Need help understanding what all the different terms mean when it comes to mortgages? Check out our extensive glossary below!

-A-

Agency
: A legal relationship in which someone (principal) hires someone else (agent) to represent them to a third party.

Adjustment Interval
For an adjustable rate mortgage, the time between changes in the interest rate charged. The most common adjustment intervals are one, three or five years.

ALTA
American Land Title Association - A national association of title insurance companies, abstractors and attorneys specializing in real property law. The association speaks for the title insurance and abstracting industry, creates title policy forms and establishes standard procedures.

Alternative Documentation
A substitute documentation process that allows lenders under certain circumstances to obtain documentation related to an applicant's income, employment, funds for closing and home loan payment history obtained directly from the applicant, rather than from his or her employer, bank or home loan servicer.    [TOP]

Amortization
Literally to "kill off" (root: mort) the outstanding balance of a loan by making equal payments on a regular schedule (usually monthly). The payments are structured so that the borrower pays both interest and principal with each equal payment.

Annual Percentage Rate (APR)
The interest rate which reflects the cost of a mortgage as a yearly rate. This rate is usually higher than the stated loan rate for the mortgage, because it takes into account points and other charges.

Applicable Requirements
All of the following: (i) all contractual obligations of the Correspondent or Originator (including those contractual obligations contained in the Manual (and/or in any of the other Contract Documents, in any agreement with any Insurer, or in any of the Mortgage Loan Documents)) for which the Correspondent or Originator was or is responsible; (ii) all applicable federal, state and local legal and regulatory requirements (including statutes, rules, regulations and ordinances) binding upon the Correspondent or Originator, (iii) all other applicable requirements and guidelines of each governmental and quasi-governmental agency, board, commission, instrumentality and other governmental body or office having jurisdiction; (iv) all other applicable judicial and administrative judgments, orders, stipulations, awards, writs and injunctions; (v) the reasonable and customary mortgage origination and servicing practices of prudent mortgage lending institutions that make and service mortgage loans of the same type as the Mortgage Loans in the jurisdictions in which the related Mortgaged Properties are located; and (vi) to the extent that they require a standard of care that is not lower than that required by all of the foregoing, the standards the Correspondent employs and exercises in originating, servicing and administering mortgage loans for its own account and/or for the account of an Agency or Private Investor.

Application
A series of steps, usually including the completion of documents, that a lender requires of those seeking a loan.

Application Fee
The fee charged by the lender to the borrower for applying for a loan. Payment of this fee does not guarantee that a loan will be approved. Some lenders may apply the cost of the application fee to certain closing costs.        [TOP]

Appraisal
The determination of property value based on recent sales information of similar properties.

Appraisal Fee
: A fee charged by the lender for an appraisal.

Approval Letter
Written authorization from Cypress Mortgage to the Correspondent specifying the correspondent lending programs described in the Manual in which the Correspondent is approved to participate. The most recent Approval Letter shall take precedence over prior Approval Letters and may amend, terminate, or otherwise modify prior Approval Letters.

Approval Tier
Level of approval to participate in certain lines of business that is assigned to Correspondent at time of approval.

ARM
Adjustable Rate Mortgage - Home loans with interest rates that change periodically on the basis of movement in a specified index.    [TOP]

Assessed Value
: The value placed on property by the Central Appraisal District as a basis for taxation.

Assets
What a person owns, i.e., car, stocks, bonds, mutual funds

Assignment of Security Instrument
An assignment of a Security Instrument, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Security Instrument, which assignment, notice of transfer or equivalent instrument shall pertain to an individual Security Instrument loan and shall contain complete recording information (including legal descriptions where needed) pertaining to the related Security Instrument, all in accordance with all Applicable Requirements.

Assignment of Trade
Permits Correspondents to negotiate their own government or conventional trades in the securities market and assign those trades to Cypress Mortgage.

Assumable Loan
These loans may be passed on from a seller of a home to the buyer. The buyer "assumes" all outstanding payments. Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically based on an index. Also called a variable rate mortgage.     [TOP]

Assumption or To Assume a Mortgage
The taking over of an existing mortgage. Usually a purchaser will assume an existing mortgage from the vendor if the existing mortgage has a good interest rate relative to market rates

Attorney's Fees
: Charges by an independent attorney chosen by the lender to draw the legal documents, i.e. Note, Deed of Trust, etc.

-B-

Balloon Payment
: An instance in which the final installation payment on a note is greater than the preceeding payments and pays the note in full.

Balloon Mortgage
Behaves like a fixed-rate mortgage for a set number of years (usually five or seven) and then must be paid off in full in a single "balloon" payment. Balloon loans are popular with those expecting to sell or refinance their property within a definite period of time.

Best Efforts Delivery
Loan that is price protected with a locked in interest rate and price, and must be delivered within a specified period of time. The Correspondent is expected to use its "best efforts" to close, fund and deliver a rate locked loan on or before the last day of the delivery period.     [TOP]

Borrower
The Person or Persons obligated on the Mortgage Note.

Broker
An individual in the business of assisting in arranging funding or negotiating contracts for a client but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.

Business Day
Any day other than (i) a Saturday or Sunday, or (ii) a day on which banking and savings and loan institutions in the state of North Carolina are authorized or obligated by law or executive order to be closed.

Buy Down
The cost to compensate a lender for granting a lower interest rate than the contracted rate

-C-

Caps
A set percentage amount by which an adjustable rate mortgage may adjust each adjustment period. For adjustable loans, caps are usually quoted as two numbers as in 2/6. The first number indicates how much a loan may adjust at each adjustment period while the second number indicates how much a loan may adjust over its lifetime.      [TOP]

• Loans like the 3/1 and 5/1 adjustable which have an initial fixed period are quoted with 3 numbers as in 3/2/6 which would mean that the first adjustment may be as much as 3%, subsequent adjustments are capped at 2% each, and the lifetime cap is 6%.
• Two-Step loans are quoted with a single cap, which is the amount by which the loan may adjust at its single adjustment date.

Chain of Title
: A history of conveyances and encumbrances affecting the title (ownership) of real property.

Closing Costs
Fees paid by the borrower when property is purchased or refinanced. These typically include a loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, deed recording fee, and credit report charges. PMI costs are also excluded from this figure. Title insurance fees are usually in the range of 25-30cents per $1,000 borrowed. An N/A in the Closing Costs category means that the information was not available from the lender or, in the case of multiple-state lenders, differed materially from state to state.

Commitment Confirmation
Written notification provided to the Correspondent by Cypress Mortgage evidencing Cypress Mortgage's commitment to purchase the Mortgage Loans specified in said notice in accordance with Applicable Requirements and the provision of the Manual and confirming the respective Rate Locks applicable thereto.

Common Bucket
Underwritten to the stricter of Fannie Mae/Freddie Mac guidelines that enable the loans to be freely moved from one agency's pool to the other.     [TOP]

Condominium
A form of ownership of real property. The purchaser receives title to a particular unit and a proportionate interest in certain common areas. The purchaser may also receive an exclusive right to use certain areas (for example, parking and storage). A condominium is generally defined as a separately owned space bounded by the interior surfaces of the perimeter walls, floors and ceilings. Title to the common areas is in terms of percentages and refers to the entire project minus the separately owned units.

Conforming Loan
A mortgage loan for $252,000 or lower.

Construction Loan
A short term loan for funding the cost of construction. The lender advances funds to the builder as the work progresses.

Contract Documents
Correspondent Agreement, the Manual, Commitment Confirmations, Approval Letters and any and all other documents, instruments and materials required by Cypress Mortgage in connection within therewith, and any and all attachments and exhibits to any and all of the foregoing, and any and all amendments thereof.

Conventional Loan
A mortgage neither insured by the FHA nor guaranteed by the VA.      [TOP]

Conventional Mortgage
: A mortgage securing a loan made by investors without government underwrting - that is, not FHA insured or VA guaranteed.

Conversion
The right of a borrower to convert an adjustable or balloon loan into a fixed loan. The possible options are as follows:Pre-payment penalty
The penalty paid by the mortgagor to discharge a fixed rate mortgage prior to maturity. The cost is usually the lower of three months interest or the interest differential.

Convey or Conveyance
: Process of transferring ownership of a property from one person to another.

Co-op Lease
The lease with respect to a dwelling unit occupied by the Mortgagor and relating to the stock allocated to the dwelling unit.

Co-op Loan
A mortgage loan secured by the pledge of stock allocated to a dwelling unit in a residential cooperative housing corporation and a collateral assignment of the related Co-op Lease.      [TOP]

Cosignor or Guarantor
A person who formally undertakes to discharge the duties of the borrower in the event of the borrower's default.

Courier Fee
: Charges for Federal Express or a runner.

Credit Rating
Borrowers are rated by lenders according to the borrower's credit-worthiness or risk profile. Credit ratings are expressed as letter grades such as A-, B, or C+. These ratings are based on various factors such as a borrower's payment history, foreclosures, bankruptcies and charge-offs. There is no exact science to rating a borrower's credit, and different lenders may assign different grades to the same borrower.

Credit Report
A report to a prospective lender on the credit standing of a prospective borrower. Used to help determine creditworthiness. Information regarding late payments, defaults, or bankruptcies will appear here.

Credit Report Fee
: Assessed by the lender for a required credit report from a cerdit bureau.      [TOP]

-D-

Deed
A legal document which affects the transfer of ownership of real estate from the seller to the buyer. A document which, when properly excised and delivered, conveys (transfers) title (ownership) of real property.

Default
The failure to make payments on a loan.

Disclosure
: To make known or public. When dealing in real property, all disclosures should be made in writing.

Discount Points
: A negotiable fee paid to the lender to secure financing for the buyer. Discount points are up-front interest charges to reduce the interest rate over the life, or a portion, of the loan's term. One discount point equals one percent of the loan amount, i.e. 3 discount points on a $100,000 loan would be $3,000.

Down Payment
Money paid by a buyer from his own funds, as opposed to that portion of the purchase price which is financed. Equity
In real estate, the difference between the fair market value of the property and any mortgages or loans secured by the property     [TOP]

-E-

Earnest Money
: Money deposited by a buyer to indicate and evidence good faith.

Effective Date of Loan Transfer
The date on which the mortgage payment is first due to the transferee servicer (Cypress Mortgage) pursuant to the assignment, sale or transfer of the servicing of the mortgage loan.

For loans purchased by Cypress Mortgage on and after the first day of one month through the last day of the same month, the effective date of the loan transfer shall be the first day of the following month.

Encumbrance
: Anything that affects or limits ownership of real propertry - such as, mortages, liens, easements, or restrictions of any kind.

Equity
The difference between the current market value of a property and the principal balance of all outstanding loans.

Escrow Fee
: Charged by the title company to service the transaction and to escrow (hold and disburse) money and documents. Usually split between buyer and seller.      [TOP]

Escrow
: The deposit of documents and funds with instructions to a neutral third party to carry out the provisions of an agreement or contract.

• Escrow for repairs: the practice of delivering all required money and documents to a neutral third party to hold until Cypress Mortgage, the Correspondent and the lender have fulfilled all of the conditions of the agreement.
• Closing and escrow: the escrow agent prepares documents, pays off existing loans, requests title insurance and divides tax and insurance payments between Cypress Mortgage and Correspondent.
• Mortgage escrow account: funds included in the monthly real estate loan payment to accumulate the amounts necessary for the future payment of property taxes, insurance premiums and other items.

Escrow Payments
The amounts constituting ground rents, taxes, assessments, water rates, sewer rates, municipal charges, mortgage insurance premiums and other payments required to be escrowed by the mortgagor with the mortgagee pursuant to the terms of any documents included in a Mortgage Loan File or the program documents.

Exclusive Right to Sell Listing
: A written agreement between owner and agent giving the agent the right to sell a property and collect a fee for a set term.

-F-

Fair Market Value
: The price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure.

Fannie Mae
Federal National Mortgage Association - A federally chartered corporation that purchases conventional and government guaranteed real estate loans. The stock of this semi-public corporation is traded on the New York Stock Exchange. Popularly known as Fannie Mae.     [TOP]

FHA
Federal Housing Administration. Its main activity is to insure residential real estate loans made by private lenders. It sets standards for construction and underwriting. FHA neither lends money, nor plans or constructs housing.

FHA Loan
A government-backed mortgage loan supported by the US FHA and the Department of Housing and Urban Development (HUD). A loan offered and insured by the Federal Housing Administration. It is a fixed rate home loan for the purchase of an existing single-family dwelling that is a primary residence not classified as a planned unit development (PUD) or condominium by the Department of Housing and Urban Development (HUD).

Finance Charge
The total dollar amount your loan will cost you. It includes all interest payments for the life of the loan, any interest paid at closing, your origination fee and any other charges paid to the lender and/or broker. Appraisal, credit report and title search fees are not included in the finance charge calculation.

Final Delivery Date (AOT)
Final date for delivery of all AOT loans as specified on the Delivery Schedule.

Final Purchase Date (AOT)
Final date for all AOT loans to be in purchasable form (meet all of Cypress Mortgage's delivery guidelines for purchase) as specified on the Delivery Schedule.      [TOP]

Fixed Rate Loan
A home loan with an interest rate that stays the same during the term of the loan.

Fixed-Rate Mortgage
A mortgage where the interest rate does not change for the life of the loan.

Float
Between the time of application and closing, a borrower may choose to bet on interest rates decreasing by electing to float. Floating is essentially choosing not to lock the interest rate. Since it is the borrower's responsibility to lock his or her rate before (or at) closing, choosing to float is considered risky and may result in a higher interest rate. Request information from your lender regarding lock procedures.

Foreclosure
A legal procedure in which real estate is sold by the lender to pay a defaulting borrower's debt . The procedure pursuant to which a lienholder acquires title to a Mortgaged Property in a foreclosure sale, or pursuant to any other comparable procedure allowed under Applicable Requirements when a loan is in default, including, to the extent applicable, a deed in lieu of foreclosure and, in connection with a Co-op Loan, foreclosure on the stock allocated to a dwelling unit in a residential cooperative housing corporation, in which foreclosure is accomplished by a sale in accordance with the provisions of Article 9 of the Uniform Commercial Code and the security agreement relating to such stock.      [TOP]

Freddie Mac
Federal Home Loan Mortgage Corporation - A private corporation authorized by federal law to provide secondary mortgage market support for conventional real estate loans. Popularly known as Freddie Mac.

Funding Date
With respect to each mortgage loan, the date when mortgage loan proceeds are disbursed to, or on behalf of, the mortgagor, so that the interest accrual begins on the mortgage loan.

-G-

Gift Income
Money received on a regular basis as a gift, not compensation for employment or distributions under the terms of a trust or estate.

GNMA
The Government National Mortgage Association, or any successor thereto.

Good Delivery
A term indicating that a transaction has met all relevant guidelines, such as deadlines for delivery of the loan and the quality of the collateral.

Good Faith Estimate
An estimate of charges which a borrower is likely to incur in connection with a loan closing.      [TOP]

Gross Monthly Income
The total amount the borrower earns per month, not counting any taxes or expenses. Often used in calculations to determine whether a borrower qualifies for a particular loan.

-HI-

Hazard Insurance
A form of insurance in which the insurance company protects the insured from certain losses, such as fire, vandalism, storms and certain other natural causes.

High Ratio Mortgage
A maximum mortgage available under a given program.

Housing Ratio
The total monthly mortgage payment including property taxes, insurance and mortgage insurance expressed as a percentage of monthly gross income.  The ratio of the monthly housing payment to total gross monthly income. Also called Payment-to-Income Ratio or Front-End Ratio.

HUD
Department of Housing and Urban Development-It is responsible for the implementation and administration of government housing and urban development programs. The broad range of programs includes community planning and development, housing production and home loans (FHA), equal opportunity in housing, research and technology.     [TOP]

Improvements
All the buildings, structures and improvements of every kind and description now or hereafter erected or placed on the real property that is part of the Mortgaged Property, and all facilities, fixtures, machinery, apparatus, appliances, installations and equipment, including all building materials to be incorporated into such buildings, all electrical equipment necessary for the operation of such buildings, and heating, air conditioning and plumbing equipment now or hereafter attached to, located in or used in connection with those buildings, structures and other improvements.     [TOP]

Index
A published interest rate not controlled by the lender to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. The index and the interest rate linked to it may increase or decrease.Liabilities. Debts
What a person owes, i.e., credit card, loans, mortgages.

• Symbol	Description
  1YTB	One Year Treasury Bill Yield
  3YTB	Three Year Treasury Note Yield
  5YTB	Five Year Treasury Note Yield
  10YTB	Ten Year Treasury Bond Yield
  30YTB	Thirty Year Treasury Bond Yield
  6mTB	Six Month Treasury Bill Yield
  6mCD	Six Month CD Rate
  6mLIB	Six Month LIBOR
  1LIB	One Year LIBOR
  11Di	11th District Cost-of-Funds Rate
  Prim	Prime Interest Rate

  All index values include an index name plus a margin as in "1TYB+2.75" which means a 2.75% margin above the One Year Treasury Bill Yield.

Initial Escrow Account Disclosure Statement
The statement required by Applicable Requirements to be submitted to a Mortgagor after a servicer has established an escrow account in connection with a Mortgagor Loan to such Mortgagor.

Insurer
Any primary mortgage insurer or provider of hazard insurance, flood insurance, Title or other insurance with respect to a loan or mortgaged property.

Interest Rate
The percentage of an amount of money which is paid for its use for a specified time.

Investment Property
A 1- to 4-unit property not occupied by the borrower. This definition is used whether or not the property produces revenue. Loans to corporations and general partnerships are considered secured by investment property. Also known as non-owner-occupied property.      [TOP]

-JKL-

Jumbo Loan
A loan above $252,000. These limits are set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

Knowledge
Whenever any representation, warranty or other statement contained in this Agreement, the Manual or any other Contract Document is qualified by reference to "the Correspondent's knowledge", " known to the Correspondent," or a similar phrase, such qualified reference shall be deemed to include knowledge of facts or conditions of which the Correspondent (including any of its directors, officers, agents, and employees) either is actually aware or should have been aware under the circumstances with the exercise of reasonable care, due diligence, and competence in discharging the Correspondent's duties under the Contract Documents. All matters of public record and all matters contained or disclosed in any Mortgage Loan Document shall be deemed to be known by the Correspondent. Any representation or warranty that is inaccurate or incomplete in any material respect is presumed to be made with the knowledge of the Correspondent, unless the Correspondent demonstrates otherwise. For purposes of this definition, "due diligence" means that care which the Correspondent would exercise in obtaining and verifying information for a loan in which the Correspondent would be entirely dependent on the property securing the loan and on the borrower's creditworthiness as security to protect the Correspondent's investment. For purposes of indemnification or repurchase obligations under the Contract Documents, any limitation or qualification as to knowledge set forth in any representation or warranty shall not prevent a recovery by Cypress Mortgage for breach of such representation or warranty.
 

Last Update
The Last Update column on Mortgage Rate Watch tables tells you when the information was provided by the lender to Mortgage Rate Watch. Mortgage Rate Watch always places new listings at the top of each table so that you, the borrower, may have immediate access to the most timely information. Times provided are all Pacific Standard Time, or, are reflective of the area where the lenders are located.     [TOP]

Lender
The bank, mortgage company, or mortgage broker offering the loan. Many institutions only "originate" loans and then resell the obligation to third parties.

Life of Loan Cap
The maximum interest rate that can be charged during the life of the loan. Also called Lifetime Cap. This value is often expressed as an increment above the initial loan rate. For example, an adjustable rate loan with an initial rate of 7.25% and a 6% lifetime cap will never adjust above a rate of 13.25% (7.25+6.0).

Lender
The bank, mortgage company, or mortgage broker offering the loan. Many institutions only "originate" loans and then resell the obligation to third parties.

Lifetime Cap
The amount, in percentage points, by which the highest possible rate in effect during the term of an adjustable rate loan may exceed the initial rate.

Loan Organization Fee
: Normally 1% of the loan amount, and charged by the lender to the buyer.    [TOP]

Loan-To-Value Ratio
The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. A LTV ratio of 90 means that a borrower is borrowing 90% of the value of the property and paying 10% as a down payment. For purchases, the value of the property is assumed to be the purchase price, for refinances the value is determined by an appraisal.

Lock noun
The period, expressed in days, during which a lender will guarantee a rate. Some lenders will lock rates at the time of application while others will allow the borrower to lock the rate after the application is taken. Request information from your lender regarding lock procedures.

Lock verb
The act of committing to a mortgage rate. This action, taken by a borrower some time between the application and the closing dates, is sometimes accompanied by a payment by the borrower to the lender. Opposite of float

-M-

Manufactured Home
A unit of manufactured housing, including all accessories thereto, securing the indebtedness of the Mortgagor under the related Mortgage Note evidencing a Manufactured Home Loan.     [TOP]

Manufactured Home Loan
A loan that is secured by a mortgage or deed of trust on real estate on which the related Manufactured Home is considered or classified as part of the real estate under the laws of the jurisdiction in which it is located.

Margin
The amount a lender adds to the quoted index rate for an adjustable rate loan to determine the new interest rate.

Mechanic's Lien
A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land. The lien attaches to the land as well as the improvements.

Methods of Delivery (Lines of Business)
Different methods Correspondent may use to deliver purchasable loans to Cypress Mortgage, which include the standard loan by loan or negotiated transactions such as AOT, Co-Issue/Quarterly transfer, mandatory delivery, six month forward stand-by commitments and Bulk delivery.

Minimum Credit
This refers to the minimum credit rating a borrower must have in order to qualify for the listed loan.     [TOP]

Modular Home (also referred to as manufactured home)
A unit of manufactured housing, including all accessions thereto, securing the indebtedness of the mortgagor under the related note evidencing a manufactured home.

Monthly Housing Expense
Total principal, interest, taxes, and insurance paid by the borrower on a monthly basis. Used with gross income to determine affordability.

Mortgage
: A legal document that provides security for repayment of a promissory note.

Mortgagee
The lender.

Mortgagee's Title Policy
: Required by lender to ensure that lender has a valid lien. It does not protect the buyer. Also required for second mortgages.     [TOP]

Mortgage Instrument
Any deed of trust, security deed, mortgage or any other instrument that constitutes a first-lien on the improved mortgaged property securing payment by a mortgagor of a mortgage note.

Mortgage Insurance
(Government or Private) Insures a home loan lender against loss caused by a borrower's default. This insurance may cover a percentage of or virtually the whole loan amount depending on the type of mortgage insurance that's obtained.

Mortgage Loan Documents
The Mortgage, Mortgage Note, Assignments of Mortgage, any guarantees, if applicable, together with any and all other documents, instruments and materials issued, executed and/or delivered in connection with the loan.

Mortgage Loan File
The contents of the file delivered to Cypress Mortgage by Correspondent for each mortgage loan sold (or to be sold by Correspondent to Cypress Mortgage.) The Mortgage Loan File will contain the documents required by the Manual and any additional documents required to be added to the Mortgage Loan File pursuant to any other Contract Document, an Applicable Requirement, or upon Cypress Mortgage's reasonable request, any alternative document.

Mortgage Note
The note, deed of trust note, security deed note or other form of promissory note showing evidence of indebtedness of a Mortgagor under a mortgage loan, and executed by the Mortgagor and secured by a Security Instrument.    [TOP]

Mortgaged Property
Any real property that is encumbered by a Security Instrument, including all applicable Improvements, additions, alterations and replacements to such Improvements. The property may consist of a 1- to 4-family residence and, to the extent the context will permit or require, a Manufactured Home or a home in a residential cooperative housing corporation.

Mortgagor
The borrower.

-NO-

Net Effective Income
Gross income less federal income tax.

Net Worth
Assets minus liabilities

Nonconforming Loans
A mortgage loan with an amount that exceeds Fannie Mae/Freddie Mac loan limits.      [TOP]

Origination Fee
The fee imposed by a lender to cover certain processing expenses in connection with making a loan. Usually a percentage of the amount loaned. Please refer to the definition to see how this fee is reflected on the Mortgage Rate Watch tables.

Originator
With respect to any Mortgage Loan, any Person that: (i) took the Mortgagor's Mortgage Loan Application, (ii) processed the Mortgagor's Mortgage Loan Application; (iii) closed (or assisted in the closing of) the Mortgage Loan; and/or (iv) funded the Mortgage Loan.

Owner's Title Policy
: Insures the buyer against loss due to any defect in the title not excepted to or excluded from the policy.

-P-

Person
An individual, corporation, financial institution, partnership, joint venture, trust or unincorporated organization or a federal, state, city, municipal or foreign government or an agency or political subdivision thereof.

Phone / E-Mail
The Mortgage Rate Watch Tables usually list the telephone numbers or e-mail address to directly access the loan department of each lender.      [TOP]

Points
Prepaid interest paid by the borrower to the lender at closing. A point is equal to 1 percent of the loan amount (e.g. 1.5 points on a $100,000 mortgage would cost the borrower $1,500). Generally, by paying more points at closing, the borrower reduces the interest rate of his loan and thus future monthly payments.

• Please Note: Lenders who charge Origination Fees as a percentage of loan amount are requested to reflect these fees in the Points column of the Mortgage Rate Watch tables.

Prepaids
Expenses such as taxes, insurance and assessments which are paid in advance of their due date and which must be paid by the buyer on a prorated basis at closing.

Prepayment
The ability to pay off the remaining balance of a loan.

Prepayment Penalty
Lenders who impose prepayment penalties will charge borrowers a fee if they wish to repay part or all of their loan in advance of the regular schedule.

Principal
The amount of debt, not counting interest, left on a loan.     [TOP]

Private Mortgage Insurance (PMI)
Paid by a borrower to protect the lender in case of default. PMI is typically charged to the borrower when the Loan-to-Value Ratio is greater than 80%.

Program Plus Options (Special Enhancements)
Options such as government lending, delegated underwriting and Third Party origination are offered to complement the standard Correspondent Lending Policy. Approval is required to participate in each Program Plus Option.

PUD
Planned Unit Development-A real estate project in which each owner has title to a residential lot and building unit and to nonexclusive easement over common areas of the project. The owner may have exclusive easements over some portion of the common area.

Purchasable Loan Files
Files that meet all of the underwriting and legal criteria, satisfy the original terms of the Correspondent and contain all of the required loan documentation, including the original note that has been properly endorsed to Cypress Mortgage.

Purchase
The payment by Cypress Mortgage of the Purchase Price of a loan on the Purchase Date to Correspondent or Correspondent's designee or any other party legally entitled to receive the purchase price (including Correspondent's warehouse lender) in accordance with the terms of the Manual and the other Contract Documents.

Purchase Agreement
A written agreement between a buyer and seller of real property, setting forth the price and terms of sale.     [TOP]

Purchase Date
With respect to any loan, the date of the Purchase of said loan by Cypress Mortgage.

Purchase Price
The dollar amount agreed to be paid by Cypress Mortgage to the Correspondent for a loan in accordance with the pricing terms set forth in the Manual, including Servicing Release Premium applicable thereto.      [TOP]

-QRS-

Qualifying Ratio
The ratio of the borrower's fixed monthly expenses to his gross monthly income. Ratios are expressed as two numbers like 28/36 where 28 would be the Front-End Ratio and 36 would be the Back-End Ratio.

• The Front-End Ratio is the percentage of a borrower's gross monthly income (before income taxes) that would cover the cost of PITI (Mortgage Principal Payment + Mortgage Interest Payment + Property Taxes + Homeowners Insurance). In the case of a 28% Front-End Ratio a borrower could qualify if the proposed monthly PITI payments were 28% or less than the borrower's gross monthly income.
• The Back-End Ratio is the percentage of a borrower's gross monthly income that would cover the cost of PITI plus any other monthly debt payments like car or personal loans and credit card debt.
• Please note that qualifying ratios are only a rough guideline in determining a potential borrower's credit-worthiness. Many factors such as excellent or poor credit history, amount of down payment, and size of loan will influence the decision to approve or disapprove a particular loan. Mortgage Rate Watch urges all borrowers to discuss their particular situation with a qualified lender regardless of the outcome of any self-qualification exercise.

Rate Lock
The act of the Correspondent's obtaining a confirmed interest rate and loan purchase price from Cypress Mortgage for a loan in accordance with the procedures set forth in the Manual.
 

Recording Fee
: Charged by the County Clerk to record documents in the public records. Charges are based on the number of pages recorded.

"Register" or "Registration"
The act or process of registering a loan with Cypress Mortgage in accordance with the procedures set forth in the Manual. A loan that has been Registered may be in a float status or a Rate-Locked status, as provided in the Manual.      [TOP]

Repurchase Price
An amount equal to: (i) the greater of the Purchase Price for the loan paid by Cypress Mortgage (including any amount in excess of par paid by Cypress Mortgage) or the outstanding principal balance of the Mortgage Note as of the Purchase Date; less (ii) the aggregate amount of reductions of the principal balance of the Mortgage Note received by Cypress Mortgage as of the date of repurchase; plus (iii) any and all interest payable on the outstanding principal balance of the Mortgage Note as of the date of repurchase; plus (iv) any and all costs and expenses, including any advances for escrows accounts, costs of foreclosure, reasonable attorneys' fees, and costs (if any) associated with purchasing the loan out of a pool of loans, incurred by Cypress Mortgage in connection with the loan, the Mortgaged Property, and/or the Mortgagor.      [TOP]

RESPA
Real Estate Settlement Procedures Act - A federal law that requires lenders to provide home loan borrowers with an estimate of settlement costs as well as the HUD booklet on settlement costs within three days of receiving an application.
 

Seasoned
Scheduled payments on a loan have been made regularly for one year or longer.
 

Security Instrument
Any deed of trust, security deed, mortgage or any other instrument that constitutes a lien on the Mortgaged Property securing payment by a Mortgagor of a Mortgage Note and any modifications thereto, including, to the extent that the context shall permit or require, the security agreement creating a security interest in favor to Correspondent in the stock allocated to a dwelling unit in a residential cooperative housing corporation and pledged to secure a Co-op Loan, and the related Co-op Lease.
 

Seller Agency
: See TREC Disclosure Form "If the Broker Represents the Owner"

Septic Well Inspection
: The septic system must have a certificate by the city or county Health Department.      [TOP]

Servicing Release Premium
The amount to be paid to the Correspondent for the Servicing Rights associated with a loan as specified by Cypress Mortgage in writing.

Servicing Rights
With respect to a loan, the right to administer, collect the payments for the reduction of principal and application of interest, pay taxes and insurance, remit collected payments, provide foreclosure services, provide full escrow administration, and the right to receive any applicable servicing fee, float benefit and ancillary income arising from or connected to the loan. Except as may be otherwise provided in the Manual, Servicing Rights shall also include the right to maintain any related custodial or escrow accounts.

Settlement Costs
See Closing Costs.

Subordinate Financing
A secured debt that is inferior to the secured interest of another in the same property. Subordination may apply not only to security instruments, but also to leases, real estate rights and any other types of debt instruments.     [TOP]

Survey
: Survey of property required by lender; shows lot size, easements, any encroachments, locations of improvements, etc.

-T-

Tax Certificate
: Charged by taxing authorities to present certification showing that the current year's taxes were paid.

Tax Lien
A claim against real estate for the amount of its unpaid taxes.

Tax Service Fee
: Required by the lender for collection and disbursement of tax escrow by a servicing company. Termite Inspection: Required by the lender to show property free and clear of active termites.

Term
The period of time for which a mortgage contract is written at a particular interest rate    [TOP]

Time Is Of The Essence
: Demands punctual performance in a binding contract.

Title Insurance Policy
A contract by which the insurer agrees to pay the insured a specific amount for any loss caused by specified defects of title to real estate. The insured must have an insurable interest, whether as purchaser, mortgagee or otherwise.
 

Title Policy
: Insurance policy on the ownership of real property against defects in title.

Title
The evidence of the right to or ownership in property. In the case of real estate, the documentary evidence of ownership is the title deed that specifies to whom the subject property is vested. Title may be acquired through purchase, inheritance, devise, gift or foreclosure of a real estate loan.      [TOP]

Title Search
An examination of city, town, or county records to determine the legal ownership of real estate.

Total Debt Service Ratio
The total monthly mortgage payment including property taxes, insurance, mortgage insurance, and all other debts expressed as a percentage of gross monthly income.

 

Option	Description
Not Available	Borrower May Not Convert This Loan.
Must Requalify	Borrower May Convert But Must Requalify. Conversion Fee Applies
Auto-Qualify	Borrower May Convert And Is Automatically Qualified. Conversion Fee Applies

-UV-

Underwriting Fee
: Charge by a lender to underwrite the loan.

VA
The Veteran's Administration.
 

VA Funding Fee
: Veteran's Administration fee for originating a VA loan.      [TOP]

VA Loan
A government-backed mortgage loan supported by the US Veterans Administration.

Variable Rate Mortgage
See Adjustable Rate Mortgage.

• Sub-Prime or Alternate Real Estate Financing is designed to help consumers with less than perfect credit to obtain home loans, or, refinance an existing loan.
• Lenders refer to perfect credit as "A paper." Alternate Real Estate lending is referred to as "sub prime paper." This means that the borrower has less than perfect credit. This is caused by late payments and other marks against your credit.
• Sub prime paper is rated similar to school grades as "A-," "B +," " B," "B-" "C+," "C," "C-," etc. So, regardless of your credit situation, you may still be able to secure a home loan, or, to refinance an existing loan.
• All the major credit bureaus use a credit scoring system based on a computer program where you lose points for high-credit usage, late payments, bankruptcies, repossessions, high inquiries on your credit report, etc.

Warehouse Fee
: Charged by the lender to hold the loan locally before selling it in the secondary mortgage to an investor.     [TOP]

Warehouse Lender
Any Person that lends moneys to the Correspondent for the funding of loans, whose security interest in a loan has been disclosed to Cypress Mortgage by means of a properly executed Bailee Agreement or a bailee letter delivered to Cypress Mortgage thereunder.
 

Zoning
: Act of city authorities specifying type of use for which property may be used.