MORTGAGE GLOSSARY

- D-

Debt	An amount owed to another. See installment loan and revolving liability.
Deed	The legal document conveying title to a property.
Deed-In-Lieu	A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."
Deed Of Trust	The document used in some states instead of a mortgage; title is conveyed to a trustee.
Default	Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
Delinquency	Failure to make mortgage payments when mortgage payments are due.
Deposit	A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit.
Depreciation	A decline in the value of property; the opposite of appreciation.
Discount Points	See point.
Dower	The rights of a widow in the property of her husband at his death.
Down Payment	The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Due-On-Sale Provision	A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
Due-On-Transfer Provision	This terminology is usually used for second mortgages. See due-on-sale provision.

- E-

Earnest Money Deposit	A deposit made by the potential home buyer to show that he or she is serious about buying the house.
Easement	A right of way giving persons other than the owner access to or over a property.
Effective Age	An appraisers estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
Effective Gross Income	Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.
Eminent Domain	The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.
Employer-Assisted Housing	A special housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.
Encroachment	An improvement that intrudes illegally on anothers property.
Encumbrance	Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
Endorser	A person who signs ownership interest over to another party. Contrast with co-maker.
Equal Credit Opportunity Act (Ecoa)	A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity	A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.
Escrow	An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.
Escrow Account	The account in which a mortgage servicer holds the borrowers escrow payments prior to paying property expenses.
Escrow Analysis	The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.
Escrow Collections	Funds collected by the servicer and set aside in an escrow account to pay the borrowers property taxes, mortgage insurance, and hazard insurance.
Escrow Disbursements	The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
Escrow Payment	The portion of a mortgagors monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.
Estate	The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.
Eviction	The lawful expulsion of an occupant from real property.
Examination Of Title	The report on the title of a property from the public records or an abstract of the title.
Exclusive Listing	A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owners right to sell the property alone without the payment of a commission.
Executor	A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form.

- F-

Fair Credit Reporting Act	A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.
Fair Market Value	The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae	A New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages.
Fannie Mae Properties	Fannie Mae owns, manages, and has available for sale, single-family detached homes, two- to four-unit properties, condominiums, and townhouses in a variety of neighborhoods. The number, type, and sales price may vary substantially. The homes vary in age and may require repairs. Fannie Mae homes are sold through local real estate brokers whose contact information is provided in the Fannie Mae Properties for Sale search results on homepath.com.
Fannie Mae's Community Home Buyer's Programsm	An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family's buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
Fannie 97®	A financing option for a fixed-rate mortgage that offers home buyers a 3 percent down payment loan with a term between 15 and 30 years. The mortgage features a loan-to-value (LTV) percentage of 97 percent, and is designed to expand homeownership opportunities for people with modest incomes. Borrowers must take a pre-purchase home-buyer education session to qualify for a Fannie 97 mortgage.
Federal Housing Administration (FHA)	An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
Fee Simple	The greatest possible interest a person can have in real estate.
Fee Simple Estate	An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.
FHA Coinsured Mortgage	A mortgage (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the mortgagor's default.
FHA Mortgage	A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.
Finder's Fee	A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
Firm Commitment	A lenders agreement to make a loan to a specific borrower on a specific property.
First Mortgage	A mortgage that is the primary lien against a property.
Fixed Installment	The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.
Fixed-Rate Mortgage (FRM)	A mortgage in which the interest rate does not change during the entire term of the loan.
Fixture	Personal property that becomes real property when attached in a permanent manner to real estate.
Flood Insurance	Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
Foreclosure	The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Forfeiture	The loss of money, property, rights, or privileges due to a breach of legal obligation.
401(K)/403(B)	An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not for profit organizations.
401(K)/403(B) Loan	Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans -- monies must be repaid to avoid serious penalty charges.
Fully Amortized ARM	An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.