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Callable
Debt
A security debt where the issuer has the right to
trade in the security at a specific price on or
after a specific date, but prior to the final stated
maturity date.
Call Option
Similar to the acceleration clause.
Cap
A set percentage amount by which an adjustable rate
mortgage may adjust each adjustment period. For
adjustable rate 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.
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.
Cash-out Refinance
When a borrower refinances his/her mortgage at a
higher loan amount than the current loan balance
with the intention of taking out money for personal
reasons, such as home remodeling, travel, start a
business, purchase a car, etc.
Carry-back Loan
A loan whereby a seller agrees to finance a buyer in
order to finalize the sale of a property.
Certificate of Deposit (C.D.’s)
A time deposit held in a bank that pays a certain
amount of interest to the account holder.
Certificate of Deposit Index
One of the indexes used for determining interest
rate changes on some A.R.M.’s It’s an average of
what banks are paying on CD’s.
Certificate of Eligibility
A document issued to a veteran by the Veteran’s
Administration that certifies the veteran’s
eligibility for a VA loan, which are normally 100%
financing loans.
Certificate of Reasonable Value (CRV)
An appraisal that has been performed on a property
that is being paid for a VA loan. After the property
has been appraised, the Veterans Administration
issues a CRV.
Chain of Title
An analysis of the transfers of title to a property
over course of time.
Clear Title
A title that is free of any legal question or liens
regarding the ownership of the property.
Closing
Final arrangements to transfer title of property, as
well as distribute charges & credits. Closing has
different meanings throughout the states. In some
states, a real estate transaction is not considered
"closed" until the documents record at the local
recorders office. In other states, the "closing" is
a meeting where all of the documents are signed &
money is exchanged between parties.
Closing Costs
Closing costs are the fees paid by the borrower when
he/she purchases a property or refinances. Costs
incurred include a loan origination fee, discount
points, appraisal fee, title search, title
insurance, survey, taxes, deed recording fee, and
credit report charges. All closing costs are
separated into "non-recurring" and "pre-paid."
Non-recurring charges are any items that are paid
only once, because a loan was obtained or a property
bought, such as a loan origination fee. Pre-paid
charges are those that recur over time, such as
insurance and property taxes. These figures are
summarized in the Good -Faith Estimate.
Closing Statement
Please see Settlement Statement.
Cloud On Title
An outstanding claim or encumbrance that, if
legitimate, would negatively affect or damage the
owner's property title.
Co-Borrower
An additional borrower to a mortgage who is
obligated on the loan and is on title of the
property.
Collateral
Property, real or personal, pledged as a security to
back up a promise. In a home loan, the property/home
is considered collateral that can be revoked if the
loan is not repaid according to the terms of the
mortgage or deed of trust.
Collection
When a borrower falls behind making the monthly
mortgage payments, the lender/bank contacts them in
an effort to bring the loan current. The loan goes
to "collection." As part of the collection effort
and process, the lender must mail & record certain
documents at the county recorders office in case
they are eventually required to foreclose on the
property.
Commission
Most salespeople earn a commission for the work that
they do. There are many rales professionals involved
in each transaction, including realtors, loan
officers, title representatives, attorneys, escrow
representatives, and representatives for pest
companies, home warranty companies, home inspection
companies, insurance agents, to name the most common
parties involved. The commissions are paid out of
the charges paid by the seller or buyer in the
purchase transaction. Generally, realtors earn the
biggest commissions, followed by lenders, and then
by the rest.
Commitment
A written letter of agreement detailing the terms &
conditions by which the bank/lender will lend & the
borrower will borrow funds to finance a property.
Common Area Assessments
In some states, common area assessments are called
“Homeowners Association Fees” (HOA Fees). They are
charges paid to the Homeowners Association by the
owners of the individual units in a condominium or
planned unit development (PUD) and are generally
used to maintain the property and common grounds.
Common Areas
Those portions of a building, land, and amenities
owned -- or managed -- by a planned unit development
(P.U.D) or condominium project's homeowners'
association (or a cooperative project's cooperative
corporation) that are used by all of the unit
owners, who share in the common expenses of their
operation and maintenance. Common areas include
swimming pools, tennis courts, and other
recreational facilities, as well as common corridors
of buildings, parking areas, means of ingress and
egress (walkways), and so forth.
Common law
An unwritten body of law based on general custom in
England & used to an extent in some states.
Community Property
In some states, especially the southwest, a home
obtained by a married couple during their marriage
is considered to be owned together, except under
special circumstances. This is a consequence of the
Spanish and Mexican heritage of the region.
Comparable Sales
Recent sales of similar properties near the home in
question which are used to help establish the market
value of a piece of property. People also refer to
this as "comps."
Condominium
An ownership type in real property where all of the
owners own the property, common areas and buildings
together, with the sole exception of the interior of
the unit to which they have title and reside in. It
is often mistakenly referred to as a type of
construction or development, but it actually refers
to the ownership type.
Condominium Conversion
This refers to the changing of ownership of an
existing building (normally apartments) to the
condominium form of ownership.
Condominium Hotel
A condominium project that operates like a
commercial hotel, even though the units are
individually owned. It has registration desks,
short-term occupancy, food/beverage and phone
services, and daily cleaning services. These are
common in resort areas like Cancun, Bahamas, etc.
Conforming Loan
A home loan for up to and including $417,000 in the
continental United States (Alaska and Hawaii limits
are higher).
Construction Loan
A short term loan for the funding of a construction
project, whereby the lender advances funds to the
builder/contractor as the project progresses.
Contingency
A condition that must be satisfied before a real
estate purchase contract is legally binding. For
example, home buyers often include a contingency
that specifies that the real estate purchase
contract is not binding until the buyer receives a
satisfactory home inspection report, which the buyer
is usually responsible for paying.
Contract
Although most contracts are in writing, they may
also be oral. They basically require you to do or
not to do a certain thing.
Conventional Mortgage
A mortgage loan that is obtained without any
additional guarantees for re-payment, such as FHA
insurance, VA guarantees, or private mortgage
insurance. This type of loan is normally given to
borrowers at an 80% loan-to-value ratio.
Conversion
When a borrower has the right to convert an
adjustable rate mortgage or balloon loan into a
fixed rate home loan.
Convertible ARM
An adjustable rate mortgage that allows the borrower
to change the ARM to a fixed-rate mortgage within a
certain period of time.
Cooperative (Co-op)
A multiple ownership type in which the residents of
a multi-unit housing complex own shares in the
cooperative corporation that owns the property. This
gives each resident the right to occupy a specific
apartment or unit.
Cost-of-Funds Index (COFI)
One of the indexes that’s used to establish interest
rate changes for various adjustable rate mortgages.
In the 11th District of the Federal Home Loan Bank,
COFI represents the weighted-average cost of
savings, borrowings, and advances of the financial
institutions, such as savings & loans and banks.
Credit
An agreement where a borrower receives something
valuable in exchange for a promise to repay the
lender at a later date.
Credit history
A history of an individual's repayment of debt that
is reviewed by banks as one of the underwriting
criteria in determining credit risk.
Credit Loan
This is a loan that is issued based solely on the
financial strength of the borrower, without much
regard to collateral.
Creditor
A person or bank to whom money is owed.
Credit Rating
Borrowers are rated by banks according to the
borrower's credit-worthiness/risk profile. A
person’s credit rating is expressed as letter
grades, for example, as A, A-, B, or C+. These
ratings are based on various factors, such as a
borrower's payment history, BK’s, foreclosures, and
charge-offs. There’s no exact science to rating a
borrower's credit and different lenders may assign
different grades to the same person.
Credit-Related Expenses
The total of foreclosure expenses, plus the
provision for losses.
Credit-Related Losses
The total of foreclosure expenses, plus charge-offs.
Credit Report
A report to a prospective bank/lender regarding
the credit standing of a prospective borrower, which
is utilized to help determine the creditworthiness
of the borrower. All information about late
payments, defaults, charge-offs, or bankruptcies
will be found here.
Credit Repository
A company, such as Experian, Transunion, and Equifax
that gathers, records, updates, and stores financial
and public record information regarding the payment
records of individuals who are being considered for
credit. |
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