Real Estate Financing Practices
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| annual percentage rate (APR) | The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the truth in lending act.
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| blanket mortgage | A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of debt
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| buydown | A financing technique used to redue the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender to buy down or lower the effective interest rate paid by the buyer thus reducing the monthly payments
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| certificate of reasonable value (CRV) | A form indicating the appraised value of a property being financed with a VA loan
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| conforming loan | A standardized conventional loan that meets fannie mae's or freddie mac's purchase requirements
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| construction loan | A short term loan usually made during the construction phase of a building project ( in this case, often referred to as a construction) otherwis interim financing
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| conventional loan | A loan from private investors that requires no government insurance not guarantee
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| department of Housing and Urban Development (HUD) | A federal cabinet department active in national housing programs. Among its many programs are urban renewal, public housing, model cities, rehabilitation loans, FHA subsidies, fair housing enforcement and water and sewer grants
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| equal credit opportunity act (ECOA) | The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national orgin, sex, age, or marital status.
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| fair credit reporting act | Give individual the right to check their own credit reports and demand that mistakes be corrected
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| fannie mae | A quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
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| federal reserve system | The country's central banking system, which controls the nation's monetary policy by regulating the supply of money and interset rates
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| FHA insured loan | A loan insured by the federal hoousing administration and made by an approved private lender in accordance with the FHA regulations.
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| freddie mac | A corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market
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| ginnie mae | A government agency under HUD that plays an important role in the secondary mortgage market. it sells mortgage backed securities that are backed by pools of FHA and VA loans
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| home equity loans | A loan (called line of credit) under which a property owners use their residence as collateral and can then draw funds up to a prearranged amount against the probperty
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| jumbo loan | A residential mortgage loan in excess of acceptable loan amounts for purchase by fannie mae or freddie mac. also called nonconforming loans.
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| loan to value ratio (LTV) | The relationship between the amount of the mortgage loan and the value of the real estate being pledge as collateral
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| open end mortgage | A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage; an equity line mortgage
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| package loan | A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a furnished home that included window coverings and major appliances
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| predatory lending act | Unscrupulous, sometimes fraudulent, lending practices usually intending to make repayment impossible; designed to take advantage of unwary borrowers that are frequestntly the low income, uninformed, elderly, or non english speaking
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| primary mortgage market | The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings associations and mortgage brokers
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| private mortgage insurance (PMI) | Insurance provideded by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency
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| purchase money mortgage | A note secured by a morgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate
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| real estate settlement procedures act (RESPA) | Federal law that ensures that residential buyers and sellers receive full disclosure of all settlement charges when a 1-4 family unit residence is financed by federallly related first mortgage loans. The act mandates a HUD booklet about closing cost, a go
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| regulation Z | Implements the truth in lending act requiring credit institutions to inform borrowers of the true cost of obtaining credit
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| reverse-annuity mortgage (RAM) | A loan under which the homeowner receives monthly payments based on the homewoner's accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date upon the death of the owner or the sale of the property
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| sale and leaseback | A transaction in which an owner sells improved property and as part of the same transaction, signs a long-term lease to remain in possession of the premises
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| secondary mortgage market | A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. mortgages are first originated in the primary mortgage market
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| subordination agreement | A written agreement between holders of liens on a property that changes the priority of mortgage, judgement and other liens under certain circumstances
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| subprime mortgage | A loan made to a borrower with a credit rating below what is required for regular loans creating greater risk liability for the lender that is countered by higher interest rates and fees, called B, C or D paper.
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| trigger terms | " Word or phrase that when used in advertising literature requires the presentation of the terms of a credit agreement so that individuals can compare credit offers on a fair and equal basis.
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| truth in lending act | Implements the truth in lending act requiring credit institutions to inform borrowers of the true cost of obtaining credit
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| VA-guaranteed loan | A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the department of veterans affairs to limit the lenders possible loss
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| wraparound loan | A method of refinancing in which the new mortgage is placed in a secondary, or subordinate position. The new mortgage includes both the unpaind principle balance of the first mortgage and whatever additional sums are advanced by the lender. In essence,
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