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