| 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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