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Abstract- A history of all transactions
shown in the public records affecting a particular tract of
land.
Abstract
Plant- See Title Plant.
Acceleration
Clause - Allows the lender to speed up the rate at which
your loan comes due or demand immediate payment of the entire
outstanding balance of the loan should you default on your
loan.
Adjustable
Rate Mortgage (ARM)- Mortgage loans under which the
interest rate is periodically adjusted, in accordance with some
market indicator, to more closely coincide with the current
rates. The extent and number of these adjustments are agreed to
at the inception of the loan.
Adjustment
Period - The length of time between interest rate changes
on an ARM. For example: a loan with an adjustment period of one
year is called a one year ARM, which means that the interest
rate can change once a year.
Adverse
Action - A denial of a loan in an amount and on terms
acceptable to the borrower.
Adverse
Possession- The possession, by one person, of land
belonging to another in a manner deemed adverse to the interest
of the owner. In most states, by operation of law, title to the
land becomes vested in such person after a fixed number of
years if the owner fails to assert his or her rights.
Affidavit-
A written statement made under oath before a notary public
or other judicial officer
Agreement-
A legally binding contract made between two or more
persons.
ALTA
(American Land Title Association)- The trade association of
the title insurance industry, which has adopted certain
insurance policy forms to standardize coverage on a national
basis.
Amortization-
Payment to reduce the principal of a debt in regular, periodic
installments.
Annual
Percentage Rate (APR) - The actual cost of credit to the
borrower, including interest and certain other charges,
expressed as a yearly rate and calculated over the life of the
loan. A guide to compare the cost of loans.
Application
- A verbal or written request for an extension of credit.
Usually a printed form on which the lender collects credit,
income and debt information about a prospective borrower, plus
facts about the property being used to secure the loan. A fee
may be charged at the time of application.
Appraisal-
A report from an independent third party detailing the
estimated value of real estate.
Appurtenance-
A right or privilege that is a part of the ownership of
property, such as a right of way to a highway across the land
of another. Water rights are also an example.
Assessment-
(1) The valuation of real estate for purpose of taxes or
special improvement charges. (2) The amount of taxes or special
improvement charges. Special improvement charges are usually
for the costs of streets, sidewalks, sewers, etc.
Assignment-
(1) The act of transferring an interest, such as a loan secured
by a mortgage, from one person to another. (2) The instrument
or paper by which one person transfers such ownership to
another.
Assumption
of mortgage - A buyer's agreement to assume the liability
under an existing note that is secured by a mortgage of deed of
trust. The lender must approve the buyer in order for the loan
to be assumed.
Attorney's
Opinion- A statement by an attorney as to the validity of a
title, arrived at after investigation of the history of the
title as recorded in the public records.
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Balloon Note- A form of promissory note
that calls for the minimum payment of principal and the payment
of interest at regular intervals. This type of note requires a
substantial final payment, which represents all the
principal.
Bankruptcy-
A proceeding in U.S. District Court wherein assets of an
insolvent debtor are protected and distributed in an equitable
manner.
Binder-
Sometimes called "preliminary certificate" or "commitment." (1)
A preliminary report as to the condition of a title and a
commitment to issue a title insurance policy in a certain
manner when certain conditions are met. (2) A deposit in escrow
of a small part of the purchase price of real estate as
evidence of good faith and to bind an agreement to
purchase.
Borrower
- The person, sometimes referred to as the mortgagor, who
obtains a mortgage loan.
Broker
- An individual in the business of assisting in arranging
funding or negotiating contracts for a client but who does not
loan the money himself. Brokers usually charge a fee or receive
a commission for their services.
Buydown
- When the lender and/or the home builder subsidizes the
mortgage by lowering the interest rate during the first few
years of the loan. While the payments are initially low, they
will increase when the subsidy expires.
Back
Title Letter- Also called "back title certificate" in some
areas, and "starter" in others. When titles previously have
been examined up to a certain date by reliable examiners, title
companies sometimes give subsequent examiners of such titles a
letter that sets forth the condition of the title at the time
of the previous examination and authorizes them to begin their
subsequent examination with the terminal date of the previous
examination.
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CC&R'S (Covenants, Conditions, and
Restrictions) - A document the controls the use,
requirements, and restrictions of a property.
CAP -
The limit of how much an interest rate or monthly payment
can change, either at each adjustment or over the life of the
mortgage.
Certificate
of reasonable value (CRV) - A document that establishes the
maximum value and loan amount for a VA guaranteed loan.
Certificate
of Title- A certificate issued by a title examiner stating
the condition of a title.
Chain-
In real estate measurements (surveying), a chain is 66 feet
long or 100 links, each link being 7.92 inches. The measurement
may change when used in fields other than surveying.
Chain of
Title- The successive ownerships or transfers in the
history of title to a tract of land.
Claim-
An adverse right or interest asserted by one party against
another or against an insurer or indemnitor. Claims may arise
from unpaid debts or taxes, as well as from hidden title
defects such as fraud, forgery, missing heirs, etc.
Clear
Title- Real property ownership free of liens, defects,
encumbrances or claims.
Closing-
Also called "settlement." A meeting of all parties involved in
a property transaction during which the transaction is
consummated.
Closing
or Settlement Costs - Fees, plus the purchase price of the
property, charged at closing which include but are not limited
to lawyer's fees, title search and insurance, survey charges
and fees to record the deed, mortgage and other documents.
Closing
Statement - The financial disclosure statement that account
for all of the funds received and disbursed at the closing
including deposits for taxes, hazard insurance, and mortgage
insurance.
Clouded
Title- An irregularity, possible claim or encumbrance that,
if valid, would adversely affect or impair the title.
Coinsurance-
Two or more policies of title insurance issued by different
insurers, each covering a portion of the same risk, which
together provide total coverage of the risk.
Commitment-
Also called "binder." A document issued by a title insurance
company that contains the conditions under which a policy of
title insurance will be issued.
Condemnation-
(1) The taking of private property for a public purpose,
with compensation to the owner under the right of eminent
domain. Governmental units, railroads and utility companies
have the right to condemn and take private property. (2) The
destruction by government of private property that imperils the
life, health or safety of the public.
Construction
Loan - A short term loan for financing the cost of
construction. The lender advances funds to the builder at
periodic intervals as the work progresses.
Contingency
Clause - A provision in some ARM's to convert to a fixed
rate loan, usually after the first adjustment period.The new
fixed rate is generally set at the prevailing interest rate for
fixed rate mortgages. This conversion feature may be an extra
cost.
Conventional
Loan- A loan secured by a mortgage or deed of trust for
which the loan-to-value ratio is within an acceptable range for
a particular lending institution.
Conveyance-
The transfer of title to property from one person to
another.
Covenant-
A formal agreement or contract between two parties in which
one party gives the other certain promises and assurances, such
as covenants of warranty in a warranty deed.
Counter-Offer
- an offer made by the lender to grant credit other than in
the amount or terms requested by the applicant.
Courtesy-
A right that a husband has in his wife's property at her
death. It does not exist in all states.
Conventional
Loan - A mortgage not insured by FHA or guarantee by the VA
or Farmers Home Administration (FmHA).
Credit
Report - The ratio, expresses as a percentage, which
results when a borrower's monthly payment obligation on
long-term debts is divided by his or her net effective income
(FHA/VA loans)or gross monthly income (Conventional loans).
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Dedication- The setting aside of certain
land by the owner and declaring it to be for public use.
Examples: streets, sidewalks and parks.
Deed of
Trust - In many states, this document is used in place of a
mortgage to secure the payment of a note.
Deed
Restriction- A covenant contained in a deed imposing limits
on the use or occupancy of the real estate or the type, size,
purpose or location of improvements to be constructed on
it.
Default
- Failure to meet legal obligations in a contract,
specifically, failure to make the monthly payments on a
mortgage.
Defect-
A blemish, imperfection or deficiency. A defective title is
one that is irregular and faulty.
Deferred
Interest - See Negative Amortization.
Delinquency
- Failure to make payments on time. This can lead to
foreclosure.
Department
of Veterans Affairs (VA) - An independent agency of the
Federal Government which guarantees long-term, low-or-no-down
payment mortgages to eligible veterans.
Depreciation-
Loss in value occasioned by ordinary wear and tear, destructive
action of the elements, or functional or economic
obsolescence.
Devise-
A gift of real estate made by a will.
Discount
Points - Prepaid interest assessed at closing by the
lender. Each point is equal to 1 percent of the loan
amount(e.g. two points on a $100,000 mortgage would cost
$2,000).
Dominant
Estate- The property for the benefit of which a
right-of-way easement exists across another's adjoining piece
of land is said to be the dominant estate. The land across
which the easement runs is said to be the servient
estate.
Dower-
A right that a wife has in her husband's property at the time
of his death. Does not exist in all states.
Down
Payment - Money paid to make up the difference between the
purchase price and mortgage amount. Down payments usually are
10 percent to 20 percent of the sales price on Conventional
loans, and no money down up to 5 percent on FHA and VA
loans.
Due on
sale clause - An acceleration clause that requires full
payment of a mortgage or deed of trust when the secured
property changes ownership.
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Earnest Money - Money given by a buyer to a
seller as part of the purchase price to bind a transaction or
assure payment.
Easement
- A right to use all or part of the land owned by another
for a specific purpose. An easement may, for example, entitle
its holder to install and maintain sewer or utility
lines.
Eminent
Domain - The right of a government to take privately owned
property for public purposes under condemnation proceedings
subject to payment of its fair market value.
Encroachment
- Any building, improvement or structure located on one
property (such as a wall, fence or driveway) that intrudes upon
the property of another.
Encumbrance
- Any interest, right, lien or liability attached to a
parcel of land (such as unpaid taxes or an unsatisfied
mortgage) that constitutes or represents a burden or charge
upon the property.
Equity-
The market value of real property, less the amount of
existing liens.
Escheat
- The reversion of property to the state when an owner dies
leaving no legal heirs, devisees or claimants.
Escrow
Account - Money held in trust by a third party to be turned
over to the grantee only upon fulfillment of a condition. Or
collected in advance by the lender, usually on a monthly basis,
for the payment of real estate taxes, betterment's and/or
insurance.
Estoppel
- A legal restraint that stops or prevents a person from
contradicting or reneging on his previous position or previous
assertions or commitments.
Examinationlain
- The study of the instruments and muniments incident to a
chain of title to determine their effect and condition in order
to reach a conclusion as to the status of the title.
Exception-
A provision in a title insurance binder or policy that excludes
liability for a specific title defect or an outstanding lien or
encumbrance.
Execute
- To sign a legal instrument. A deed is said to be executed
when it is signed, sealed, witnessed and delivered.
Equal
Credit Opportunity Act - Federal and state laws that
prohibit discrimination in the granting of credit based on
race, color, religion, national origin, sex, marital status,
age, or whether a person is receiving public assistance or
alimony.
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Fannie Mae (FNMA)- Federal National
Mortgage Association. A private corporation dealing in the
purchase of first mortgages.
Farmers
Home Administration (FmHA) - Provides financing to farmers
and other qualified borrowers who are unable to obtain loans
elsewhere.
Fee
Simple Deed - The absolute ownership of a parcel of land.
The highest degree of ownership that a person can have in real
estate, which gives the owner unqualified ownership and full
power of disposition.
Federal
Home Loan Mortgage Corporation (FHLMC) - Also called
Freddie Mac, is a quasi-governmental agency that purchases
conventional mortgages from insured depository institutions and
HUD-approved mortgage bankers.
Federal
National Mortgage Association (FNMA) - A.K.A. Fannie Mae. A
privately owned corporation created by Congress to support the
secondary mortgage market. It purchases and sells residential
mortgages insured by the FHA or guaranteed by VA, as well as
conventional home mortgages.
FHA
(Federal Housing Administration) - A federal agency that
insures first mortgages, enabling lenders to lend a very high
percentage of the sale price.
FHA
Mortgage Insurance - Requires a small fee (up to 3 percent
of the loan amount) paid at closing or a portion of this fee
added to each monthly payment of an FHA loan to insure the loan
with FHA. On a 9.5 percent $75,000 30-year fixed-rate FHA loan,
this fee would amount to either $2,250 at closing or an extra
$31 a month for the life of the loan. In addition, FHA mortgage
insurance requires an annual fee of 0.5 percent of the current
loan amount, the more years the fee must be paid.
Finance
charge - The total cost a borrower must pay, directly or
indirectly, to obtain credit according to regulation"Z".
Fixed
Rate Mortgage - a conventional mortgage loan with a set
interest rate and equal monthly payments for the entire term of
the loan. Lender - the entity or person, sometimes referred to
as the mortgagee, who offers the mortgage loan.
Fixtures-
Personal property that is attached to real property and is
legally treated as real property while it is so attached.
Examples: medicine cabinets, window blinds and
chandeliers.
Foreclosure
- A legal proceeding in which real estate secured by a
mortgage or deed of trust is sold to satisfy the underlying
debt.
Forgery
- The fraudulent signing of another's name to an instrument
such as a deed, mortgage or check.
Freddie
Mac (FHLMC) - Federal Home Loan Mortgage Corporation. A
federal agency that purchases both conventional and federally
insured first mortgages from members of the Federal Reserve
System and the Federal Home Loan Bank System.
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Ginnie Mae (GNMA) - Government National
Mortgage Association. A federal association working with the
FHA that offers special assistance in obtaining mortgages and
purchases mortgages in the secondary market.
Graduated
Payment Mortgage - A residential mortgage with monthly
payments that is stated at a low level and increased at a
predetermined rate.
Grant
- To bestow or confer, with or without compensation, a gift
such as land or money by one having control or authority over
the gift.
Grantee
- One to whom a grant is made.
Grantor-
One who makes a grant.
Government
National Mortgage Association (GNMA) - Also known as Ginnie
Mae, provides sources of funds for residential mortgages,
insured or guaranteed by FHA or VA.
Gross
Monthly Income -The total amount the borrower earns per
month, before any expenses are deducted.
Guarantee
- A promise by one party to pay a debt or perform an
obligation contracted by another if the original party fails to
pay or perform according to a contract.
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Hazard Insurance - A form of insurance in
which the insurance company protects the insured from specified
losses, such as fire, windstorm and the like.
Hereditaments-
Any and all kinds of estates, interest and rights in real
estate that can be inherited.
Homeowners
Insurance- Real estate insurance protecting against loss
caused by fire, some natural causes, vandalism, etc., depending
on the terms of the policy. Also includes coverage such as
personal liability and theft away from home.
Housing
Expenses-to-Income Ratio - The ratio, expressed as a
percentage, which results when a borrower's housing expenses
are divided by his/her net effective income (FHA/VA loans) or
gross monthly income (Conventional loans).
Home
inspection report - A qualified inspector's report on a
property's overall condition. The report usually includes an
evaluation of both the structure and mechanical
systems.
Home
warranty plan - Protection against failure of mechanical
systems with the property. Frequently includes plumbing,
electrical, heating systems, and installed appliances.
HUD
(Department of Housing and Urban Development) - The federal
department responsible for the major housing programs in the
United States.
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Index- (1) An alphabetical listing in the
public records of the names of parties to recorded real estate
instruments together with the book and page number of the
record. (2) The listing in abstract and title plants of
recorded real estate instruments in groups according to land
descriptions, known as a geographic index. (3) The alphabetical
listing in abstract and title plants, by names of the parties,
of all recorded instruments that affect but do not describe
particular real estate, such as judgments, powers of attorney,
wills and probate proceedings. Such indexes are known by
various names, such as "general index," "judgment index" and
"name index."
Instrument-
Any written document having a legal effect.Impound - That
portion of a borrower's monthly payments held by the lender or
servicer to pay for taxes, hazard insurance, mortgage
insurance, lease payments, and other items as they become due.
Also known as reserves.
Investor
- Money source for a lender
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Joint tenancy - An equal, undivided
ownership of property by two or more persons. Upon death of any
owner, the survivors take the descedent's interest on the
property.
Judgment
- The determination of a court regarding the rights of
parties in an action. A judgment of debt on a property owner
can create a lien on all of that owner's land within a certain
jurisdiction.
Jumbo
Loan - A loan which is larger (more than $203,150)than the
limits set by the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation. Because jumbo loans
cannot be funded by these two agencies, they usually carry a
higher interest rate.
Junior
Mortgage- A mortgage lower in lien priority than
another.
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Leasehold - The right to possession and use
of land for a fixed period of time. The lease is the agreement
that creates the right.
Lessee
- A tenant holding a leasehold.
Lessor
- A landlord; one who gives a leasehold to a lessee.
License
- Permission to go upon or use the land of another, the
permission being a personal privilege and not constituting an
interest in the land.
Lien
- A monetary charge imposed on a property, usually arising
from some debt or obligation.Lien Waver- Also called "waiver of
liens." A waiver of mechanics' lien rights, signed by
contractors or subcontractors.
Link -
In surveying, a length of 7.92 inches.
Lis
Pendens - A legal notice intending to bind third parties of
litigation claiming an interest in real estate.
Loan
commitment - A written promise to make a loan for a
specified amount with specific terms.
Loan
Policy- Also called "mortgage policy." A title insurance
policy insuring a mortgagee, or beneficiary under a deed of
trust, against loss caused by invalidity or unenforceability of
a lien, or loss of priority of the mortgage or deed of
trust.
Loan-to-Value
Ratio - the percentage comparison between the unpaid
principal balance of the mortgage and the sales price or the
appraised value of the property, whichever is lower.
Lot -
Generally, any portion or parcel of real property. Usually
refers to a portion of a subdivision.
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Margin - The number of percentage points
the lender adds to the index rate to calculate the ARM interest
rate at each adjustment.
Market
Value - The average of the highest price that a buyer,
willing but not compelled to buy, would pay and the lowest
price a seller, willing but not compelled to sell, would
accept.
Mechanic's
Lien - A lien on real estate, created by operation of law,
that secures the payment of debts due to persons who perform
labor or services or furnish materials incident to the
construction of buildings and improvements on the real
estate.
Metes
and Bounds - A land description in which boundaries are
described by courses, directions, distances and
monuments.
Mortgage
- A conditioned pledge of property to a creditor as
security for the payment of a debt.
Mortgage
Insurance- Insurance written by an independent mortgage
insurance company protecting the mortgage lender against loss
incurred by a mortgage default, thus enabling the lender to
lend a higher percentage of the sale price.
Mortgagee
- The holder of a mortgage. The party to whom a mortgage is
made, generally the lender.
Mortgagee
Policy- See Loan Policy.
Mortgage
Review Board - A voluntary board consisting of an equal
number of lenders and community representatives who will review
the residential mortgage loans denied by participating lenders
where the applicants believe the denial was based on the
location of the property.
Mortgagor
- A person who mortgages property. A person who executes a
mortgage, generally the property owner.
Multiple
Listing - The pooling in a central bureau of listings of
properties for sale. These listings are held individually by
members of a group of real estate brokers, with the agreement
that any member of the group may sell the properties and, in
the case of a sale, the commission will be divided between the
broker making the sale and the broker who filed the
listing.
Muniments
of Title - Written evidence (documents) that an owner
possesses to prove his or her title to property.
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Negative Amortization - Negative
amortization occurs when your monthly payments are not large
enough to pay all the interest due on the loan. The interest
that is not covered is added to the unpaid principal balance,
which means that even after several payments you could owe more
than you did at the beginning of the loan. Negative
amortization can occur when an ARM has a payment cap that
results in monthly payments that are not high enough to cover
the interest.
Net
Effective Income - The borrower's gross income minus
federal income tax.
Non-Assumption
Clause - A statement in a mortgage contract forbidding the
assumption of the mortgage without the prior approval of the
lender.
Note -
Also called "promissory note." A written promise to pay a
sum of money, usually at a specified interest rate, at a stated
time to a named payee.
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Origination Fee - A fee or charge for
establishing a new loan. PITI Principal, interest, taxes and
insurance.
Owner's
Policy - A policy of title insurance insuring an owner of
real estate against loss occasioned by defects in, liens
against or unmarketability of the owner's title.
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PITI - Principal, interest, taxes, and
insurance. Also called monthly housing expense.
Plat -
Also called "plat map." A map dividing a parcel of land
into lots, as in a subdivision. A plat book contains the plat
maps for a given area.
Point
- Also called "commission points" or "discount points." One
percent of the amount of the loan.
Power of
Attorney - A legal document authorizing one person to act
on behalf of another.
Premium
- The amount payable for an insurance policy.
Prepaids
- Expenses necessary to create an escrow account or to
adjust the seller's existing escrow account. Can include taxes,
hazard insurance, private mortgage insurance and special
assessments.
Prepayment
- A privilege in a mortgage permitting the borrower to make
payments in advance of their due
Prepayment
penalty - A fee charged to a mortgagor who pays a loan
before it is due.
Prescriptive
Easement - A right to use another's property that is not
inconsistent with the owner's rights and that is acquired by an
open, notorious, adverse and continuous use for the statutory
period, for example 20 years.
Principal
- (1) A sum of money owed as a debt on which interest is
payable. (2) A person who empowers another to act as his
representative or agent. (3) The person having prime
responsibility for an obligation as distinguished from one who
acts as a surety or endorser.
Private
Mortgage Insurance (PMI) - In the event that you do not
have a 20 percent down payment, lenders will allow a smaller
down payment-as low as 5 percent in some cases. With the
smaller down payments loans, however, borrowers are usually
required to carry private mortgage insurance. Private mortgage
insurance willrequire an initial premium payment of 1.0 percent
to 5.0 percent of your mortgage amount and may require an
additional monthly fee depending on your loan's structure. On a
$75,000 house with a 10 percent down payments, this would mean
either an initial premium payment of $2,025 to $3,375, or an
initial premium of$675 to $1,130 combined with a monthly
payment of $25 to $30.
Point
- A non-refundable sum of money, equal to one percent of
the principal amount of a mortgage, charged by the lender to
cover certain costs of making a loan. The number of points that
may be charged is limited by law.
Purchase
Money Mortgage - A mortgage given by a purchaser to a
seller on the subject property to secure payment of a part of
the purchase price.
Purchase
Agreement - A written document in which the purchaser
agrees to by certain real estate and the seller agrees to sell
certain real estate under stated terms and conditions. Also
called a sales contract, earnest money contract, or agreement
for sale.
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Quit Claim Deed - A deed that does not
imply that the grantor holds title, but that surrenders and
gives to the grantee any possible interest or rights that the
grantor may have in the property.
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Rate - Lock Agreement/interest Rate
Commitment - a written agreement by which a lender will hold an
interest rate on a mortgage for a specified period of time. The
terms and conditions of a rate lock agreement vary from lender
to lender.
Realtor
- A real estate broker or associate active in a local real
estate board affiliated with the National Association of
Realtors.
Real
Estate - Also called "real property." (1) Land and anything
permanently affixed to the land, such as building, fences and
those things attached to the buildings, such as light fixtures,
plumbing and heating fixtures, or other such items that would
be personal property if not attached. (2) May refer to rights
in real property as well as the property itself.
Real
Estate Settlement Procedures Act (RESPA) - A federal law
that requires a good faith estimate of closing costs required
to be given on certain first mortgages.
Recording
- The noting in a public office of the details of a legal
document - such as a deed or mortgage - affecting the title to
real estate. When such an instrument is properly recorded, it
is considered to be a matter of public record. Legally, that
means that all subsequent purchasers are deemed to have
constructive knowledge of that information.
Reinsurance
- A contractual relationship between two insurance
companies under which one insurer assumes a portion of the risk
of the insurance policy written by the other.
Release
- (1) To relieve from debt or security or abandon a right,
such as the release of a mortgage lien from a part or all of
the land mortgaged. (2) The instrument effecting a
release.
Renegotiable
Rate Mortgage (RRM) - A loan in which the interest rate is
adjusted periodically. See Adjustable Rate Mortgage
Restrictions
- Limitations on the use of property imposed or created by
deeds or other documents in the chain of title. A restriction,
for example, may prohibit the placement of trailer or the
construction of a commercial structure on the
property.
Reverse
Annuity Mortgage (RAM) - A form of mortgage in which the
lender makes periodic payments to the borrower using the
borrower's equity in the home as security.
Right of
Rescission - State and federal laws that allow consumers
who refinance first mortgages and certain second mortgages to
cancel their contract and receive a full refund. This must take
place within three business days following the closing, or
following the delivery of the required information and
rescission forms and disclosures, whichever occurs last.
Riparian
Rights - The rights of owners of lands bordering
watercourses which relate to the water and its use.
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Secondary Mortgage Market - Investors who
purchase residential mortgages originated by lenders.
Sale
Agreement - A contract entered into between a buyer and
seller, setting forth the terms, provisions and conditions of a
sale of real estate.
Sale and
Leaseback - The sale of an asset to a buyer who immediately
leases it back to the seller.
Search
- A careful exploration and perusal of the public records
in an effort to find all recorded instruments relating to a
particular chain of title.
Second
Mortgage - A mortgage ranking in priority immediately below
a first mortgage.
Subordination
- The act or process by which a person's rights are ranked
below the rights of others. For example, a second mortgagee's
rights are subordinate to those of the first
mortgagee.
Surety -
(1) A person who agrees to be responsible for a debt or
obligation of another. (2) The pledge or agreement by which one
undertakes responsibility for the debt or obligation of
another
Servicing
- All the steps and operations a lender perform to keep a
loan in good standing, such as collection of payments, payment
of taxes, insurance, property inspections and the
like.
Shared
Appreciation Mortgage (SAM) - A mortgage in which a
borrower receives a below-market interest rate in return for
which a lender (or another investor such as a family member or
other partner) receives a portion of the future appreciation in
the value of the property. May also apply to mortgages where
the borrower shares the monthly principal and interest payments
with another party in exchange for a part of the appreciation.
Survey
- A measurement of land, prepared by a registers land
surveyor, showing the location of the land with reference to
known points, its dimensions, and the location and dimensions
of any building.
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Tenancy in common - A type of joint
ownership of property by two or more persons with no right of
survivorship.
Term
Mortgage - See Balloon Payment Mortgage.
Title -
(1) A combination of all the elements that constitute the
highest legal right to own, possess, use, control, enjoy and
dispose of real estate or an inheritable right or interest
therein. (2) The rights of ownership recognized and protected
by the law.
Title
Covenants - Covenants ordinarily inserted in conveyances
and in transfers of title to real estate for the purpose of
giving protection to the purchaser against possible
insufficiency of the title received. A group of such covenants
known as "common law covenants" includes: covenants against
encumbrances; covenants for further assurance (in other words,
to do whatever is necessary to rectify title deficiencies);
covenants of good right and authority to convey; covenants of
quiet enjoyment; covenants of seisin; covenants of warranty.
(See Warranty or Covenant.)
Title
Defect - (1) Any possible or patent claim or right
outstanding in a chain of title that is adverse to the claim of
ownership. (2) Any material irregularity in the execution or
effect of an instrument in the chain of title.
Title
Insurance Policy - A contract of title insurance under
which the insurer, in keeping with the terms of the policy,
agrees to indemnify the insured against loss arising from
claims against the insured interest.
Title
Plant - Also called "abstract plant" in some areas. A
geographically filed assemblage of title information that helps
in expediting title examinations, such as copies of previous
attorneys' opinions, abstracts, tax searches and copies or
take-offs of the public records.Title - A document that gives
evidence of an individual's ownership of property.
Title
Search - An examination of legal records to check the
validity and completeness of the title to the property. The
title search should uncover any liens, overdue assessments or
other claims against the property.
Truth-in-Lending
- Federal and state laws that require lenders to provide
borrowers with full disclosure of the true cost of a loan and
easy-to-understand information about the annual percentage rate
and terms of the loan.
Two-Step
Mortgage - A mortgage in which the borrower receives a
below-market interest rate for a specified number of years
(most often seven or 10 years), and then receives a new
interest rate adjusted (within certain limits) to market
conditions at that time. The lender sometimes has the option to
call the loan, due within 30 days notice at the end of seven or
10 years. Also called"Super Seven" or "Premier" mortgage.
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Underwriter - An insurance company that
issues insurance policies to the public or to another
insurer.
Urea
Formaldehyde Foam Insulation (UFFI) Notice - A state law
requiring a borrower or seller to disclose to a lender the
absence or presence of UFFI and the formaldehyde level in a
dwelling.
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Variable Interest Rate - Also called
"flexible interest rate." An interest rate that fluctuates as
the prevailing rate moves up or down. In mortgages, there are
usually maximums as to the frequency and amount of
fluctuation.
Veterans
Administration (VA) Loans- Housing loans to veterans by
banks, savings and loans, or other lenders that are guaranteed
by the Veterans Administration, enabling veterans to buy a
residence with little or no down payment.VA Loan - A loan that
is guaranteed by the Veterans Administration and made by a
private lender.
VA
Mortgage Funding Fee - A premium of up to 2 percent
(depending on the size of the down payment) paid on a VA-backed
loan.
Variable
Rate Mortgage (VRM) - See Adjustable Rate Mortgage.
Verification
of Deposit (VOD) - A document signed by the borrower's
financial institution verifying the status and balance of
his/her financial accounts.
Verification
of Employment - A document signed by the borrower's
employer verifying his/her position and salary.
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Waiver - The voluntary and intentional
relinquishment of a known right, claim or privilege.
Warranty-
In a broad sense, an agreement or undertaking by a seller to be
responsible for present or future losses of the purchaser
occasioned by deficiency or defect in the quality, condition or
quantity of the thing sold. In a stricter sense, the provision
or provisions in a deed, lease or other instrument conveying or
transferring an estate or interest in real estate under which
the seller becomes liable to the purchaser for defects in or
encumbrances on the title. (See Title Covenants.)
Will
- A testamentary disposition of property, usually in a form
prescribed by law, that takes effect upon death.
Wraparound
- Results when an existing assumable loan is combined with
a new loan, resulting in an interest rate somewhere between the
old rate and the current market rate. The payments are made to
a second lender or the previous homeowner, who then forwards
the payments to the first lender after taking the additional
amount off the top.
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Zoning - Laws passed by local governments
regulating the size, type, structure, nature and use of
land.
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