A blacklist in real estate refers to a list maintained by lenders that contains names of individuals or entities flagged for mortgage application fraud or possessing poor credit history, aimed at avoiding issuance of loans to untrustworthy borrowers.
Credit history refers to an individual's past behavior involving the taking out and repayment of loans and the use of revolving credit, such as credit cards. Credit histories are recorded by national credit reporting companies who issue credit reports. These reports are used by lenders to assess an applicant’s creditworthiness.
Creditworthiness is a measure assessing a person's ability to qualify for and repay a loan. It influences loan approvals, interest rates, and credit limits.
The Debt Coverage Ratio (DCR) is a financial metric that measures the ability of a property to cover its operating expenses and debt obligations. It is widely used by lenders and investors in commercial real estate to assess the risk associated with a particular investment.
The Federal Housing Administration (FHA) is a United States government agency that provides mortgage insurance on loans made by FHA-approved lenders. It aims to make homeownership more accessible, especially for first-time homebuyers, by reducing the risk for lenders and arranging easier borrowing terms for borrowers.
A foreclosure sale is the public auction of a mortgaged property following the foreclosure of the loan secured by that property. This process is designed to recoup the unpaid loan balance through the sale of the collateral property.
A high loan-to-value (LTV) loan covers more than 100% of the market value of the home. Typically, the coverage can go up to 125% of the property's value. These loans are mainly used for refinancing, making them a form of home equity loan, and are generally reserved for the lowest-risk borrowers.
Piggybacking is a strategy used by individuals with poor credit histories to improve their credit scores by being added as an authorized user on the credit account of someone with a good credit rating. While it can temporarily boost a credit score, the practice is of dubious legality and may defraud lenders.
A prepayment clause permits a borrower to pay off a loan before its maturity date, sometimes incurring a penalty for the privilege of early payment.
The primary mortgage market is where borrowers and lenders come together to originate mortgages. This market includes various institutional lenders such as savings and loan associations, banks, and mortgage bankers and brokers.
In real estate, 'Priority' refers to the order in which creditors will be repaid in the event of a foreclosure. This can significantly impact which stakeholders are paid first and who might not receive any repayment if funds are exhausted.
Private Mortgage Insurance (PMI) is a type of insurance specifically designed to protect lenders in case a borrower defaults on a mortgage. It is often required for homebuyers who seek a conventional loan with a down payment of less than 20%.
Repossession refers to the forced retrieval of property by a lender or lessor when a borrower or lessee defaults on contractual obligations, such as missing payments. This legal process primarily involves reclaiming collateral used to secure a loan or leased items and is often juxtaposed with the term foreclosure.
Table funding refers to the practice of originating mortgage loans using a lender's internal capital until these loans are packaged together and sold in the secondary market. This process enables the lender to recoup capital, allowing continued lending activities.
TransUnion is one of the three major credit reporting agencies (along with Experian and Equifax) in the United States, responsible for collecting and providing consumer credit information to lenders and other entities.
Usury refers to the practice of charging a rate of interest on loans that is higher than what is allowed by state law, designed to protect borrowers from excessively high interest rates.
