| 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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