| MORTGAGE GLOSSARY a | b-c | d-f | g-l | m-q | r-s | t-z | |||||||
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Third-party Origination When 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. Title A document that gives evidence of an individual's ownership of property. Title Insurance A policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests. Title Search An examination of municipal records to determine the legal ownership of property. Usually is performed by a title company. Total Expense Ratio Total obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts. Truth-In-Lending A federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z. Two-Step Mortgage A mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often seven or 10), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. the lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. also called "Super Seven" or "Premier" mortgage. Underwriting The decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount. Usury Interest charged in excess of the legal rate established by law. VA Loan A long-term, low- or no-down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements. VA Mortgage Funding Fee A premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 fixed-rate mortgage with no down payment, this would amount to $1,406 either paid at closing or added to the amount financed. Variable Rate Mortgage (VRM) see adjustable rate mortgage Verification of Deposit (VOD) A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts. |
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