MORTGAGE GLOSSARY

- Q-

Qualifying Ratios	Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.
Quitclaim Deed	A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

- R-

Radon	A radioactive gas found in some homes that in sufficient concentrations can cause health problems.
Rate-Improvement Mortgage	A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.
Rate Lock	A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time. See lock-in.
Real Estate Agent	A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
Real Estate Settlement Procedures Act (Respa)	A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
Real Property	Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.
Realtor®	A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.
Recission	The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed.
Recorder	The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."
Recording	The noting in the registrars office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
Refinance Transaction	The process of paying off one loan with the proceeds from a new loan using the same property as security.
Rehabilitation Mortgage	A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.
Remaining Balance	The amount of principal that has not yet been repaid. See principal balance.
Remaining Term	The original amortization term minus the number of payments that have been applied.
Rent Loss Insurance	Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.
Rent With Option To Buy	See lease-purchase mortgage loan.
Repayment Plan	An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are called "relief provisions."
Replacement Reserve Fund	A fund set aside for replacement of common property in a condominium, PUD, or cooperative project -- particularly that which has a short life expectancy, such as carpeting, furniture, etc.
Revolving Liability	A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.
Right Of First Refusal	A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
Right Of Ingress Or Egress	The right to enter or leave designated premises.
Right Of Survivorship	In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.
Rural Housing Service (Rhs)	An agency within the Department of Agriculture, which operates principally under the Consolidated Farm and Rural Development Act of 1921 and Title V of the Housing Act of 1949. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.

- S-

Sale-Leaseback	A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
Second Mortgage	A mortgage that has a lien position subordinate to the first mortgage.
Secondary Mortgage Market	The buying and selling of existing mortgages.
Secured Loan	A loan that is backed by collateral.
Security	The property that will be pledged as collateral for a loan.
Seller Take-Back	An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing.
Servicer	An organization that collects principal and interest payments from borrowers and manages borrowers escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
Servicing	The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
Settlement	See closing.
Settlement Sheet	See HUD-1 statement.
Single-Family Properties	One- to four-unit properties including detached homes, townhomes, condominiums, and cooperatives.
Special Deposit Account	An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed.
Standard Payment Calculation	The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.
Step-Rate Mortgage	A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.
Subdivision	A housing development that is created by dividing a tract of land into individual lots for sale or lease.
Subordinate Financing	Any mortgage or other lien that has a priority that is lower than that of the first mortgage.
Subsidized Second Mortgage	An alternative financing option known as the Community Seconds® mortgage for low- and moderate-income households. An investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit corporation. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.
Survey	A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Sweat Equity	Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.

- T-

Tenancy By The Entirety	A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. Contrast with tenancy in common.
Tenancy In Common	A type of joint tenancy in a property without right of survivorship. Contrast with tenancy by the entirety and with joint tenancy.
Tenant-Stockholder	The obligee for a cooperative share loan, who is both a stockholder in a cooperative corporation and a tenant of the unit under a proprietary lease or occupancy agreement.
Third-Party Origination	A rocess by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market. See mortgage broker.
Title	A legal document evidencing a person's right to or ownership of a property.
Title Company	A company that specializes in examining and insuring titles to real estate.
Title Insurance	Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
Title Search	A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
Total Expense Ratio	Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts.
Trade Equity	Equity that results from a property purchaser giving his or her existing property (or an asset other than real estate) as trade as all or part of the down payment for the property that is being purchased.
Transfer Of Ownership	Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device. In cases in which an inter vivos revocable trust is the borrower, lenders also consider any transfer of a beneficial interest in the trust to be a transfer of ownership.
Transfer Tax	State or local tax payable when title passes from one owner to another.
Treasury Index	An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. See adjustable-rate mortgage (ARM).
Truth-In-Lending	A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
Two-Step Mortgage	An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.
Two- To Four-Family Property	A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.
Trustee	A fiduciary who holds or controls property for the benefit of another.