Alt-A Mortgages are residential property-backed loans which are given to borrowers who have credit scores better than subprime borrowers but provide less documentation than typically required for standard loan applications.
Amortization is the process of gradually paying off a debt over time through regular payments, which include both principal and interest. This structured repayment schedule is commonly used in loans such as mortgages, car loans, and personal loans.
An Asset-Backed Security (ABS) is a financial instrument that is backed by a pool of assets such as mortgages, loans, or receivables. These securities are often enhanced through credit enhancements like bank letters of credit or insurance, which improve their credit quality.
The term 'assign' in real estate refers to the transfer of one's property rights or contract rights to another party. This can apply to leases, mortgages, deeds of trust, and other contractual agreements. It's important to note that assigning a contract does not typically relieve the initial party of their contractual obligations unless a novation, or the substitution of one party for another with the consent of all parties involved, occurs.
Assignment is the method by which a right or contract is transferred from one person to another, typically involving leases, mortgages, and deeds of trust. It enables the assignee to sustain the interest in the property originally held by the assignor.
A borrower is a person or entity that has received a loan and is obligated to repay the amount borrowed, often with interest and other fees, according to the loan terms. The term is commonly used interchangeably with 'debtor.'
The capital market is a venue where various long-term securities such as equities, mortgages, and bonds are traded. It contrasts with the money market, which deals with short-term securities.
Collateralized Debt Obligation (CDO) is a complex financial product that is structured and sold to investors, leveraging various types of debt instruments like bonds, mortgages, and loans as collateral.
In real estate, 'encumber' refers to the act of burdening a property with a liability, debt, or legal claim, which can limit the owner's ability to transfer title or decrease the property's market value.
Escrow Closing refers to the final phase in a real estate transaction, particularly in states that use deeds of trust instead of mortgages. During this phase, an escrow agent or title company holds onto necessary documents and funds until all conditions of the sale are met.
Exhibits are attachments to leases, mortgages, and other legal documents, providing detailed, supplementary information pertinent to the main document.
The face interest rate is the percentage interest specified on the loan documents, representing the nominal annual interest rate before accounting for additional fees or compounding periods. This term is often compared with the Annual Percentage Rate (APR) and the Effective Rate.
Face value refers to the nominal or dollar value stated on financial instruments, such as bonds, stocks, or mortgages. It is a fixed amount, unaffected by fluctuating market prices.
Freddie Mac (Federal Home Loan Mortgage Corporation) is a government-sponsored enterprise (GSE) that buys and securitizes mortgages to ensure a reliable and affordable supply of mortgage funds across the country.
A detailed, physical examination of property or documents to ascertain their condition or accuracy. Inspections are essential for validating compliance with building standards, property sales requirements, and legal scrutiny of agreements.
Interest in real estate can refer to both the cost associated with borrowing money to finance real estate transactions and the extent of ownership in a property.
A level-payment income stream refers to a series of equal payments made at regular intervals over a specific period of time. It is typically associated with annuities, mortgages, or other financial instruments.
A Mortgage-Backed Security (MBS) is a type of asset-backed security that represents a claim on the cash flows from mortgage loans, primarily on residential property. These securities are created by pooling together various mortgage loans and then selling the subsequent payment streams to investors.
A notary public is an official, authorized to perform certain legal formalities, including witnessing signatures on documents, to deter fraud and ensure proper execution of important paperwork.
A clause sometimes inserted in mortgages or deeds of trust; grants the lender (or trustee) the right to sell the property upon certain defaults. The property is to be sold at auction but court authority is unnecessary.
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.
A mortgage provided by the seller to the buyer in part payment of the purchase price of real estate. It serves as an alternative or additional financing option for buyers who may not qualify for traditional loans.
The rate of interest, also known as the interest rate, is the proportion of a loan that is charged as interest to the borrower. It is a crucial factor in real estate financing and investment.
A registrar is responsible for maintaining accurate official records, including deeds, mortgages, and other important documents in real estate transactions.
The remaining balance, also referred to as the outstanding balance, is the amount of loan principal that has not yet been repaid, plus any accrued interest or fees.
The secondary mortgage market involves mechanisms for buying and selling residential first mortgages. It enables lenders to sell mortgages and transfer the associated debt, thereby improving liquidity and fostering a more stable housing finance market.
A state law that stipulates that certain contracts must be in writing to be enforceable. This includes deeds, mortgages, and other real estate contracts, except for leases shorter than one year.
A step loan is a type of adjustable-rate mortgage where the interest rate is adjusted only once during the life of the loan, blending characteristics of both fixed-rate and adjustable-rate loans.
A trust deed is a conveyance of real estate to a third party to be held for the benefit of another. Commonly used in certain states in place of mortgages, it conditionally conveys title to a lender.
In real estate, the term 'valid' refers to documents or agreements that have legally binding force and are authorized by law. Examples include valid deeds, wills, leases, mortgages, and other contracts.
Wrongful foreclosure occurs when a lender improperly or illegally forecloses on a borrower’s property. This type of foreclosure typically arises due to failure to follow correct legal procedures or agreements made between the lender and the borrower.
