A provision in the mortgage that gives the mortgagee (the lender) the
right to call the mortgage due and payable at the end of a specified
period for whatever reason.
A provision of an adjustable-rate mortgage (ARM) that limits how much
the interest rate or mortgage payments may increase or decrease. See
lifetime payment cap, lifetime rate cap, periodic payment cap, and
periodic rate cap.
(1) Money used to create income, either as an investment in a business
or an income property. (2) The money or property comprising the wealth
owned or used by a person or business enterprise. (3) The accumulated
wealth of a person or business. (4) The net worth of a business
represented by the amount by which its assets exceed liabilities.
The cost of an improvement made to extend the useful life of a
property or to add to its value.
Any structure or component erected as a permanent improvement to real
property that adds to its value and useful life.
A refinance transaction in which the amount of money received from the
new loan exceeds the total of the money needed to repay the existing first
mortgage, closing costs, points, and the amount required to satisfy any
outstanding subordinate mortgage liens. In other words, a refinance
transaction in which the borrower receives additional cash that can be
used for any purpose.
certificate of deposit
A document written by a bank or other financial institution that is
evidence of a deposit, with the issuer's promise to return the deposit
plus earnings at a specified interest rate within a specified time period.
See adjustable rate mortgage (ARM).
certificate of deposit index
An index that is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans. It represents the weekly average of
secondary market interest rates on six-month negotiable certificates of
deposit. See adjustable-rate mortgage.
Certificate of Eligibility
A document issued by the federal government certifying a veteran's
eligibility for a Department of Veterans Affairs (VA) mortgage.
Certificate of Reasonable Value (CRV)
A document issued by the Department of Veterans Affairs (VA) that
establishes the maximum value and loan amount for a VA mortgage.
certificate of title
A statement provided by an abstract company, title company, or
attorney stating that the title to real estate is legally held by the
chain of title
The history of all of the documents that transfer title to a parcel of
real property, starting with the earliest existing document and ending
with the most recent.
The frequency (in months) of payment and/or interest rate changes in
an adjustable-rate mortgage (ARM).
Another name for personal property.
A title that is free of liens or legal questions as to ownership of
A meeting at which a sale of a property is finalized by the buyer
signing the mortgage documents and paying closing costs. Also called
"settlement." At this meeting, ownership of the property is transferred
from the seller to the buyer.
closing cost item
A fee or amount that a home buyer must pay at closing for a single
service, tax, or product. Closing costs are made up of individual closing
cost items such as origination fees and attorney's fees. Many closing cost
items are included as numbered items on the HUD-1 statement.
Expenses (over and above the price of the property) incurred by buyers
and sellers in transferring ownership of a property. Closing costs
normally include an origination fee, an attorney's fee, taxes, an amount
placed in escrow, and charges for obtaining title insurance and a survey.
Closing costs percentage will vary according to the area of the country;
lenders or Realtors® often provide estimates of closing costs to
See HUD-1 statement.
cloud on title
Any conditions revealed by a title search that adversely affect the
title to real estate. Usually clouds on title cannot be removed except by
a quitclaim deed, release, or court action.
A sharing of insurance risk between the insurer and the insured.
Coinsurance depends on the relationship between the amount of the policy
and a specified percentage of the actual value of the property insured at
the time of the loss.
A provision in a hazard insurance policy that states the amount of
coverage that must be maintained -- as a percentage of the total value of
the property -- for the insured to collect the full amount of a loss.
An asset (such as a car or a home) that guarantees the repayment of a
loan. The borrower risks losing the asset if the loan is not repaid
according to the terms of the loan contract.
The efforts used to bring a delinquent mortgage current and to file
the necessary notices to proceed with foreclosure when necessary.
A person who signs a promissory note along with the borrower. A
co-maker's signature guarantees that the loan will be repaid, because the
borrower and the co-maker are equally responsible for the repayment. See
The fee charged by a broker or agent for negotiating a real estate or
loan transaction. A commission is generally a percentage of the price of
the property or loan.
A formal offer by a lender stating the terms under which it agrees to
lend money to a home buyer. Also known as a "loan commitment."
common area assessments
Levies against individual unit owners in a condominium or planned unit
development (PUD) project for additional capital to defray homeowners'
association costs and expenses and to repair, replace, maintain, improve,
or operate the common areas of the project.
Those portions of a building, land, and amenities owned (or managed)
by a planned unit development (PUD) or condominium project's homeowners'
association (or a cooperative project's cooperative corporation) that are
used by all of the unit owners, who share in the common expenses of their
operation and maintenance. Common areas include swimming pools, tennis
courts, and other recreational facilities, as well as common corridors of
buildings, parking areas, means of ingress and egress, etc.
An unwritten body of law based on general custom in England and used
to an extent in the United States.
Community Land Trust Mortgage Option
An alternative financing option that enables low- and moderate-income
home buyers to purchase housing that has been improved by a nonprofit
Community Land Trust and to lease the land on which the property stands.
In some western and southwestern states, a form of ownership under
which property acquired during a marriage is presumed to be owned jointly
unless acquired as separate property of either spouse.
An alternative financing option for low- and moderate-income
households under which 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
organization. Payment on the second mortgage is often deferred and carries
a very low interest rate (or no interest rate at all). Part of the debt
may be forgiven incrementally for each year the buyer remains in the home.
An abbreviation for "comparable properties"; used for comparative
purposes in the appraisal process. Comparables are properties like the
property under consideration; they have reasonably the same size,
location, and amenities and have recently been sold. Comparables help the
appraiser determine the approximate fair market value of the subject
Interest paid on the original principal balance and on the accrued and
The determination that a building is not fit for use or is dangerous
and must be destroyed; the taking of private property for a public purpose
through an exercise of the right of eminent domain.
A real estate project in which each unit owner has title to a unit in
a building, an undivided interest in the common areas of the project, and
sometimes the exclusive use of certain limited common areas.
Changing the ownership of an existing building (usually a rental
project) to the condominium form of ownership.
A condominium project that has rental or registration desks,
short-term occupancy, food and telephone services, and daily cleaning
services and that is operated as a commercial hotel even though the units
are individually owned.
A short-term, interim loan for financing the cost of construction. The
lender makes payments to the builder at periodic intervals as the work
A condition that must be met before a contract is legally binding. For
example, home purchasers often include a contingency that specifies that
the contract is not binding until the purchaser obtains a satisfactory
home inspection report from a qualified home inspector.
An oral or written agreement to do or not to do a certain thing.
A mortgage that is not insured or guaranteed by the federal
government. Contrast with government mortgage.
A provision in some adjustable-rate mortgages (ARMs) that allows the
borrower to change the ARM to a fixed-rate mortgage at specified
timeframes after loan origination.
An adjustable-rate mortgage (ARM) that can be converted to a
fixed-rate mortgage under specified conditions.
A type of multiple ownership in which the residents of a multiunit
housing complex own shares in the cooperative corporation that owns the
property, giving each resident the right to occupy a specific apartment or
A business trust entity that holds title to a cooperative project and
grants occupancy rights to particular apartments or units to shareholders
through proprietary leases or similar arrangements.
Mortgages related to a cooperative project. This usually refers to the
multifamily mortgage covering the entire project but occasionally
describes the share loans on the individual units.
A residential or mixed-use building wherein a corporation or trust
holds title to the property and sells shares of stock representing the
value of a single apartment unit to individuals who, in turn, receive a
proprietary lease as evidence of title.
Arrangements under which an employer moves an employee to another area
as part of the employer's normal course of business or under which it
transfers a substantial part or all of its operations and employees to
another area because it is relocating its headquarters or expanding its
cost of funds index (COFI)
An index that is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans. It represents the weighted-average
cost of savings, borrowings, and advances of the 11th District members of
the Federal Home Loan Bank of San Francisco. See adjustable-rate mortgage
A clause in a mortgage that obligates or restricts the borrower and
that, if violated, can result in foreclosure.
An agreement in which a borrower receives something of value in
exchange for a promise to repay the lender at a later date.
A record of an individual's open and fully repaid debts. A credit
history helps a lender to determine whether a potential borrower has a
history of repaying debts in a timely manner.
credit life insurance
A type of insurance often bought by mortgagors because it will pay off
the mortgage debt if the mortgagor dies while the policy is in force.
A person to whom money is owed.
A report of an individual's credit history prepared by a credit bureau
and used by a lender in determining a loan applicant's creditworthiness.
credit reporting agency (or bureau)
An organization that prepares reports that are used by lenders to
determine a potential borrower's credit history. The agency obtains data
for these reports from a credit repository as well as from other sources.
An organization that gathers, records, updates, and stores financial and
public records information about the payment records of individuals who
are being considered for credit