedents estate when the decedent has left no will. If a woman is appointed, she is called an administratrix.
Ad Valorem Literally, according to value. this term is usually used in reference to real property taxes which are assessed according to value, i.e., ad Valorem.
Adverse Possession A process of acquiring title to real property by possession for a certain (statutory) period of time, in addition to fulfilling other conditions.
Affidavit A written statement or declaration, sworn to before an officer who has authority to administer an oath. One who has authorization, either expressed or implied, to act for or represent another party, usually in business matters, such as issuing title insurance policies on behalf of a title insurer for a portion of the premium.
Agreement of Sale A written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) on an installment or deferred payment plan. It is also known as an agreement to convey, a long form Security Agreement or a real estate installment contract.
All-Inclusive Rate Rate which includes charges for title insurance, searching or abstract fees and examination fees.
All Inclusive Trust Deed (AITD/Wrap-Around) A junior Deed of Trust securing a promissory note, the face amount of which is the sum of the liability secured by prior Trust Deeds plus the cash or equity advanced by the AITD lender. ALTA
ALTA (American Land Title Association) Organization composed of title insurance firms which sets standards for the industry, including title insurance policy forms used on a national basis.
Amendment A change either to alter, add to, or correct part of an agreement without changing the principal idea or essence.
Amortized Loan A loan that is paid off over a period of time, by regular equal or nearly equal payments, including both interest and principal.
Amount Financed A required Truth in Lending Act disclosure for consumer loans. It is calculated by starting with the full amount borrowed (principal) and subtracting out the dollar amount of prepaid finance charges (finance charges the borrower is paying in advance).
Annual Percentage Rate (APR) The yearly interest percentage of a loan, as expressed by the actual rate of interest paid. For example, 6% add-on interest would be much more than 6% simple interest, even though both would say 6%. The APR is disclosed as a requirement of Federal Truth in Lending statutes.
Application Fee A fee charged by the lender or broker for the loan application.
Appraisal An estimate of value of property resulting from analysis of facts about the property; an opinion of value.
Approved Attorney An attorney whose opinion is acceptable to a title company as the basis for issuance of a title insurance policy by the insurer. The insurer, rather than the attorney, executes the policy.
Arbitration The hearing and determination of a cause between parties in controversy, by a person or persons chosen by the parties. This may be done by one person; but it is usual to choose two or three called arbitrators; or for each party to choose one, and these to name a third, who is called the umpire. Their determination is called the award. The arbitrator would not be related or affiliated with the escrow, mortgage, realtor or the buyer and seller. This may also be called an "Interpleader action".
Assessed Value The value placed on land and improvements as a basis for taxation. In California this is usually accomplished by the tax assessor�s office.
Assessments Special and local levies on local property in the immediate vicinity of an improvement. Assessments can be imposed by such entities as flood control districts, street lighting districts and air pollution control districts which serve an area.
Assignee One to whom a transfer of interest is made. For example, the assignee of a Deed of Trust or Contract.
Assignment The transfer, in writing, of a persons interest to another person or entity in an asset, such as an assignment of stock, a Deed of Trust and a note or a lease.
Assignor One who makes an assignment. For example, the assignor of a Deed of Trust or contract.
Assumption The act of conveying real property; taking title to a property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the property.
Attorney in Fact One who holds a power of attorney from another allowing him to act on behalf of the grantor of the power.
Balloon payment A scheduled payment due at the end of a loan term that is substantially greater than the regular monthly payments. This may be a very large payment. It is designed to occur when the regular payments do not pay off all interest and principal owing (not fully amortizing) on the loan over the term of the loan.
Bank Owned REO (Real Estate Owned by Lending Institutions) Properties acquired by lenders through foreclosures or deeds in lieu of foreclosures.
Bankruptcy A special proceeding under federal, or in some instances state, laws by which the property of a debtor is protected by the court and may be divided among the debtors creditors and the debtor.
Beneficiary The person or financial institution, (a trust fund, for instance) you name in a life insurance policy to receive the proceeds. In addition to naming a specific beneficiary, you should name a second or "contingent" beneficiary, in case you outlive the first beneficiary. If there is no living beneficiary, the proceeds will go to your estate. If there are probate proceedings this could possible delay your loved ones receiving the money. The proceeds may also be subject to estate taxes. See Deed of Trust.
Blanket Mortgage/Trust Deed A mortgage or trust deed that covers more than one lot or parcel of real property, and often an entire subdivision. As individual lots are sold, a partial reconveyance from the blanket mortgage is ordinarily obtained.
Bona Fide Purchaser One who buys property in good faith, for fair value, and without notice of any adverse claim or right of third parties.
Borrower A person who receives funds in the form of a loan with the obligation to repay the loan in full.
Branch A subordinate or division office, as opposed to an affiliate, agent, subsidiary or underwritten firm associated with the headquarters.
Breach of Contract Failure to perform a contract, in whole or part, without legal excuse.
Broker Compensation or Fee The amount of money the broker will receive for finding a loan for a borrower. This may be an amount paid by the borrower, an amount paid by the lender or a combination of the two.
Building Contract An agreement between an owner or lessee and a building contractor, setting forth terms relative to the construction of a proposed structure.
Buydown A payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate during the early years of a loan. The buy down is usually for the first one to five years of the loan. See also Certificate Backed Mortgage.
Cash-out Refinancing Loan A loan that refinances a prior mortgage and that provides additional cash to the borrower. funds.
Capitalization Rate The percentage (acceptable to an average buyer) used to determine the value of income property through capitalization.
CC&R - Declaration of Covenants, Conditions and Restrictions The CC&R's are a set of rules designed to protect the quiet enjoyment and value of your property and the property of your neighbors. Also known as deed restrictions, CC&RS are contractual limitations of your rights as a property owner. These restrictions were placed on your property deed, filed with County, and made a condition of the purchase of your lot by the original developer. When you purchased your property, along with the other countless forms and documents, you signed a contract stating the following: The Buyer has read and approved CC&RS for said property. These restrictions are passed on to any new owner because they are attached to the property deed. In other words, the CC&RS" run with the land."
Certificate of Title In areas where attorneys examine abstracts or chains of title, a written opinion, executed by the examining attorney, stating that title is vested as stated in the abstract.
Close of Escrow The date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.
Closing The final procedure in the real estate sales process, where the sale and pertinent loan are completed by the execution of documents for recording. In some areas, this procedure is known as the closing of escrow.
Closing Costs A general term to describe the fees that a borrower will pay at closing. Sometimes called "settlement fees."
Cloud on Title An irregularity, possible claim, or encumbrance which, if valid, would adversely affect or impair the title.
Coinsurance Ordinary coinsurance is defined as a transaction under which each of two or more insurers assumes a designated portion of the liability for the total risk and is liable for only such portion of any loss beginning at the first dollar of loss. See Reinsurance.
Collateral By or at the side, additional or auxiliary. Mistakenly used to mean collateral security.
Collateral Security Most commonly used to mean some security in addition to the personal obligation of the borrower.
Collection Service A service performed by a neutral third party in receiving and disbursing loan payments as instructed by the parties concerned.
Commissions A fee or allowance given to a sales person or agent such as loan officers with "points" and realtors which is usually receive about 3% of the sales price (each) of the property at the close of escrow in exchange for services rendered.
Commitment A binding contract with a title company to issue a specific title policy, showing only those exceptions contained in the commitment and any intervening matters after the date of the commitment and prior to the effective date of the policy. The commitment contains all information included in the preliminary title report, plus a list of the title companies requirements to insure the transaction. It also includes the standard exceptions from coverage that will appear in the policy.
Community Driveway A driveway which is jointly owned, used and maintained by two or more persons. Usually, a portion of each owners property is burdened by the driveway.
Community Property Property acquired by husband, wife or both during marriage which gives each spouse an interest in the property whether each appears in title or not.
Common Law - Nevada does not have a "Common Law"
Comparative Market Analysis (CMA) or "Comps" Sales that have similar characteristics as the subject property, used for analysis in the appraisal. One of several ways in which an appraiser may look to assist in their assessment of a properties worth and a realtor may help a buyer make the best offer to a seller. The gross value of 3 or 4 other "like" properties within the neighborhood of the property in question that have the most recent county recording dates.
Condemnation The taking of private property by the government for public use � as for a street or a storm drain � upon making just compensation to the owner. This right or power of government to take property for a necessary public use is called �eminent domain.�
Condominium A multi-family or other structure in which units are individually owned and in which owners of individual units also own an undivided interest in common areas.
Conforming Loans Loans which conform to Fannie Mae guidelines.
Courier Fees This is a fee that may be charged to send documents or payments by courier, messenger or overnight mail service to various parties involved in the loan transaction.
Community Property Only in states that recognize community property, a special form of joint tenancy between husband and wife, each owning one-half. Upon death, the decedent's interest passes in a manner similar to tenants in common.
Conservator A person appointed by the court to care for the person and/or property of an incompetent adult or an adult unable to care for their person or property because of health.
Constructive Notice Notice imparted by the public records of the county when documents entitled to recording are recorded.
Contingent Dependent upon conditions or events specified but not yet accomplished. Property may be sold contingent upon the seller or buyer meeting a predetermined condition.
Conveyance An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.
Corporation An entity authorized by law and established by a group of people, the stockholders, which is endowed with certain rights, privileges and duties similar to an individual.
County Assessor One who sets value of property for taxation purposes.
Covenant (1) A formal agreement or contract between two parties in which one party gives the other certain promises and assurances, such as the covenant of warranty in a warranty deed. (2) Agreements or promises contained in deeds and other instruments for performance or nonperformance of certain acts, or use or nonuse of property in a certain manner.
Covenants, Conditions and Restrictions Commonly called "CC&Rs" the term usually refers to a written recorded declaration which sets forth certain covenants, conditions, restrictions, rules or regulations established by a sub divider or other landowner to create uniformity of buildings and use within tracts of land or groups of lots. The restrictions also can be established by deed. CC&Rs are sometimes referred to as private zoning.
Credit Report This is a report which is generated by a credit reporting agency (such as Trans Union, Experian or Equifax). It is supposed to show accurately the history of your on-time and late payments on mortgages, credit cards, rent, utilities, and other debts. It may also show how much you owe on your various debts and whether you have taken the maximum amount of credit available to you through credit card borrowing. Your credit reports are used, with other information, to generate a credit score that is supposed to reflect how good a credit risk you are. Your loan officer can explain these ratings to you in more detail. If there are errors on your credit reports. Your loan officer will be able to help you explain them to the Lender.
Credit Score This is a number that is supposed to show the lender how likely you are to repay a loan--whether you are a good or poor credit risk. This score can be a very big factor in determining whether you will get a loan, from whom, and what interest rate and fees you will be charged for your loan. The score is generated by a mathematical formula that considers your credit reports and other factors. It may also be referred to as FICO score (Fair Isaac Company) or Beacon score or some other name-these are companies that create credit scores.
Debt (top) Money owing from one person to another.
Debtor One who owes a debt.
Declaration of Homestead A statutory protection from execution or the establishment of title by occupation of real property in accordance with the laws of various States or the Federal Government. Simplified, a homestead protects you from losing your primary home. If a judgment is not paid, one can try to collect money owed several ways including having a home sold to pay a debt. The homestead law protects a certain amount (about 100K) of the value / equity of your home from being taken to pay judgment. This would be done after the escrow (home purchase or refinancing). Consider to homestead before filing bankruptcy.Enclose your Declaration of Homestead and a money order or a cashiers check for $18.00 and then Mail To: Clark County Recorder, PO Box 551510, Las Vegas, Nevada 899155-1510
2) when you refinance your home. You must do it again
3) One Homestead in each state or in each county for which you own a home.
4) Primary home within a single county.
5) Placing your home in a trust. You must do it again
6) When you file for a Pre-Nuptial Agreement, you must do it all over again.
Declaration of Value Accompanies a deed and explains weather or not a transfer tax will be paid.
Decree of Distribution A probate court decree which determines how the estate of a decedent shall be distributed.
Deed Written document by which an estate or interest in real property is transferred from one person to another. The person who transfers the interest is called the grantor. The one who acquires the interest is called the grantee. Examples of deeds are grant deeds, administrators deeds, executors deeds, quitclaim deeds, etc. The deed to use depends on the language of the deed, the legal capacity of the grantor and other circumstances.
Deed of Trust or Trust Deed A written document by which the title to land is conveyed as security for the repayment of a loan or other obligation. It is a form of mortgage. The landowner or debtor is called the trustor. The party to whom the legal title is conveyed (and who may be called on to conduct a sale thereof if the loan is not paid) is the trustee. The lender is the beneficiary. When the loan is paid off, the trustee is asked by the beneficiary to issue a recon or reconveyance. This reconveyance corresponds to the release that the holder of a mortgage executes when the mortgage is paid off.
Deed Restrictions Limitations in the deed to a property that dictate certain uses that may or not be made of the property.
Defect A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
Default Failure to perform a duty or pay an obligation.
Defective Title (1) Title to a negotiable instrument obtained by fraud. (2) Title to real property which lacks some of the elements necessary to transfer good title.
Deficiency Judgment A personal judgment in a judicial foreclosure action for the remaining amount due after the sale of the security.
Demand Note A note having no date for repayment, but due on demand of the lender.
Deposit (1) Money given by the buyer with an offer to purchase. Shows good faith. Also called Earnest Money. (2) A natural accumulation of resources (oil, gold, etc.) which may be commercially recovered and marketed.
Description The exact location of a piece of real property stated in terms of lot, block, tract, part lot, metes and bounds, recorded instruments, or U.S. Government survey (sectionalized). This is also referred to as legal description of property.
Document Preparation Fee An amount of money that you may be charged for the preparation of mortgage loan documents. This charge will be shown on the HUD-1 Settlement Statement.
Earnest Money (top) "EMD" Or "Escrow Deposit"; Here in Nevada, the down payment made by a purchaser of real estate as evidence of good faith; a deposit or partial payment. It is no less than 1% of the purchase price of the home. Usually starts about a $1000.00 to $2,500 but very rarely do I see it go as high as $10,000.
Easement A right or interest in the use of the land of another which entitles the holder to some use, privilege or benefit, such as to place pole lines, pipe lines or roads thereon.
Effective Demand A qualifying term meaning the ability to pay as well as desire to buy.
Eminent Domain The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value. See Condemnation.
Encroachment The presence of an improvement such as a building, a wall, a fence or other fixture which overlaps onto the property of an adjoining owner.
Encumbrance A right or claim upon real property (land) held by one other than the property owner. Encumbrances are divided into two classes, as follows b) Encumbrances other than liens which are limitations on the ownership of the land (such as conditions, restrictions, reservations, easements, etc.).
Endorsement Addition to or modification of a title insurance policy which expands or changes coverage of the policy, fulfilling specific requirements of the insured.
Equity (1) A legal doctrine based on fairness, rather than strict interpretation of the letter of the law. (2) The market value of real property, less the amount of existing liens. (3) Any ownership investment (stocks, real estate, etc.) as opposed to investing as a lender (bonds, mortgages, etc.).
Escheat The reversion of property to the state when an owner dies leaving no legal heirs, devisees or claimants.
Escrow (Mortgage) An independent third party, such as an Escrow Officer, who acts as the agent for buyer and seller, or for borrower and lender, carrying out instructions of both and disbursing documents and funds. Escrow closes and the transfer of property or document is completed upon fulfillment of certain conditions specified in the written instructions, whereupon the necessary deeds and other instruments are recorded.
Escrow Account (Mortgage) An escrow account is a fund that your escrow officer establishes for the lender in order to pay property taxes and hazard insurance as they become due on your home during the year for the duration of the loan. In this way, the lender uses the escrow account to guard its investment in your home.
- Escrow Assistant Support team for the escrow officer. Responsible for assisting Clients and completing Escrow packages and signings.
- Escrow Cancellations A Purchase Agreement is a legal and binding contract. One can submit (in writing) that you want to cancel the escrow if a Buyer shows that they can not qualify for their loan (Lender must put this in writing and submit it to escrow) the Buyer can have their earnest money (deposits) returned and walk away from the home purchase and the seller can not keep it. The appraisal doesn't meet the asking price or the inspections fail. On the other hand, if the Seller puts a "Kick-out Clause" in a sales contract, that allows a Seller to accept one buyer's contingent offer, then back out without penalty if a second buyer makes a better offer. There are other ways as well, but get costly. In short, if you don't really want it, don't sign it.
Escrow Deposit See "Earnest money"
- Escrow Instructions Instructions which are signed by both buyer and seller, and which enable an escrow agent to carry out the procedures necessary to transfer real property, a business, or other assignable interest.
Escrow Officer: An escrow agent. In some states, one who has, through experience and education, gained a certain degree of expertise in escrow matters. An escrow officer is usually licensed to to do business on any property within their respective State.
Escrow Hold Back Agreement: Funds held in escrow that are set aside to guarantee that seller or buyer will complete an expected variety of work or other obligations per the purchase agreement contract. This is usually required by the lender.
- With regard to professions, a code of professional standards, containing aspects of fairness and duty to the profession and the general public.
Estate (1) The interest or nature of the interest which one has in property, such as a life estate, the estate of a deceased, real estate, etc. (2) A large house with substantial grounds surrounding it, giving the connotation of belonging to a wealthy person.
Exception An exclusion from conveyance (such as an interest in real property) and retained by the grantor, or that which had been excluded in a prior conveyance.
Execution An order directing a sheriff, constable, marshal or court-appointed commissioner to enforce a money judgment against the property of a debtor. This officer, if necessary, may sell the property to satisfy the judgment.
Executor A person appointed in a will and affirmed by the probate court to cause a distribution of the decedents estate in accordance with the will. (The one who makes the will is called a testator.) If a woman is appointed, she is referred to as the executrix.
Fee Simple (top) An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. Commonly, a synonym for ownership.
Fees This is money you pay or is charged to you up front to get a mortgage loan. You may pay fees in cash or finance them (or a portion of them) as part of the loan. If you finance fees, your loan balance will be higher and your equity will be lower. The fees appear on the Good Faith Estimate and HUD-1 Settlement Statement. Many of these fees are negotiable or can be reduced if you shop around.
FICO Score Credit scores calculated by Fair Isaac Company are often referred to as FICO Normally an average of credit scores taken by 3 national credit bureaus. Rating of Excellent would be: 720-850 to 700-719 to 675-699 Average 620-674 to 560-619 and 500-559 would be below average. Your loan officer can explain these ratings to you in more detail. If there are errors on your credit reports. Your loan officer will be able to help you explain them to the Lender.
File and Use In most states, title insurers file rate schedules, title insurance policies and endorsement forms with the State Insurance Department or other state agency and then may use such items or rates starting within a specified period of time after filing. Rates so filed usually are mandatory.
Finance Charge The finance charge is a disclosure that appears on the Truth in Lending Act Disclosure Statement. It is intended to show the cost of your loan as a dollar amount. It includes (1) interest that will be charged over the life of the loan and (2) some up front fees (prepaid finance charges). Prepaid finance charges include such items as mortgage broker fees; lender fees; points; and some closing agent fees. Any closing fees that are unreasonably high should also be included. You may also be required to pay other fees that will not be included in the finance charge.
Fixed Rate Mortgage A mortgage having a rate of interest which remains the same for the life of the mortgage.
Flood Certification Fee A fee charged to determine if the property lies in a flood zone and whether flood insurance is required.
Foreclosure The sale of property used as security for a debt after default in payment.
Forfeiture of Title A common penalty for the violation of conditions or restrictions imposed by the seller upon the buyer in a deed or other proper document. For example, a deed may be granted upon the condition that if liquor is sold on the land, the title to the land will be forfeited (that is, lost) by the buyer (or some later owner) and will revert to the seller.
FSBO "For Sale By Owner" (Selling property without the assistance of a Realtor).
Full Disclosure In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose known defects in the property for sale or lease.
Fully Amortizing This describes a loan where the balance owed at the scheduled end of the loan is zero if all regular monthly payments are made as scheduled.
Gift (top) A cash gift a buyer receives from a relative or other source. Lenders usually require a "gift letter" stating that the money will not have to be repaid.
Good Faith or Mortgage Savings Clause A clause in CC&Rs which provides that a violation thereof shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value.
Good Faith Estimate This document lists the estimated fees you will have to pay to get the loan. It also identifies who is expected to provide services and receive fees in connection with your loan, such as credit bureaus, appraisers, and closing agents.
Good Faith Purchaser or Mortgagee A person who buys or lends in good faith, that is, without notice of any existing problem, where value is paid or lent.
Grant A transfer of real estate, between individuals, by deed. A transfer of real estate from a sovereign is accomplished by patent or royal decree.
Grantee/Grantor See Deed.
Grant Deed One of the many types of deeds used to transfer real property. Contains warranties against prior conveyances or encumbrances. When title insurance is purchased, warranties in a deed are of little practical significance.
Guardian A person appointed by a court to manage the person and/or property of one who is legally incompetent to handle his/her own affairs.
Government Recordings and Taxes Fees and taxes required to be paid to the local government where your mortgage documents are filed.
Habendum clause (top) The "to have and to hold" clause that defines the quantity of the estate granted in the deed.
Hazard Insurance Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property. Also known as homeowner's insurance or fire insurance, hazard insurance covers physical risks such as fire and wind damage. Lenders usually require coverage for at least the replacement value of the home.
Hectare The equivalent of 2.471 acres.
Homestead Act of 1862 Signed into law by President Abraham Lincoln, the Act, which became law on Jan. 1, 1863, allowed anyone to file for a quarter-section of free land (160 acres). The land was yours at the end of five years if you had built a house on it, dug a well, broken (plowed) 10 acres, fenced a specified amount, and actually lived there. Additionally, one could claim a quarter-section of land by "timber culture" (commonly called a "tree claim"). This required that you plant and successfully cultivate 10 acres of timber. The Homestead Act remained in effect until it was repealed in 1976, with provisions for homesteading in Alaska until 1986. Alaska was one of the last places in the country where homesteading remained a viable option into the latter part of the 1900s. The Taylor Grazing Act of 1934 substantially decreased the amount of land available to homesteaders in the West. Because much of the prime land had been homesteaded decades earlier, successful Homestead claims dropped sharply after this time. See Declaration of Homestead.
Home Equity Loan A loan made to a current homeowner that is secured by the equity in the home. i.e., It that allows owners to borrow against the equity in their homes.
Home Inspection An examination of a home's construction, condition, and internal systems by an inspector or contractor prior to purchase.
Home Warranty A type of insurance that covers repairs to certain parts of a house and some fixtures.
Homeowner's Insurance This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.
Homeowners' Association (HOA) A group that governs a subdivision, condominium, or planned community. The association collects monthly fees from all owners to pay for common area maintenance, handle legal and safety issues, and enforce the covenants, conditions, and restrictions set by the developer.
Homeowners' Association Dues Monthly payments due to a homeowners' association, to be used for maintenance and communal expenses. Condominiums, townhouse complexes, and planned unit developments (PUDs) may require monthly homeowners' association dues.
Homeowners' Warranty A special insurance policy that covers certain home repairs for a specified amount of time.
Housing Discrimination The illegal practice of denying an individual or group the right to buy or rent a home based on race, color, religion, national origin, sex, disability, or family status.
HUD The U.S. Department of Housing and Urban Development
HUD-1 Also called a "Settlement Statement" of all costs and fees in your closing.
Hypothecate To pledge (property) as security or collateral for a debt without transfer of title or possession.
Fees collected from
developers of new homes to
pay for schools, parks, and
other facilities. Implied
warranty of habitability
Implied Warranty of Habitability Legal doctrine stating that all new homes are assumed to be fit for human habitation and meet all building codes.
Impounds A trust type of account established by lenders for the accumulation of borrowers funds to meet periodic payments of taxes, mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security. A portion of the monthly mortgage payment that is placed in an account and used to pay for hazard insurance, property taxes and private mortgage insurance.
Indemnity Insurance against possible loss or damage. A title insurance policy is a contract of indemnity.
Rate The rate at
which interest accrues on a
Interest Paid over Life of Loan The total amount paid to the lender for the use of money during the time the money is borrowed.
Interest Rate The fee, expressed as a percentage, charged for a loan. The interest rate also helps determine the monthly payment. For adjustable-rate loans, the interest rate may change from its initial level.
Interest Rate Buy-Down Plans For cash-short buyers, some sellers are willing to advance funds from the sale of the home to buy down the interest rate and reduce the buyer's monthly obligation.
Interest Rate Cap The maximum interest rate charge allowed on the monthly payment of an adjustable rate mortgage during an adjustment period.
Interest Rate Ceiling The highest interest a lender can charge for an adjustable rate mortgage. Interest Rate Cost of borrowing money expressed as a percentage of the amount borrowed.
Interest-Only Loan The borrower pays only the interest that accrues on the loan balance each month. Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment.
Interim Financing Short-term financing used by sellers to bridge the gap between the sale of one house and the purchase of another (also known as bridge or swing loans). A construction loan is also a form of interim financing.
Inspection fee A fee paid to determine the present physical condition of the home, required by the lender in order to supplement the information contained in the appraisal report.
Inspection report An examination of a home's exterior, foundation, framing, plumbing, electrical system, heating, air conditioning, fireplace, kitchen, bathroom, roof, and interior.
Introductory Rate Some loans have a lower introductory interest rate, which is in effect for a limited time. At the end of the introductory period, the interest rate will increase. It is also known as a "teaser rate."
Intestate (1) Deceased without leaving a legally valid will. (2) Property not disposed of by will or bequest.
Joint Tenancy (top) Property owned by two or more people at the same time in equal shares; typically referred to as the four unities (unity of time, title, interest and possession vesting in each joint tenant). Each joint tenant has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant passes away, his/her interest automatically vests in the surviving joint tenants by operation of law. Not all the states allow this form of property ownership.
Judgment Lien A lien against the property of a judgment debtor. An involuntary lien.
Jumbo Loans Loans which exceed the Fannie Mae guidelines for loan size and amount. Jumbo loans may have different guidelines from a "conforming" loan.
Kick-out Clause (top) A clause in a sales contract that allows a seller to accept one buyer's contingent offer, then back out without penalty if a second buyer makes a better offer.
Land Contract (Land Sale) (top) An installment contract for the sale of land whereby the seller (vendor) holds legal title and the buyer (vendee) has equitable title until the sales price is paid in full.
Late Charge A penalty you will have to pay if you do not make your loan payment on time. This usually is calculated as a percentage of the payment amount or a minimum dollar amount, such as 5% of the late payment, or $25.
Lease An agreement by which an owner of real property (lessor) gives the right of possession to another (lessee), for a specified period of time (term) and for a specified consideration (rent).
Lease Option (Lease With Option To Purchase) A lease containing an option giving the lessee the right to purchase the property. The price and terms of the purchase must be set forth for the option to be valid. The option may run for the length of the lease or only for a portion of the lease period.
Legal Description A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.
Lender Any person or entity advancing funds which are to be repaid. A general term encompassing all mortgagees, and beneficiaries under deeds of trust.
Lessee The tenant under a lease.
Lessor The landlord under a lease.
LID Local Improvement District.
Lien An encumbrance against property for money, either voluntary or involuntary. All liens are encumbrances but all encumbrances are not liens.
Line of Credit Also called an "open line of credit" secured on your home. Often there are no closing costs involved, or the lender offers to pay all closing costs. Use like a checking account, borrowing credit over time up to your credit limit.
Lis Pendens A notice recorded in the official records of a county to indicate that a lawsuit is pending affecting the lands described in the notice.
Loan Approval A lender's agreement to make a loan on particular terms, including interest rate, fees and charges.
Loan Officer Often referred to as "Mortgage Loan Originators", are people who work for banks and other financial institutions with the main objective to recommend individual and business loan applications for approval. Loan officers specialize in commercial, consumer and mortgage loans.
Market Value (top) The price that real property would reasonably be expected to bring were it to be offered for sale with a reasonable sales effort over a reasonable period of time.
Mechanics Lien A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.
Metes and Bounds A term used in describing the boundary lines of land setting forth all the boundary lines together with their terminal points and angles.
Mortgage A mortgage is a promise in which you agree to put up your home as security for a loan. The mortgage is the instrument which secures the Promissory Note, in which you promise to repay the loan at a certain date. The mortgage document allows the lender to force a sale of your home (foreclosure) if, for example, you fail to make payments, to pay property taxes or insurance, or keep other promises. In some states the mortgage document is called a "deed of trust."
(1) To hypothecate as security, real property for the payment of a debt. The borrower (mortgagor) retains possession and use of the property.
(2) The instrument by which real estate is hypothecated as security for the repayment of a loan.
Mortgage Broker Agreement A contract between a borrower and a mortgage broker. It describes what the broker will do for the borrower, and the terms of the agreement, including compensation.
Mortgage Insurance (PMI) Insurance that may be required when a loan is greater than 80% of the value of the home. This insurance protects the lender in the event a borrower fails to make his or her loan payments. The borrower ordinarily pays the cost of MI or PMI, in the form of monthly premiums added to the mortgage payments.
Mortgagee The party lending the money and receiving the mortgage.
Mortgagor The party who borrows the money and gives the mortgage.
Multiple Listing Service (MLS) An MLS is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers/agents. Membership isn't open to the general public, although selected MLS data may be sold to real estate listings web sites. MLS's are local or regional. There is no one MLS covering the whole country. The MLS includes properties for sale and rentals.
Needs-Based Pricing (top) An asking price based on factors such as the funds required to pay off the seller's mortgage, the cost of remodeling, or the purchase of another house.
NEA & AEA The Nevada Escrow Association of whom are also members of the parent organization American Escrow Association
Negative Amortization Occurs when a borrower's monthly payment is too small to cover both the principal and interest of a loan, so the outstanding balance of the loan actually grows larger with each payment. Many adjustable rate mortgages are susceptible to this.
Net Listing A listing agreement in which the broker's commission consists of the amount above a net price set by the owner. If the net price is not met, a commission is not earned.
Neutral Third Party The Escrow Officer and/or the Title Company are considered a "neutral third party". Independent of buyer and seller and respective agents as well as the Lender. Simply put, as an example; if you ask the question "Is this a good deal or am I getting taken to the cleaners by someone?", the title company and/or any of it's employees cannot comment or make recommendations (to you or anyone) one-way or another in regards to the loan quality, commissions, purchase agreement or weather or not you are getting a fair price on the property either as the Seller or as the Buyer. We (the third party) would encourage you to consult legal counsel if you have such questions on this topic prior to signing any legal or binding contract.
No-cash-out Refinance The amount of the new mortgage covers the remaining balance of the first loan plus closing costs and any liens, and yields no more than 1 percent of the new loan's principal in cash.
No-documentation loan A loan application that does not require verification of income but typically is granted in cases of large down payments.
Non-conforming loan A non-conforming loan is any loan that doesn't meet the qualifications or is too large to be purchased by Fannie Mae or Freddie Mac. The current conforming loan limit is $252,700.
Non-liquid asset An asset such as a house that is not easily turned into cash.
Non-solicitation order An order issued by the secretary of state to brokers and agents, prohibiting them from soliciting listings in a designated area.
Non-assumption clause A loan provision that prohibits the transfer of a mortgage to another borrower without lender approval.
Nonrecurring closing costs One-time-only fees for items including an appraisal, loan points, credit report, title insurance, and home inspection.
Notary Public A public official appointed by the state government to serve the public as an impartial witness. Mobile Notaries Public, provide this service and are able to go to remote locations. Usually individuals need some basic training to obtain a notary public license; they must pass a test, have some form of background check, and/or obtain a bond or insurance to insure their integrity. In the United States, a non-attorney notary may not offer you legal advice and cannot recommend how you should sign something or even what type of notarization is necessary.
Note A unilateral agreement containing an express and absolute promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand. Usually provides for interest and, concerning real property, is secured by a mortgage or trust deed.
Note rate The interest rate specified in a mortgage note.
Notice of default A lender's initial action when a mortgage payment is late and attempts to reconcile the issue out of court have failed.
Novation A release of liability to the first borrower of a loan, and the substitution of a subsequent borrower with the lender's approval.
Notice of Completion A notice which should be recorded to indicate completion of a work of improvement to real property. A valid notice of completion limits the time for filing valid mechanics liens.
Notice of Default Recorded notice that a default has occurred under a Deed of Trust and/or Note.
Notice of Right to Cancel Under federal law, you may be permitted to cancel or "rescind" a mortgage loan within a specified time, generally three days, after you have signed loan documents in a refinance, second mortgage or other mortgage loans which do not involve the purchase of a home. . The lender is required to give the borrower notice in writing of this right to cancel or rescind and the deadline to cancel.
Obligee (top) One to whom an obligation (promise) is owned.
Obligor One who legally binds (obligates) oneself, such as the maker of a promissory note.
Offset Statement A statement furnished to an escrow from an owner of land subject to an encumbrance (note) as to the balance due. Not to be confused with a beneficiaries statement. This can also be provided by a tenant regarding his rights of possession.
Open End Deed of Trust A Deed of Trust which secures additional notes for funds that a lender may advance to a trustor, subsequent to the execution of the original loan.
Open Escrow or Title Order Form A request to open an escrow. When accompanied with a Purchase Agreement, these are the guidelines that an escrow officer will follow to complete the escrow transaction.
Original Cost The purchase price of property, paid by the present owner. The present owner may or may not be the first owner.
Owners Policy A policy of title insurance usually insuring an owner of real estate against loss occasioned by defects in, liens against or unmarketability of the owner�s title.
Parcel (top) Any area of land contained within a single description.
Partnership An association of two or more persons who have contracted to join in business and share the profits.
Party Wall A wall generally erected on a property boundary or between two lots for the common benefit and use of the property owners on either side.
Patent A conveyance of title to land by the Federal or State Government.
Payee One who receives payments.
Payor One who makes payments.
Personal Property (movable) Any property that is not designated by law as real property (i.e., money, goods, evidences of debt, rights of action, furniture, automobiles).
PIQ A title term referring to Property In Question.
PITI A payment that combines Principal, Interest, Taxes, and Insurance.
PLAT A plan, map or chart of a tract or town site dividing a parcel of land into lots.
PMI Private Mortgage Insurance - Required for loans with less than a 20% down payment
Points A charge made by a lender. One point equals one percent of the loan.
Power of Attorney (Special) A document by which one person (called the principal) authorizes another person (called the attorney-in-fact) to act for him/her in a specific manner in designated transactions.
PUD A Planned (Housing) Unit Development
Purchase Agreement A written contract completed and signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Pre, Prelim or Preliminary Report A written report issued by a title company, preliminary to issuing title insurance, which shows the recorded condition of title of the property in question. See Commitment.
Prepayment Penalty The charge which can be imposed if you pay off your loan before maturity. The Truth in Lending Disclosure Statement will show whether a loan has a prepayment penalty.
Prequalification Letter A mortgage prequalification letter provided to you by a loan officer will help you start the refinance process. A mortgage prequalification letter is an estimate that tells you the amount you'll be able to afford to borrow on your refinance loan.
Prime Loan A loan offered to borrowers with better credit history (sometimes called "A" loans). Prime loans generally are priced lower and cost the borrower less.
Priority The order of preference, rank or position of the various liens and encumbrances affecting the title to a particular parcel of land. Usually, the date and time of recording determine the relative priority between documents.
Priority Inspection A title term referring to the type of inspection made in connection with insuring a new construction loan. In making the inspection of the property, the title company must be assured that the work of improvement had not yet begun when the lenders deed of trust was recorded.
Probate The court process following a person's death that includes proving the authenticity of the deceased person's will, appointing someone to handle the deceased person's affairs identifying and inventorying the deceased person's property, paying debts and taxes identifying heirs, and distributing the deceased person's property according to the will or, if there is no will, according to state law. Formal court-supervised probate is a costly, time-consuming process which is best avoided if possible.
Property Tax The primary source of revenue for local governments. The property tax is a tax on the assessed value of property. The tax rate times the assessed value owned by a taxpayer is what the taxpayer owes to the government; the tax rate times the total assessed value of the government is the total tax levy. The state government also collects a very small part of the property tax, at a rate of "x" cent per $100 assessed value. The property tax is administered on the state level by the State Board of Tax Commissioners, and on the local level by the county and township assessors, the county auditor and the county treasurer.
Proration The allocation of property taxes, interest, insurance premiums, rental income, etc., between buyer and seller proportionate to time of use.
Promissory Note A legal contract in which the borrower promises to pay back the loan. The "promissory note" sets forth the terms and conditions that apply to the loan repayment, such as interest rate, when payments are due, where payments are made, what happens if payments are not made.
Public Domain Land owned by the government and belonging to the community at large.
Public Records The transcriptions in a recorders office of instruments which have been recorded, including the indexes pertaining to them.
Qualifying Ratio (top) A ratio calculated by a lender to determine how much a potential buyer can borrow.
Quiet Title To free the title to a piece of land from the claims of other persons by means of a court action called a quiet title action. The court decree obtained is a quiet title decree.
Quiet Title Suit A lawsuit filed to ascertain the legal rights of an owner to a certain parcel of property.
Quitclaim Deed A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor. A document that releases a party from any interest in a piece of real estate.
Rate Lock (Lock in the Rate) (top) Refers to the agreement between the borrower and the lender or broker that as long as the loan is closed within a certain period of time (for example, 30 or 60 days), the interest rate on the loan will be set (locked) at an agreed- upon rate. A "rate lock" agreement must be in writing or it will be unenforceable.
Realtor A person who acts as an agent for the sale and purchase of buildings and land; a real estate agent.
Realtor's Transaction Fee: In addition to the Realtors commission, there is a transaction fee. Its used in part to pay for office space and supplies at their Brokers office. Because every realtor is different and there is no "Chart" to go by the Escrow Officer will use an estimated amount on Settlement Statement until the exact amount is provided by each realtor for each escrow.
REO (Real Estate Owned by Lending Institutions) ie "Bank Owned" Properties acquired by lenders through foreclosures or deeds in lieu of foreclosures.
Real Property (immovable) Land, from the center of the earth and extending above the surface indefinitely, including all inherent natural attributes and any man-made improvements of a permanent nature place thereon. For example minerals, trees, buildings, appurtenant rights.
Reconveyance An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt. Most commonly used upon payment in full of a trust deed. Also called a deed of reconveyance or release.
Recording Filing documents affecting real property as a matter of public record, giving notice to future purchasers, creditors, or other interested parties. Recording is controlled by statute and usually requires the witnessing and notarizing of an instrument to be recorded.
Recording Fees Fees charged by the local government to record loan documents Example: the mortgage). These fees will be charged to the borrower and shown on the Settlement Statement (HUD-1).
Refinance To repay one or more existing mortgage loans by getting a new mortgage loan.
Reinsurance A contract which one insurer makes with another to protect the first insurer, wholly or partially, against loss or liability by reason of a risk under a separate and distinct contract as insurer of a third party. Reinsurance differs from coinsurance in that, in the case of reinsurance, only one insurer has a direct contractual relationship with the insured, and that insurer (commonly referred to as the lead insurer) purchases reinsurance in order to lessen or spread the risk. The lead insurer will assume a risk up to a limit (the amount of which is referred to as the retention) and any loss which exceeds this limit would be borne by the reinsurers. In the case of coinsurance, each coinsurer has a direct contractual relationship with the insured, and the risk is shared in agreed-upon proportions from the first dollar of loss.
Rental Agreement or Lease A rental agreement provides for a tenancy of a short period (often 30 days) that is automatically renewed at the end of the period unless the tenant or landlord ends it by giving written notice. For these month-to-month rentals, the landlord can change the terms of the agreement with proper written notice.
Requests for Notice of Default A recorded request for notification of a recorded notice of default on a Deed of Trust.
Reservation Right reserved by the grantor in conveying property, or a right which had previously been reserved.
Rescind (Right of Rescission) Literally means "to take back" or "cancel." If a borrower rescinds a mortgage loan, it is as if the mortgage loan never existed. Some borrowers have by law a right to "rescind" certain mortgage loans. Note: A Borrower is entitled to a refund all fees paid in connection with the loan if the Borrower exercises his right of rescission.
Restrictions Often called restrictive covenants. Provisions in a deed or other instrument whereby an owner of land prohibits or restricts certain use, occupation or improvement of the land.
Right of Survivorship Ownership of property by two or more people in which the survivors automatically gain ownership of a decedent's interest. In the case of more than one survivor, the decedent's share is divided among the survivors.
Right of Way (1) The right to pass over property owned by another, usually based upon an easement. (2) A path or thoroughfare over which passage is made. (3) A strip of land over which facilities such as highways, railroads or power lines are built.
Sale and Leaseback (top) A situation in which the grantor in a deed to a parcel of property sells it and retains possession by simultaneously leasing it from the grantee.
Search In title industry parlance, a careful exploration and examination of the public records in an effort to find all recorded instruments relating to a particular chain of title.
Second Mortgage A mortgage loan that is in addition to a mortgage that already exists on the home.
Settlement Statement A mortgage loan closing form required by HUD that is often called a HUD-1. It provides details of all charges and payments made in connection with your loan, and shows to whom they are distributed.
Separate Property Real property owned by one spouse exclusive of any interest of the other spouse.
Short Sales a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens' full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any shortfalls on the loans, unless specifically agreed to between the parties. An alternative to foreclosure.
SID's Street Improvement District. These fees maintain the road a house sits on
Signing Agent A Notary signing agent is hired as an independent contractor to ensure that real estate loan documents are executed by the borrower, notarized, and returned for processing on time. Completing this critical part of the loan process enables the loan to be funded.
Single Man or Woman Typically used if one has never been married.
Sole and Separate Property Owned entirely by one person.
Squatter One who settles upon unoccupied land without legal claim or authority. See Adverse Possession.
- Statement of Information
- A confidential form filled out by buyer or seller to help a title company determine if any liens are recorded against either. Very helpful when people with common names are involved.
Starter A copy of the last policy or report issued by a title insurer which described the title to land upon which a new search is to be made. In some states, this is called a back title letter or back title certificate.
Street Improvement Bonds Interest-bearing bonds issued, usually by a city or county, to secure the payment of assessments levied against land to pay for street improvements. The property owner may pay off the particular assessment against the property, or may allow the assessment to go to bond and pay installments of principal and interest over a period of years, usually at the city or county treasurers office. The holder of a bond received payments from these offices.
Subject To: Usually referred to as the condition of title that exists at the time of acquisition by the buyer, such as subject to a Deed of Trust of record.
Subdivision An area of land laid out and divided into lots, blocks, and building sites, and in which public facilities are laid out, such as streets, alleys, parks, and easements for public utilities.
Subordination Agreement An agreement by which one encumbrance (i.e. a mortgage) is made subject to another encumbrance (i.e. a mortgage) is made subject to another encumbrance (perhaps a lease). To subordinate is to make subject too or to make of lower priority.
Surface Rights Rights to enter upon and use the surface of a parcel of land, usually in connection with an oil and gas lease or other mineral lease. They may be implied by the language of the lease (no explicit reservation or exception of the surface rights) or explicitly set forth.
Survey The measurement by a surveyor of real property which delineates the boundaries of a parcel of land. An ALTA survey additionally delineates the exact location of all improvements, encroachments, easements and other matters affecting the title to the property in question. A survey may be required by a title insurance company whenever the company is requested to issue an ALTA Extended Coverage Policy.
Tax Deed (top) A deed executed by the tax collector to the state, county or city when no redemption is made from a tax sale.
Tax Sale Property on which current county taxes have not been paid is sold to the state. No actual sale takes place the title is transferred to the state and the owner may redeem it by paying taxes, penalties and costs. If it has not been redeemed within five years, the property (referred to as tax sold property) is actually deeded to the state. (Similar sales to cities take place for unpaid city taxes.)
Tenancy in Common Property owned by two or more persons at the same time. The proportionate interests and right to possess and enjoy the property between the tenants in common do not have to be equal. Upon death, the decedent' s interest passes to his/her heirs named in the will who then become new tenants in common with the surviving tenants in common.
Testate Leaving a legally valid will at death.
Title (1) A combination of all the elements that constitute a legal right to own, possess, use, control, enjoy and dispose of real estate or a right or interest therein. (2) The rights of ownership recognized and protected by the law.
Title Agent See Escrow Officer
Title Company A title company makes sure that the title to a piece of real estate is legitimate and then issues title insurance for that property. Title insurance protects the lender and/or owner against lawsuits or claims against the property that result from disputes over the title.
Title Insurance Insured statement of the condition of title or ownership of real property. For a one-time-only premium, the named insured and their heirs are protected against title defects, liens and encumbrances existing as of the date of the policy and not specifically excluded from it. In the event of a claim, the title company provides legal defense from the policyholder and pays any covered losses incurred as a result of such claim.
Title Report See Preliminary Report.
Title Search A review of all recorded documents affecting a specific parcel of land to determine the present condition of title. An experienced title officer or attorney reviews and analyzes all material relating to the search, then determines the sufficiency and status of title for insurance of a title insurance policy.
Transaction Fee: In addition to the Realtors commission, there is a transaction fee. Its used in part to pay for office space and supplies at their Brokers office. Because every realtor is different and there is no "Chart" to go by the Escrow Officer will use an estimated amount on Settlement Statement until the exact amount is provided by each realtor for each escrow.
Transfer Tax This is a government tax or charge that is usually based on a percentage of the property value or loan amount and imposed by state or local law. Many states do not require this charge for a refinance loan, but almost all require it for a home purchase. A transfer tax will be shown on the Settlement Statement (HUD-1).
Truth in Lending Act (TILA) This is a federal law designed to protect borrowers and to give them enough information to comparison shop for loans. TILA requires certain disclosures about the loan and when they must be given to the borrower. TILA also provides additional protections and prohibitions.
Truth in Lending Disclosure Statement This is a very important document that federal law requires for all consumer loans.] It provides key information to enable borrowers to shop around and compare loan terms from various lenders.
Trustee/Trustor (in a Deed of Trust) See Deed of Trust.
Underwriting (top) The process in which lenders evaluate the risks posed by a particular borrower and set appropriate conditions for the loan.
Underwritten Company A title firm which conducts title searches but is not qualified to insure, and therefore issues policies of a qualified title insurer (underwriter) in return for a portion of the premium.
Underwriting Fee This is a fee charged by the lender to evaluate whether the borrower qualifies for a mortgage loan. An underwriting fee may be charged to the borrower and shown on the Settlement Statement (HUD-1).
A person who claims the
right to a piece of property
after the death of an owner
without a will.
Undisclosed spouse A marital partner who can claim the right to a piece of property but is not identified in the owner's will.
Unilateral contract A one-sided contract. If one party makes a promise to do something, the second party is not legally required to perform. If the second party does comply, however, the first party is obligated to keep its promise.
Up Front Costs These are costs or fees which are charged to the borrower at or before closing of the mortgage loan, such as loan application fees, appraisal fees, points, broker fees, credit report fees, real estate taxes, etc. Upfront costs can be paid in several ways: (1) they can be paid by the borrower in cash; or (2) they can be added to the loan amount and financed over the life of the mortgage.
Usury Illegally excessive interest charged on any loan.
key program of the U.S.
Department of Veterans
Affairs. The Veterans
Administration allows most
veterans to purchase a house
without a down payment.
VA loan A loan through the Veterans Administration program, which allows most veterans to purchase a house without a down payment.
Valuation The estimated worth or price. The act of valuation by appraisal.
Variable Rate Mortgage (VRM) A loan with an interest rate that hinges on factors such as the rate paid on bank certificates and Treasury bills.
Variable Interest Rate An interest rate that fluctuates with the current cost of money; subject to adjustment if the prevailing rate moves up or down. Based on factors including changes in the rate paid on bank certificates of deposit or Treasury bills.
Vendee/Vendor See Agreement of Sale.
Vendor�s Lien An implied lien given by law to a vendor for the remaining unpaid and unsecured part of a purchase price.
Venue Neighborhood; often used to refer to the county or place in which an acknowledgment is made before a notary; also refers to the county in which a lawsuit may be filed or tried.
Deposit Part of the
loan process, in which a
lender will ask a borrower's
bank to sign a statement
verifying the borrower's
account balances and
Verification of employment Part of the loan process, in which a lender asks the borrower's employer for confirmation of the borrower's position and salary.
Vesting The names, status and manner in which title of ownership is held with a fixed or determinable interest in a particular parcel of real property; also that portion of a title report or policy setting forth the above.
Voidable Contract A contract that may seem to be valid, but can be rejected by either one of the parties.
Voluntary Lien A lien that a homeowner willingly gives to a lender.
Waive (top) To voluntarily and intentionally relinquish a known right, claim or privilege.
Waiver A voluntary relinquishing of certain rights or claims.
Walk-through A buyer's final inspection of the home to determine if conditions in the purchase agreement have been satisfied.
Warehouse fee A closing-cost fee representing the lender's cost of holding a borrower's loan temporarily before it is sold on the secondary mortgage market.
Warranty A legally binding promise to do something in the future.
Warranty Deed A deed used in many states to convey fee title to real property.
Wraparound Mortgage A loan given to a buyer for the remaining balance on a seller's first mortgage and an additional amount requested by the seller. Payments on both amounts are made to the lender who holds the wraparound loan.
Yield Spread Premium (YSP) (top) This is a payment made by a lender to a mortgage broker in connection with a borrower's mortgage transaction. It is shown on the Settlement Statement (HUD-1), but often in a way that is difficult to understand. For example, a $1,500 yield spread premium may be shown as "YSP POC 1500." Borrowers are often unaware that the YSP payment is being made. The payment of a YSP by a lender affects the interest rate charged to the borrower.
Zero-lot line (top) The positioning of a house near or on top of the lot boundary, resulting in little or no space between houses. Example: A portion of one house's structure may be another's "fence" or "fence line".
Zero-net When the seller receives little or no net proceeds from the property sale.
Zoning Local government regulations relating to the use of property.
Zoning Variance A one-time modification of existing zoning law. Example: From residential to commercial property.