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A A  Mortgage Corp.
is located in downtown Manchester, MO,
one block west of
Woods Mill Rd.

14346 Manchester Rd
in West County.

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Call option
A contract granting the right, but not the obligation, to purchase a security at a specified strike price on a particular date.

Call provision
In a mortgage or deed of trust, a condition that gives the right to demand or "call in" the balance of the obligation in the event of a breach of specified terms or conditions. In bonds, the issuerís right to redeem the bond before maturity.

Cancellation Clause
In a lease or other contract, a provision detailing conditions under which each party may terminate the agreement.

The net worth of a business represented by the amount that its assets exceed liabilities. Money invested to create income.

Capital Asset
An asset of a permanent or fixed nature to be used in a business or trade and not sold.

Capital Expenditure
The cost of a capital asset or a property improvement made to add value to or extend the useful life of an existing capital asset.

Capital Gain or Loss
The gain or loss incurred from the sale or disposition of a capital asset.

Capital Improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

Capital Market
The financial market for buying and selling long-term investments (those with maturities of greater than one year), such as mortgages, Treasury bonds, and certificates of deposit.

The process of converting into present value a series of anticipated future installments of net income by discounting them into a present worth using a specific desired rate of earnings.

Capitalization Rate
The rate of return on net operating income considered acceptable for an investor and used to determine the capitalized value. This rate should provide a return on, as well as a return of, capital.

Capitalized Value
The estimated market value of business assets in terms of the present value of anticipated earnings.

Caps (Interest)
Consumer safeguards on an adjustable-rate mortgage which limit the amount the interest rate may change per year and/or over the life of the loan.

Caps (Payment)
Consumer safeguards on an adjustable-rate mortgage which limit the amount monthly payments may change.

Carry-back Financing
An agreement in which the seller takes back a note for part of the purchase price secured by a junior mortgage, wrap-around mortgage, or contract for deed.

Carrying Charges
The charges or costs incurred for holding property when it is idle, non-productive, or in interim use, including the opportunity cost of nonproductive use of the property.

Cash Basis of Accounting
An accounting method under which income is reported when actually received and expenses are deducted when paid.

Cash Equivalent Value
A method of calculating the appraised value of a property that considers sales and financing concessions when evaluating comparable properties. There is no standard in the appraisal industry for measuring cash equivalent value, but investors and mortgage insurers sometimes insist that cash equivalency be incorporated in appraised values.

Cash Flow (After Taxes)
Cash received less cash paid out, including income taxes paid.

Cash Flow (Before Taxes)
Cash received less cash paid out, before any consideration for income taxes.

Cash Market
A market where mortgages and/or mortgage-backed securities are bought and sold for immediate delivery and cash payment. Also called spot market.

Cash-on-Cash Return
The rate of return on an investment as measured by cash returned to the investor, based on the investorís cash investment and without regard to income tax savings or the use of borrowed funds.

Cash Out Refinancing
When the principal amount of a new mortgage involved in refinancing is greater than the principal amount outstanding of the existing mortgage being refinanced, and all or a portion of the equity is converted to cash.

Cash Settlement
The process by which a dollar adjustment rather than a physical instrument is used to satisfy the delivery requirement of a given contract at expiration.

Casualty or Theft Loss
Losses on property arising from fire, storm, theft, or similar sudden and unexpected occurrences.

CBOT (Chicago Board of Trade)
The exchange where futures and options contracts are traded. Residential mortgage bankers may use futures and options to hedge their inventories of mortgages.

CBOE (Chicago Board Options Exchange)
The largest and most active organized options marketplace.

Certificate of Claim
A contingent promise to reimburse an insured mortgagee for certain costs incurred during foreclosure of an insured mortgage, provided the proceeds from the sale of the property are sufficient to cover the lenderís claim.

Certificate of Completion
A document issued by an architect or engineer stating that construction is completed in accordance with the terms, conditions, approved plans, and specifications.

Certificate of Deposit (CD)
Certificates issued by financial institutions with a stated return or interest rate, and with a set maturity. The bank pays the holder in due course at maturity.

Certificate of Eligibility
A document issued by the Veteranís Administration which verifies a veteranís eligibility for a VA mortgage guarantee.

Certificate of Occupancy
Written authorization given by a local municipality that allows a newly completed or substantially renovated structure to be inhabited.

Certificate of Reasonable Value (CRV)
A document issued by the Veteranís Administration which establishes a maximum value and loan amount for a VA guaranteed mortgage.

Certificate of Sale
An affidavit issued the buyer of real property at a judicial or tax sale which guarantees the deed of the parcel purchased, pending court confirmation.

Certificate of Title
A confirmation written by a title attorney or company stating that the title to a parcel of real property is legally vested in the present owner.

Chain of Title
A chronology of documents which have transferred title to a parcel of real property from the original owner to the present owner.

Change Order
A document evidencing a change in the original plan of construction by a building owner or general contractor.

Chart of Accounts
For accounting purposes, a numerical designation assigned to each asset, liability, and capital account of a business.

Personal property.

Chattel Mortgage
An agreement between a secured party and a debtor creating a security interest in personal property.

Clear Title
Unencumbered title to real property, free of liens or defects. Also, "free and clear."

Clearing Account
A bank account used by a mortgage servicer for temporary, short-term deposit of mortgage payments collected for transmittal to investors or for deposit in escrow accounts.

Clearing House
A third-party participant in settling security trades by acting as a buyer to each seller and a seller to each buyer, ensuring performance.

Closed-End Mortgage
A mortgage under which the mortgagor is prohibited from borrowing additional funds under the same mortgage.

Closed Period
The interval of time under a mortgage during which the loan cannot be prepaid.

In real estate, the delivery of a deed, financial adjustments, the signing of notes, and the disbursement of funds necessary to consummate a sale of loan transaction.

Closing Costs
Fees paid to effect the closing of a mortgage, such as an origination fee, discount points, title insurance fees, survey fees, and attorneyís fees.

Closing Statement
A financial disclosure giving an account of all funds received and expected at closing, including escrow deposits for taxes, hazard insurance, and mortgage insurance. All FHA, VA, and most conventionally financed loans us e a uniform settlement statement called the "HUD-1."

Cloud On Title
Any outstanding claim or encumbrance which, if valid, would affect or impair title. It can be removed by a quit-claim deed, release, or court action.

Cluster Zoning
A zoning procedure where there is a prescribed amount of residential or unit density for an entire area. The developer is permitted to concentrate or disperse the density within the area in accordance with flexible site-planning criteria. This differs from a traditional zoning plan that dictates density on a lot-by-lot basis, prescribing the same maximum density for all single structure lots within the zoning district.

Certified Mortgage Banker. A professional designation awarded by the Mortgage Bankers Association of America (MBA) to those in the industry who have demonstrated superior knowledge and skills in the field of real estate finance. Candidates must be employed by MBA member firms and meet various educational, experience, and examination requirements.

A type of insurance where the insured agrees to carry a specified proportion of the policy amount to the actual value of the property insured at the time of loss. Thus, a portion of the property value is self insured. In federal multi-family housing programs, it refers to a sharing of the risk of mortgage default between a mortgage firm and the federal government.

Coinsured Lender
Under a HUD program, an eligible multi-family lender who is permitted to conduct the processing of multi-family projects from initial application through loan closing.

Property pledged as security for a debt, for example, mortgaged real estate.

Collateralized Mortgage Obligation (CMO)
A multiple class mortgage-backed security that is normally treated as a debt obligation of the issuer for federal tax and financial accounting purposes. CMO bond classes (or tranches) are characterized by differing maturities calculated to match various investor preferences.

The servicing procedure followed to bring a delinquent mortgage current and to file the required notices to begin foreclosure when necessary.

Collection Report
The form used by a mortgage servicer in reporting collection from mortgagors, including payments in full, repayment of advances, tax and insurance funds for foreclosed mortgages, and any other items not remitted as regular installment payments.

Color of Title
An act that indicates good title, but in fact contains some defect.

Commencement of Term
In retail leasing, where a lease becomes effective when signed but rent payments do not begin until occupancy or opening of business.

Commercial Paper
Short-term, negotiable, unsecured notes of highly reputable business firms.

Combining funds (such as escrows) into one account that should be accounted for and deposited into separate accounts.

An agentís compensation for negotiating a real estate or loan transaction, often expressed as a percentage of the selling price.

An agreement, often in writing, between a lender and a borrower, to loan money at a future date, subject to specified conditions. In secondary marketing, an agreement, in writing, between a lender and an investor to buy and sell mortgages under specific terms.

Commitment (Builder)
An agreement by a lender to provide long-term financing to a builder, secured by an existing proposed building. The commitment usually provides for the substitution of a to-be-approved owner/occupant at a higher loan amount than committed to the builder.

Commitment Fee
Any fee paid by a potential borrower to a potential lender for the lenderís promise to loan money at a specified date in the future. The lender may or may not expect to fund the commitment. In secondary marketing, a fee paid by the loan seller to the investor in return for the investorís promise to purchase a loan or package of loans at a future date.

Common Area
An area owned by the owners or tenants of a complex or subdivision, for the common use of residents.

Community Apartment Project
Multiple ownership of an apartment in which each owner is a tenant-in-common.

Community Association
A group composed of property owners that serves to protect and maintain a neighborhood or commonly owned properties.

Community Development Block Grant (CDBG)
Under title 1 of the Housing and Community Development Act of 1974, eight former categorical grant and loan programs were replaced by a system of unified block grants under which communities of over 50,000 people are entitled to receive funding, while other communities may apply for discretionary funding. Its purpose is to encourage more broadly conceived community development projects and expand housing opportunities for low- and moderate-income persons.

Community Property
In some 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.

A second borrower who signs a mortgage loan with a mortgagor. The co-mortgagorís income, assets and debts are combined with the mortgagorís for underwriting and ratio analysis purposes. The co-mortgagorís name must appear on the FHA certificate of commitment and the mortgage or deed of trust. For full guarantee under the VAís program, the co-mortgagor must be either a spouse or another eligible veteran.

Properties used for comparative purposes in the appraisal process that have similar characteristics to the subject property.

Compensating Balance
A non-interest paying bank deposit maintained by the borrower that induces the bank to make credit available to the borrower on more favorable terms than would otherwise be available.

Completion Bond
A bond furnished by a contractor to guarantee completion of construction.

Compliance Inspection Report
A report given a lender by a designated compliance inspector indicating whether construction or repairs conform to conditions established by prior inspection.

Component Depreciation
A method of depreciation involving the separation of the cost of various elements of a building (such as roofing, plumbing, and mechanical components) to take advantage of the shorter useful lives of such elements, and thereby, increase the depreciation of deductions in the early years of a project.

Component Financing
A method to achieve maximum financing by splitting a real estate parcel into separate fee and leasehold interests, and financing each component separately. Also called split financing.

Compound Interest
Interest computed on both the original principal and accrued interest.

Compound Options
Options on options. The buyer is required to pay a fee for the right to buy an additional option at a later date, at a given strike price.

Computerized Loan Origination System (CLO)
An electronic system that furnishes subscribers with the latest data on available loan programs at a variety of lending institutions. Some CLOs offer mortgage information services and can prequalify buyers, process loan applications, underwrite loans, and even make a commitment of funds.

A discount or other inducement given by a landlord or seller to a prospective tenant or buyer to induce them to sign a lease of purchase property.

The taking of private property for public use under the right of eminent domain with just compensation paid the owner.

Conditional Commitment
An agreement to lend money to a borrower that has yet to be identified, but is still subject to the approval of the lender. During HUD/FHA mortgage insurance processing, it indicates the satisfactory completion of technical processing involving the estimated cost of the project, the "as-is" value of the site, a detailed estimate of operating expenses and taxes, supportable costs, the financial and credit capacity of sponsors, financial requirements, and mortgage amounts.

Conditional Prepayment Rate (CPR)
A monthly prediction of the number of current outstanding mortgages in a pool that will prepay.

Conditional Sales Contract
A contract for the sale of a property in which transfer of title to the buyer is contingent on fulfillment of certain conditions.

Conditions and Restrictions
Limitations on the use of land and resulting penalties for failure to comply. Commonly used by land subdividers on newly plotted areas.

A form of property ownership whereby the purchaser receives title to a unit in a multiunit structure and proportionate interest in common areas.

Condominium Conversion
The process of changing rental units into a condominium form of ownership.

Condominium Declarations
The basic condominium documents that must be registered by conveyance of the first unit sold. The declaration thoroughly describes the entire condominium entity, including each unit and all common areas, and specifies essential elements of ownership that permanently govern its operation. Also known as a master deed.

An entity which issues mortgage-backed securities backed by mortgages which were originated by other lenders.

Confirmation of Sale
Court approval of the sale of property by an administrator, executor, guardian, conservator, or commissioner in a foreclosure sale.

Conforming Mortgage Loan
A mortgage loan which meets all requirements (size, type, and age) to be eligible for purchase or securitization by federal agencies.

Something of value offered and accepted in exchange for a promise, without which a contract is unenforceable.

The percentage of the original loan paid in equal annual payments that provides principal reduction and interest payments over the life of the loan. For example, a $1 million loan with a 10.8 percent constant requires a $108,000 annual payment.

Constant Payment
A periodic payment of a fixed amount that includes interest and principal. As the loan amount reduces, the portion of the payment applied to the principal increases. Standard home mortgages are constant payment loans.

Construction Contract
An agreement between a general contractor and an owner/developer stating the specific duties the general contractor will perform according to blueprints and specifications at a stipulated price and terms of payment.

Construction Costs
All costs incurred in the completion of a construction project, including land, labor, overhead, and builderís profit.

Construction Loan
A short-term, interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as work progresses.

Construction Loan Agreement
A written agreement between a lender and a builder and/or borrower which details the specific terms and conditions of a construction loan, including the schedule of payments.

Construction Loan Draw
A partial disbursement of the construction loan based on the schedule of payments in the loan agreement. Also called takedown.

Constructive Notice
Notice attempted indirectly by newspaper or public record, or similar device, whether received or not, which satisfies the legal requirements for notification.

To bring to completion.


A clause in a contract that requires the completion of a certain act or the occurrence of a certain event before the contract is binding.

Contingency Reserve
A reserve account in which funds are held until certain specified conditions are satisfied.

Contingent Interest
An equity-sharing provision appended to a loan in which the lender receives a percentage of annual gross or net project income exceeding a certain base amount, in addition to fixed interest.

In futures, a standardized agreement obligating two parties to a transaction involving a set amount and grade of a commodity, at a price and time specified by an exchange.

Contract of Sale
A contract between a purchaser and seller of real property to convey title after certain conditions have been met and payments have been made.

Contract Rent
Actual rent as specified in a rental or lease agreement, as opposed to actual market or economic rent.

A person or company who agrees to do work and/or furnish materials for a contracted price. Subcontractors are often hired by the contractor to perform specialized or technical labor.

Conventional Financing
In real estate, mortgage financing which is not insured or guaranteed by a government agency such as HUD/FHA, VA, or the Farmers Home Administration.

Movement of the price of a futures contract toward the price of the underlying cash commodity. As the contract nears expiration, the futures price and the cash price converge.

Convertible Mortgage
A type of adjustable-rate mortgage that may be converted to a fixed-rate mortgage at specified intervals during a predetermined time period. In income property lending, a mortgage in which lender-provided funds convert to equity ownership after a predetermined period of time.

Convertible Standby Commitment
A Fannie Mae mortgage purchase that may be converted to the same yield offered in the most recent Free Market Auction.

The act of transferring title to real property from one party to another.

The document, such as a deed, lease, or mortgage, used to effect a transfer.

Cooling-Off Period
A period of time, provided by law or by contract, during which a party to a contract can legally back out of a contract.

In real estate, a form of multiple ownership in which a corporation or business trust entity holds title to a property, (usually an apartment complex) and grants occupancy rights to shareholder tenants through proprietary leases. Also called a co-op

A business entity owned by a group of owners, called stockholders. A corporation is considered an artificial person under law.

The final step in the appraisal process where the appraiser considers three estimates of value derived from cost, income, and market data approaches. The correlation process weighs the influence of each method in relation to the specific property type and final estimate of value.

A specialized type of mortgage banker whose function is limited to the origination of mortgage loans which are sold to other mortgage bankers or investment bankers.

One who agrees to assume a debt obligation if the principal borrower defaults on mortgage payments. A co-signer assumes only personal liability and has no ownership interest in the property; his or her income and obligations are used in the underwriting process to reinforce the credit of the principal borrower.

Cost Approach to Value
A valuation approach in which the value of a property is determined by computing the replacement value of improvements, depreciation, and the value of the land.

Cost Certification
An itemization of all construction costs and other building and material costs for verification. Generally required in HUD/FHA multifamily insurance programs.

The difference between the yield on an instrument and the cost of funds to finance it.

Cost Overrun
The amount of money required or expended over and above budgeted cost, including such items as labor, interest, materials, and land.

Cost-Plus Contract
A construction contract in which the contract price is equal to the cost of construction plus a profit allowance to the builder, as opposed to a fixed price contract.

Cost-Plus-Fee Agreement
An agreement under which the contractor (in an owner-contractor agreement) or the architect (in an owner-architect agreement) is reimbursed for direct and indirect costs and, in addition, is paid a fee for services. The fee is usually a stated sum or percentage of costs.

A legally enforceable promise or restriction in a mortgage. For example, the borrower may covenant to keep the property in good repair and adequately insured against fire and other casualties. A breach of covenant in a mortgage usually creates a default as defined by the mortgage, and can be the basis for foreclosure.

The percentage of mortgage pipeline that has investor commitments or is hedged.

Credit Life
Declining term life insurance taken out by a borrower as an added source of funds for the repayment of a loan.

Credit Rating
A rating given to a person or company that establishes creditworthiness based upon present financial condition, experience, and past credit history.

Credit Report
A report to a prospective lender on the credit standing of a prospective borrower, used to aid in the determination of creditworthiness.

Cross-Defaulting Clause
A clause in many junior mortgages that say a default in one mortgage also triggers a default in the mortgage in which the clause appears.

Cubage (Cubit Feet)
An appraisal method using the cost approach. The front or width of the building is multiplied by the depth of the building and by the height, figured from the basement floor to the outer surfaces of the walls and roof. The total cubic measurement is then multiplied by a cost per factor to obtain the appraisal figure.

Curable Depreciation
Items of physical deterioration and functional obsolescence that can be repaired or replaced by a prudent property owner.

Current Assets
Assets that can be turned into cash within a year, such as accounts receivable or marketable securities.

Current Market Position
The amount of money a firm would gain or lose if it were to meet loan guarantees and mandatory commitments at current market prices.

Current Ratio
The ratio of current assets to current liabilities.

Current Yield
The ratio of interest to the actual face value of the investment instrument.

Custodial Accounts
Bank accounts for the deposit of funds belonging to others.

Usually a commercial bank which holds for safekeeping mortgages and related documents backing a mortgage-backed security. Custodians may be required to examine and certify documents.

Responsibility for a property, as when the mortgagee turns a foreclosed property over to VA. A specialized VA term, custody may, but does not necessarily, include the legal right to physical possession of the property.

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