A B C D
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N O P
Q R S
T U V
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Z
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call option
A provision in the mortgage that gives the mortgagee the right to call
the mortgage due and payable at the end of a specified period for whatever
reason.
cap
A provision of an adjustable-rate mortgage (ARM) that limits how much
the interest rate or mortgage payments may increase or decrease. See
lifetime
payment cap, lifetime
rate cap, periodic
payment cap, and periodic
rate cap.
capital
(1) Money used to create income, either as an investment in a business
or an income property. (2) The money or property comprising the wealth
owned or used by a person or business enterprise. (3) The accumulated
wealth of a person or business. (4) The net worth of a business represented
by the amount by which its assets exceed liabilities.
capital expenditure
The cost of an improvement made to extend the useful life of a property
or to add to its value.
capital improvement
Any structure or component erected as a permanent improvement to real
property that adds to its value and useful life.
cash-out refinance
A refinance transaction in which the amount of money received from the
new loan exceeds the total of the money needed to repay the existing
first mortgage, closing costs, points, and the amount required to satisfy
any outstanding subordinate mortgage liens. In other words, a refinance
transaction in which the borrower receives additional cash that can
be used for any purpose.
certificate of deposit
A document written by a bank or other financial institution that is
evidence of a deposit, with the issuer’s promise to return the deposit
plus earnings at a specified interest rate within a specified time period.
certificate of deposit index
An index that is used to determine interest rate changes for certain
ARM plans. It represents the weekly average of secondary market interest
rates on six-month negotiable certificates of deposit. See adjustable-rate
mortgage (ARM).
Certificate of Eligibility
A document issued by the federal government certifying a veteran’s eligibility
for a Department of Veterans Affairs (VA) mortgage.
Certificate of Reasonable Value (CRV)
A document issued by the Department of Veterans Affairs (VA) that establishes
the maximum value and loan amount for a VA mortgage.
certificate of title
A statement provided by an abstract company, title company, or attorney
stating that the title to real estate is legally held by the current
owner.
chain of title
The history of all of the documents that transfer title to a parcel
of real property, starting with the earliest existing document and ending
with the most recent.
change frequency
The frequency (in months) of payment and/or interest rate changes in
an adjustable-rate mortgage (ARM).
chattel
Another name for personal property.
clear title
A title that is free of liens or legal questions as to ownership of
the property.
closing
A meeting at which a sale of a property is finalized by the buyer signing
the mortgage documents and paying closing costs. Also called "settlement."
closing cost item
A fee or amount that a home buyer must pay at closing for a single service,
tax, or product. Closing costs are made up of individual closing cost
items such as origination fees and attorney's fees. Many closing cost
items are included as numbered items on the HUD-1 statement.
closing costs
Expenses (over and above the price of the property) incurred by buyers
and sellers in transferring ownership of a property. Closing costs normally
include an origination fee, an attorney's fee, taxes, an amount placed
in escrow, and charges for obtaining title insurance and a survey. Closing
costs percentage will vary according to the area of the country; lenders
or realtors® often provide estimates
of closing costs to prospective homebuyers.
closing statement
See HUD-1 statement.
cloud on title
Any conditions revealed by a title search that adversely affect the
title to real estate. Usually clouds on title cannot be removed except
by a quitclaim deed, release, or court action.
coinsurance
A sharing of insurance risk between the insurer and the insured. Coinsurance
depends on the relationship between the amount of the policy and a specified
percentage of the actual value of the property insured at the time of
the loss.
coinsurance clause
A provision in a hazard insurance policy that states the amount of coverage
that must be maintained -- as a percentage of the total value of the
property -- for the insured to collect the full amount of a loss.
collateral
An asset (such as a car or a home) that guarantees the repayment of
a loan. The borrower risks losing the asset if the loan is not repaid
according to the terms of the loan contract.
collection
The efforts used to bring a delinquent mortgage current and to file
the necessary notices to proceed with foreclosure when necessary.
co-maker
A person who signs a promissory note along with the borrower. A co-maker's
signature guarantees that the loan will be repaid, because the borrower
and the co-maker are equally responsible for the repayment. See endorser.
commission
The fee charged by a broker or agent for negotiating a real estate or
loan transaction. A commission is generally a percentage of the price
of the property or loan.
commitment
letter
A formal offer by a lender stating the terms under which it agrees to
lend money to a home buyer. Also known as a "loan commitment."
common area assessments
Levies against individual unit owners in a condominium or planned unit
development (PUD) project for additional capital to defray homeowners'
association costs and expenses and to repair, replace, maintain, improve,
or operate the common areas of the project.
common areas
Those portions of a building, land, and amenities owned (or managed)
by a planned unit development (PUD) 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,
etc.
common law
An unwritten body of law based on general custom in England and used
to an extent in the United States.
Community Land Trust Mortgage Loan
An alternative financing option that enables low- and moderate-income
home buyers to purchase housing that has been improved by a nonprofit
Community Land Trust and to lease the land on which the property stands.
community property
In some western and southwestern states, a form of ownership under which
property acquired during a marriage is presumed to be owned jointly
unless acquired as separate property of either spouse.
comparables
An abbreviation for "comparable properties"; used for comparative
purposes in the appraisal process. Comparables are properties like the
property under consideration; they have reasonably the same size, location
, and amenities and have recently been sold. Comparables help the appraiser
determine the approximate fair market value of the subject property.
compound interest
Interest paid on the original principal balance and on the accrued and
unpaid interest.
condemnation
The determination that a building is not fit for use or is dangerous
and must be destroyed; the taking of private property for a public purpose
through an exercise of the right of eminent domain.
condominium
A real estate project in which each unit owner has title to a unit in
a building, an undivided interest in the common areas of the project,
and sometimes the exclusive use of certain limited common areas.
condominium conversion
Changing the ownership of an existing building (usually a rental project)
to the condominium form of ownership.
condominium hotel
A condominium project that has rental or registration desks, short-term
occupancy, food and telephone services, and daily cleaning services
and that is operated as a commercial hotel even though the units are
individually owned.
construction loan
A short-term, interim loan for financing the cost of construction. The
lender makes payments to the builder at periodic intervals as the work
progresses.
consumer reporting agency (or bureau)
An organization that prepares reports that are used by lenders to determine
a potential borrower's credit history. The agency obtains data for these
reports from a credit repository as well as from other sources.
contingency
A condition that must be met before a contract is legally binding. For
example, home purchasers often include a contingency that specifies
that the contract is not binding until the purchaser obtains a satisfactory
home inspection report from a qualified home inspector.
contract
An oral or written agreement to do or not to do a certain thing.
conventional mortgage
A mortgage that is not insured or guaranteed by the federal government.
Contrast with government mortgage.
convertibility clause
A provision in some adjustable-rate mortgages (ARMs) that allows the
borrower to change the ARM to a fixed-rate mortgage at specified timeframes
after loan origination.
convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate
mortgage under specified conditions.
cooperative (co-op)
A type of multiple ownership in which the residents of a multiunit housing
complex own shares in the cooperative corporation that owns the property,
giving each resident the right to occupy a specific apartment or unit.
cooperative corporation
A business trust entity that holds title to a cooperative project and
grants occupancy rights to particular apartments or units to shareholders
through proprietary leases or similar arrangements.
cooperative mortgages
Mortgages related to a cooperative project. This usually refers to the
multifamily mortgage covering the entire project but occasionally describes
the share loans on the individual units.
cooperative project
A residential or mixed-use building wherein a corporation or trust holds
title to the property and sells shares of stock representing the value
of a single apartment unit to individuals who, in turn, receive a proprietary
lease as evidence of title.
corporate relocation
Arrangements under which an employer moves an employee to another area
as part of the employer's normal course of business or under which it
transfers a substantial part or all of its operations and employees
to another area because it is relocating its headquarters or expanding
its office capacity.
cost of funds index (COFI)
An index that is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans. It represents the weighted-average
cost of savings, borrowings, and advances of the 11th District members
of the Federal Home Loan Bank of San Francisco. See adjustable-rate
mortgage (ARM).
covenant
A clause in a mortgage that obligates or restricts the borrower and
that, if violated, can result in foreclosure.
credit
An agreement in which a borrower receives something of value in exchange
for a promise to repay the lender at a later date.
credit history
A record of an individual's open and fully repaid debts. A credit history
helps a lender to determine whether a potential borrower has a history
of repaying debts in a timely manner.
credit life insurance
A type of insurance often bought by mortgagors because it will pay off
the mortgage debt if the mortgagor dies while the policy is in force.
creditor
A person to whom money is owed.
credit report
A report of an individual's credit history prepared by a credit bureau
and used by a lender in determining a loan applicant's creditworthiness.
See merged credit report.
credit repository
An organization that gathers, records, updates, and stores financial
and public records information about the payment records of individuals
who are being considered for credit.
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Washington Depot, CT 06794-0566
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