Chap 9 Vocab

Acceleration Clause

A condition in a real estate financing instrument giving the lender the power to declare all sums owing lender immediately due and payable upon the happening of an event, such as sale of the property, or a delinquency in the repayment of the note.

Fixed Interest Mortgage

A mortgage in which the interest does not change.

Yield

A return on an investment

Sub-Prime Mortgages (lending)

A type of loan granted to individuals with poor credit histories (often below 600), who, as a result of their deficient credit ratings, would not be able to qualify for conventional mortgages.

Borrower Paid Points

Additional amounts paid by the borrower outside the cost of procuring the loan.

Due on Sale Clause

An acceleration clause granting the lender the right to demand full payment of the mortgage upon a sale of the property.

Fannie Mae

An acronym nickname for Federal National Mortgage Association (FNMA), a privately owned corporation that purchases conventional mortgages.

Inflation

An increase in money and credit relative to available goods that results in higher prices.

Return on Investment

Any additional amount after the return of investment.

Promissory Note

Following a loan commitment from the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its payment. The evidence of the debt.

Stock

Represents ownership interest in a corporation.

Return of Investment

Return or recapture of the original investment amount.

Equity

The value of an asset minus the debt.

Recession

Two or more consecutive quarters of negative growth.

Freddie Mac

A nickname for Federal Home Loan Mortgage Corporation (FHLMC), a corporation wholly owned by the Federal Home Loan Bank System that purchases FHA, VA, and conventional mortgages.

Bond

A debt instrument that represents debt.

Mortgage Insurance Premium (MIP)

A one-time premium paid at the closing pursuant to the purchase

Underwriter

An individual at a lending institution who determines credit worthiness in order to qualify an applicant for a loan.

Variable Interest Rate

An interest rate in a real estate loan which by the terms of the note varies upward and downward over the term of the loan depending on money market conditions.

Supply

The amount of a certain good or service that is available in the market.

Primary Mortgage Market

The marketplace whereby loans are originated.

Secondary Mortgage Market

The marketplace whereby the loans that were originated in the primary mortgage market are bought and sold.

Intercontinental Exchange London Interbank Offered Rate (LIBOR)

A benchmark rate that some of the world's leading banks charge each other for short-term loans.

Unconventional Loan

A loan whereby there is government participation or cooperation.

Unsecured Debt

An obligation or debt that does not have specific property serving as collateral for payment of the debt.

Buyer's Market

An oversupply plus lessened or decreased demand.

Negotiable Instrument

An unconditional promise or order, to pay a fixed amount of money, with or without interest, or other charges described in the promise or order.

Secured Debt

Debt that is backed or secured by collateral to reduce the risk associated with lending.

Face Value

That amount borrowed that is displayed on the promissory note.

Gross Domestic Product (GDP)

The aggregate (sum total) amount of the value of all goods and services provided in the economy for a certain period of time.

Demand

The overall desire for a product or service.

Interest Rate

The percentage of a sum of money charged for its use. Rent or charge paid for use of money, expressed as a percentage per month or year of the sum borrowed.

Prepayment Penalty

A penalty for paying off a loan before its maturity date.

Mutual Mortgage Insurance (MMI)

A percentage of the amount owed.

Mortgage Broker

A broker who arranges a mortgage loan between a lender and a borrower for a fee.

Conventional Loan

A loan whereby there is no government participation or cooperation.

Debt Instrument

A paper or electronic obligation.

Mortgage Banker

A person whose principle business is the originating, financing, closing, selling and servicing of loans secured by real property for institutional lenders on a contractual basis.

Economic Index

A piece of statistical data that is used to assess the health or condition of the overall economy.

Seller's Market

A scarcity of supply and a great demand.

Short Sale

A seller's attempt to sell the real estate whereby the liens are greater than the value of the property.

Underwriting

The criteria with which a lender determines the credit worthiness in order to qualify them for the loan.

Maturity Date

The date by which a loan is to be paid in full.

Real Estate Owned (REO)

A term used to denote that the real estate has been foreclosed upon

Annual Percentage Rate

The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.

Ginnie Mae

a nickname for Government National Mortgage Association (GNMA), is a government-owned corporation that guarantees bonds backed by home mortgages that have been guaranteed by other government agencies (FHA & VA loans).