| C C and Rs
|
Also know as
Conditions, Covenants and Restrictions, this document may apply to homes
constructed in a particular area or subdivision. Homeowners Associations
include this document as a part of title liens. If the Appraisal
specifies these, they are mandatory for Project Approval.
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| CALL OPTION |
Provision in the
mortgage that gives us the right to call the mortgage due and payable at
the end of a specified period for whatever reason.
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| CANCELED CHECK
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A check that has been cashed by the bank on which the check
was drawn.
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| CAPACITY
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A customer's
financial ability to repay debt. Also see 3 Cs.
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The amount of cash
generated from income-producing property or investments after all
operating expenses and loan payments have been made.
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| CAP (INTEREST RATE) |
Maximum allowable
interest rate increase for variable rate mortgages.
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| CAPITAL |
Money and/or property
comprising the wealth owned/used by a person or business enterprise.
Accumulated wealth of a person or business. Also the net worth of a
business represented by the amount that its assets exceed liabilities.
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| CAPITAL
EXPENDITURES |
Cost of an
improvement made to extend the useful life of a property or to add to
its value.
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| CAPITAL GAIN OR
LOSS |
Gain or loss incurred
from the sale or disposition of a capital asset.
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| CASH INVESTMENT |
Amount of the
difference between the total cost of acquisition and the amount of the
mortgage to be insured. This cash investment must come from an approved
source of funds. See Source of Funds.
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| CASH-OUT REFINANCE
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Refinancing
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 (in an amount
greater than the lesser of 2% of the principal amount of the new
mortgage or $2,000).
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| CASH-OUT
EXPLANATION LETTER |
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A handwritten, signed and dated letter provided by
customers who are receiving cash from the loan to explain how they
intend to use that cash. Generally used to verify that borrowers aren't
planning to use the cash to incur additional debt that will add to their
monthly obligations and decrease disposable monthly income.
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| CASH VALUE |
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The amount of money one would receive today by selling an
asset in the market place.
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| CASHIER'S CHECK |
A check drawn by a
bank on itself rather than on an account of a depositor. A cashier's
check is generally acceptable to close a sale without waiting for the
check to clear.
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| CEILING |
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The highest interest rate that may be assessed or an
adjustable-rate loan during the life of the loan based on the start rate
and lifetime cap.
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| CERTIFICATE OF
COMPLETION |
Document issued by
an architect or engineer stating that a construction project is
completed in accordance with the terms, conditions, approved plans, and
according to specifications.
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| CERTIFICATE OF
DEPOSIT INDEX |
Index used to
determine interest rate changes for certain ARM plans. It represents the
weekly average of secondary market interest rates on six (6)-month
negotiable certificates of deposit.
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| CERTIFICATE OF
OCCUPANCY |
Written
authorization given by a local municipality that allows a newly
completed, or substantially completed structure to be inhabited.
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| CERTIFIED COPY |
A copy attested to
be true by the individual or entity holding the original.
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| CHANGE DATE |
This is a date
established in an adjustable rate loan contract when a new interest rate
will be assessed. Also known as adjustment date.
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| CHAPTER 13 BK |
Chapter 13 is a debt
reorganization plan where debts are repaid under a court-supervised
repayment plan. Debtors submit part of their income for distribution
among creditors. Also known as the wage-earner plan.
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| CHAPTER 7 BK |
A Chapter 7 BK is a
straight liquidation bankruptcy where the debtor submits all of their
non-exempt assets to the trustee for liquidation; proceeds are disbursed
to creditors.
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| CHARGE-OFF |
A delinquent credit
account with a balance owed that was never fully satisfied and the
creditor removed it from the books for accounting purposes even though
the debtor still owes payment in full.
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| CHAIN OF TITLE |
History of all
documents transferring a title to a parcel of real property, starting
with the earliest existing document and ending with the most recent.
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| CHILD SUPPORT |
Periodic payments
made under a divorce decree or a written separation agreement for the
support of the children.
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| CHATTEL |
Personal property.
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| CHATTEL MORTGAGE |
Agreement between a
secured party and a debtor creating a security interest in personal
property.
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| CLEAR TITLE |
Title not encumbered
or burdened with defects.
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| CLOSING |
Conclusion of a
transaction. In real estate, closing includes the delivery of a deed,
financial adjustments, the signing of notes, and the disbursement of
funds necessary to the sale or loan transaction.
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| CLOSING COSTS |
Money paid by
borrowers and sellers to close a mortgage loan. This normally includes
an origination fee, discount points, title insurance, survey, attorney's
fee, and such prepaid items as taxes and insurance escrow payments.
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| CLOSING STATEMENT |
Financial disclosure
giving an account of all funds received and expected at closing,
including the escrow deposits for taxes, hazard insurance, and mortgage
insurance for the escrow accounts.
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| CLOUD ON TITLE |
Any outstanding
claim or encumbrance which, if valid, would affect or impair the title.
It can be removed by a quit claim deed, release, or court action.
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| CO-BORROWER
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A 2nd borrower on a
loan who is entitled with same exact interest in property as primary
borrower.
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| COINSURANCE CLAUSE |
Provision in a
hazard insurance policy stating 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.
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| COLLATERAL |
Property pledged by
the borrower to secure the repayment of the loan. The lender's claim or
lien appears on the title report for the property. See 3 Cs.
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| COMBINED LOAN TO
VALUE (CLTV) |
The total of all
liens on the subject property divided by the appraised value of the
property.
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| COMBINED MONTHLY
HOUSING EXPENSE |
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Monthly expenses for the customer's primary residence,
which include rent or mortgage payments, other financing, hazard and
flood insurance, mortgage insurance, real estate taxes, utilities and
homeowner association dues.
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| COMMON AREA
ASSESSMENTS |
Levies against
individual unit owners in a condominium or PUD project for additional
capital to defray the owners' association's costs and expenses to
repair, replace, maintain, improve, or operate the common areas of the
project.
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| Common Elements
(Areas) |
Portions of a
building, land, and amenities owned (or managed) by a PUD or condominium
owners' 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.
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| Co-mortgagor
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Person's name
appearing on the application with the mortgagor. The co-mortgagor's
income, assets, and debts are added together with the mortgagor's for
underwriting and ratio analysis. The co-mortgagor's name must appear on
the Note and the Mortgage Deed of Trust.
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| COMMERCIAL PROPERTY |
A property used for
business purposes.
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| COMMUNITY PROPERTY |
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Property owned equally by a husband and wife. This
classification of property is only used in certain states.
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| Comparables
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Properties used for
comparative purposes in the appraisal process. Refers to facilities of
reasonably the same size and location with similar amenities. Also
properties that have been recently sold and have characteristics similar
to property under consideration, indicating the approximate fair market
value of the subject property.
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| Compensating Factor |
Element that may be
used to justify the approval of a loan with ratios in excess of normal
guidelines. Elements include, but are not limited to:
- Borrower can provide large down payment (in excess of 10%).
- Borrower has substantial cash reserves.
- Borrower receives compensation or income not reflected in
effective income, but directly affecting the ability to pay the
mortgage.
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| CONCESSION |
Special or unusual
terms offered by the seller that may warrant the buyer paying a higher
price for the property.
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| Condemnation |
Determination that a
building is not fit for use or is dangerous and must be destroyed.
Taking of private property for a public purpose through an exercise of
the right of eminent domain.
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| Conditional Lien
Release |
Signed by a
contractor, subcontractor or material supplier, this form waives their
right to file a mechanic’s lien. This is signed on the condition that
they receive payment for work performed. This release may be submitted
throughout the construction phase or at completion of construction on an
OTC loan.
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| Condo
Hotel/Condominium Hotel |
See Condotel.
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| Condominium |
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.
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| Condominium
Conversion |
Changing the
ownership of an existing building (usually a rental project) to a
condominium form of ownership.
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| Condotel |
Condominium project
that has rental or registration desks, short-term occupancy, food and
telephone services, and daily cleaning services, and which is operated
as a commercial hotel even though the units are individually owned.
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| Consideration |
Required element in
all contracts by which a legal right or promise is exchanged for the act
or promise of another person.
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| Construction
Administrative Fee |
This fee covers the
cost of all inspections and disbursements during the construction phase
of an OTC loan.
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| Construction Loan
Agreement |
Closing document
that spells out the parameters and conditions of the construction phase
of an OTC loan, as well as the responsibilities of all parties
associated with the loan. The Lender, the borrower(s) and the
builder/contractor will all sign this document at the closing table.
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| Construction Start
Date |
The date the OTC
loan security instrument is recorded reflecting a certain lender as
lender of record.
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| Construction Term |
The actual term of
the construction phase of an OTC loan. It is stated in months: 4, 6,9,
12 or 18 months are the current options or conventional loans.
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| CONSUMER CREDIT |
Credit owed by the
individual, not secured by real estate.
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| Consumer Reporting
Agency (or Bureau) |
Organization that
prepares reports used by credit grantors to determine the credit and
public records history of an individual. The agency obtains data for
these reports from repositories of accumulated credit records as well as
from other sources.
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| Contiguous |
Adjoining.
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| Contingency |
Clause in a contract
that requires the completion of a certain act or the occurrence of a
certain event before the contract is binding.
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| Contingency
Reserves |
A reserve account
usually equal to 5% of the Direct Costs of the construction project of
an OTC loan. These funds are held in reserve and will be available to
cover any unexpected construction mishaps or severe problems.
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| Contractor Review
Request |
This form is to be
used for submitting a builder/contractor for prior approval for the OTC
program. It requires specific information about the builder / contractor
and provides for attachment of licensing & insurance information.
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| CONVENTIONAL LOAN |
A loan that was not
underwritten by HUD, the SBA, VA or the FHA.
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| Conventional
Mortgage |
Mortgage that is not
insured or guaranteed by the federal government.
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| Convertible ARM |
Adjustable-rate
mortgage that includes an option for the mortgagor to change the
mortgage to a fixed-rate mortgage in the early years of the mortgage
term.
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| CONVERSION CLAUSE
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A provision in some
Adjustable Rate Mortgages ("ARM") that allows a borrower to change the
ARM to a fixed-rate loan at some point during the term.
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| Convey |
Act of transferring
title to real property from one party to another.
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| Conveyance |
Document, such as a
deed, lease, or mortgage, which is used to transfer title to real
property.
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| CORPORATION |
An artificial person
or legal entity created by or under the authority of the law of a state.
May have limited liability, perpetual life, freely transferable shares
and centralized management.
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| Corporate
Relocation |
Arrangements under
which an employer moves an employee to another area as part of the
employer's normal course of business, or 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.
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| Cosigner |
One who agrees to
assume the debt obligation if the principal borrower defaults on
mortgage payments. A cosigner assumes only personal liability and has no
ownership interest in the property. His or her income and obligations
are used in the underwriting process to reinforce the credit of the
principal borrower. The cosigner's credit is not given equal weight with
that of the principal borrower, but serves only as a compensating
factor. Contrast with co-mortgagor.
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| COSMETIC REPAIR |
Repairs that improve
the appearance of the property.
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| Cost of Funds Index
|
Index used to
determine interest rate changes for certain 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.
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| COVENANTS,
CONDITIONS AND RESTRICTIONS (C C & Rs) |
Limitations placed
on the use and enjoyment of real property. Usually intended to maintain
a certain look within a neighborhood and common in subdivisions, PUDS or
condominium communities.
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| CREDIT
AUTHORIZATION LETTER |
A letter signed by
the borrower that authorizes a lender, to conduct a credit
investigation.
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| Credit Life
Insurance |
Insurance often
bought by mortgagors because it pays off the mortgage debt if the
borrower dies while the policy is in force.
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| CREDIT BUREAU |
A company that
collects and organizes information about an individual's credit and
payment habits. The 3 national credit bureaus are Experian, TransUnion
and Equifax.
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| CREDIT DENIAL
LETTER |
A letter that is
sent to a credit applicant advising him or her that the application has
been denied and the reason for the denial.
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| CREDIT DEPTH |
The number of years
a borrower has established credit. This information shows up on the
borrower's report.
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| CREDIT HISTORY |
The history of
whether the borrower has met financial obligations on time in the past.
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| CREDIT LENGTH |
The length of time a
customer has had established credit.
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| CREDIT REPORT |
A report provided by
a credit reporting bureau that provides a detailed account of the
applicant's credit history.
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| CREDIT SCORE |
| A numerical
assessment assigned to the customer by credit bureaus that represents a
measurement of the customer's overall credit rating. The scores are
weighted and range from approximately 365 to 840. Low scores reflect a
"high risk", while higher scores reflect a "lower risk". Each credit
bureau has its own credit score system. |
