An investment banker or firm in the
business of buying and selling
mortgage-backed securities not as an
agent, but as a principal. Unlike
brokers, dealers hold inventories of
An interest-bearing bond issued
against the general credit of a
corporation or government
organization, with no specific pledge
Money loaned at an agreed interest
rate for a fixed term of years;
distinguished from equity capital
which is money invested by owners
(shareholders) for use in business
A ratio of effective annual
net income to annual principal and
interest payments. Also called debt
The proportion of capital
borrowed to the amount of capital
invested out-of-pocket or obtained
through the sale of common stock; also
called leverage ratio.
A borrower’s periodic mortgage
payments comprised of principal plus
interest on the unpaid mortgage
A factor that, when
multiplied by the original loan
amount, yields the annual debt service
payment (principal plus interest)
required to amortize the loan.
Foreclosure and Sale
judicial foreclosure, the court decree
of judgment that establishes the
amount of the mortgage debt and orders
the property sold to satisfy the debt.
The granting of land by the owner for
some public use and its acceptance for
such use by authorized public
A deed given by a mortgagor to a
mortgagee to satisfy a debt and avoid
The transfer of a
legal title from the trustee to the
trustor (the borrower) after the trust
deed is paid in full.
A type of security
instrument in which the borrower
conveys title to real property to a
third party (trustee) to be held in
trust as security for the lender, with
the condition that the trustee shall
reconvey the title upon the payment of
the debt, and, conversely, will sell
the land and pay the debt in the event
of a default by the borrower. See
A condition placed in
a deed limiting or restricting the use
of the real property.
A breach or nonperformance of the
terms of a note or the covenants of a
The occupancy level at
which the effect gross income from an
income-producing property is
insufficient to pay operating expenses
and debt service, thus creating the
risk of default. The ratio is
calculated by dividing the effective
gross income into operating expenses
plus debt service.
A mortgage provision which
allows the mortgagor to reclaim
property that has been foreclosed, if
certain conditions are met.
An encumbrance on a title
that is made a part of the public
record. Some recorded defects are
judgments, mortgages, other liens, or
difference between the balance
outstanding on a loan and proceeds
from the sale of the loan collateral.
A court order to pay the
balance owed on a loan if the proceeds
from the sale of the security are
insufficient to pay off the loan.
mortgage securities, the time elapsed
from receipt of mortgage payments from
borrowers to remittance of
pass-through cash flows to investors.
For Fannie Mae MBSs, it is 54 days;
for GNMA I and II MBSs, 45 days; for
Freddie Mac PCs, it is 75 days; for
conventional pass-throughs, 54 days.
Failure of a borrower to make timely
payments under a loan agreement.
The ratio of number of past
due loans to total number of loans
In mortgage banking, the physical
transfer of loan documents to an
investor or agent in conformance with
The contracted date when the
actual payment of funds and delivery
of mortgage-backed securities occurs.
The calendar month during
which a given contract expires and
delivery can be made; also called
A note or mortgage
that the lender can call due at any
time and without prior notice.
A sum of money given to (1) bind a
sale of real estate, or (2) assure
payment or an advance of funds in the
processing of a loan. Also called
A form used to
acknowledge the acceptance of the
earnest money that binds an offer to
purchase real property.
A decline in value of a building
or other real estate improvement,
resulting from age, physical wear, and
economic or functional obsolescence.
This figure is deducted annually from
person or entity who prepares raw land
for building sites or rehabilitates
A short-term loan advanced
before a construction loan, used by
developers to acquire land and install
basic utilities such as roads, sewers,
and water supply systems.
The process through which
development projects are conceived,
initiated, analyzed, financed,
designed, built, and managed
The rights a landholder
sells to improve a property or enhance
the use of said property.
In a mortgage-backed security, the
difference between the MBS security
rate and the coupon rates of the
underlying mortgages. The issuer
retains the differential to pay for
servicing costs and the guarantee.
Labor and materials costs of
construction, excluding overhead.
A HUD program
that enables an eligible single-family
lender to conduct the processing and
closing of FHA single-family loan
applications without HUD’s prior
Officers Liability Insurance (D &
O Liability Insurance)
that protects both a corporation and
its key employees. The standard D
& O policy usually includes
corporate reimbursement, which covers
expenses insured by the directors and
officers for legal costs and judgments
Actual payment of monies. Used to
describe construction loan draws.
Information relevant to specific
transactions that is required by law.
In loan originations, a discount
refers to an amount withheld from loan
proceeds by a lender. In secondary
market sales, a discount is the amount
by which the sale price of a note is
less than its face value. In both
instances, the purpose of a discount
is to adjust the yield upward, either
in lieu of interest or in addition to
interest. The rate or amount of
discount depends on money market
conditions, the credit of the
borrower, and the rate or terms of the
Amount payable to the
lending institution by the borrower or
seller to increase the lender’s
effective yield. One point is equal to
one percent of the loan.
In central banking, the rate
the Federal Reserve charges to member
banks that borrow money from it.
obtain physical possession of property
by due process of law.
A stockholder’s share of profits of
a corporation. An insurance dividend
is not a true dividend but a return of
premium. Dividends from a savings and
loan association, credit union
passbook account, or certificate are
interest, and are not considered
A mark "stamped"
onto a deed certifying the amount of
transfer tax paid.
When an owner of property
is given certain rights to use
rights a widow has to her husband’s
property at his death. Dower laws are
being changed in many states.
A portion of the sales price paid
a seller by a buyer to close a sales
transaction, with the understanding
that the balance will be paid later.
Also, the difference between the sale
price of real estate and the mortgage
advances of funds according to the
schedule of payments in a construction
loan agreement. Also called advance,
disbursement, payout, progress
payment, or takedown.
clause in a mortgage stating that if
the mortgagor sells, transfers, or in
any way encumbers the property, then
the mortgagee has the right to
implement an acceleration clause
making the balance of the obligation
single structure designed with two
separate housing units.
estimate of the volatility or
sensitivity of the market price of a
bond to changes in interest rates; it
measures the weighted average time
until cash flow repayment.
pressure, or coercion under protest.
Living quarters occupied, or
intended for occupancy, by a