Could the same worries – I can’t come up with the big down payment I need, my credit scores are too low, my bank account has almost none of the “reserves” lenders want to see – put a needless damper on a housing recovery in the new year?

You bet. Lenders and economists will tell you flat out: The lack of accurate information about the availability of loan programs that are designed to address special needs is discouraging far too many consumers from even considering an application, much less shopping around.

Mortgage banker Alex Stenback of the Residential Mortgage Group in Minnetonka, Minn., says he sees it every day: “People just aren’t aware of what’s possible right now” and as a result, they are missing real estate prices and long-term interest rate opportunities they shouldn’t. Doug Lebda, founder and CEO of LendingTree, the online site that allows banks to make competing offers to applicants, believes that “the fear of being rejected” because they don’t conform to standards that may not even exist, is keeping qualified applicants on the sidelines for no reason.

For example, what’s needed for an acceptable down payment? Is it 20 percent? 10 percent? Less? Yes, it’s less – and potentially a lot less if you qualify for the right program. The widespread erroneous assumption that banks require a minimum 20 percent for conventional loans may have arisen from heavy media coverage this spring and summer of a controversial proposal by federal agencies calling for borrowers to put down that much if they want to get the best interest rates and lowest fees.

Also contributing to incorrect beliefs about down payments: The Obama administration floated the idea of a phased-in move to 10 percent upfront cash for all loans eligible for purchase by mortgage giants Fannie Mae and Freddie Mac, who together dominate the conventional home-loan sector. But neither the 20 percent nor the 10 percent plan has been adopted and the odds of either moving forward in 2012 are remote. Fannie Mae’s and Freddie Mac’s standard minimums are still 5 percent with mandatory mortgage insurance coverage.

If you have little or no cash to put down, there are multiple options for you: FHA requires just 3.5 percent down on its insured mortgages. Other programs let you go to zero – even finance more than the price on the house when fees are rolled into the mortgage – provided you fit into an eligibility niche. If you qualify as a veteran or active member of the military, you can get a zero-down VA-guaranteed mortgage. Plus the VA allows your seller to pay your loan fees and closing costs provided they don’t exceed 6 percent of the house price.

You can also buy with nothing down if you are purchasing a home in any of the many communities around the country that are eligible for rural (USDA) guaranteed mortgages. Though the property may be located on the outskirts of a large metropolitan area (some are available in the greater Tucson area) – land that might not strike you as particularly “rural” – if the local population is below roughly 20,000, there’s a decent chance you’re eligible. The little-publicized USDA guaranteed home loan program, by the way, is booming. In the last fiscal year alone, according to housing administrator Tammye Trevino, more than 130,000 borrowers received low or no down payment guaranteed mortgages – quadruple the number of loans extended as recently as 2006.

What about credit? Haven’t lenders been pushing up minimum FICO scores into the mid-700s and rejecting applications with lower scores outright? Not everywhere. Though most lenders doing FHA loans require 620 to 640 scores to get you in the door, a few of the biggest FHA originators, such as Quicken Loans, will accept scores down to 580. Bob Walters, Quicken’s chief economist, says underwriters scrutinize low FICO applications extra carefully but are seeing good to excellent performance from them: Not one has gone seriously delinquent this year.

And how about debt-to-income ratios? Aren’t they tighter than ever? Not really. Lenders say that when loan applications go through the “automated underwriting” systems used by Fannie, Freddie and FHA, borrowers with high total monthly debt levels of 45 percent to 55 percent of household income – well beyond the posted limits – frequently get approved if they have positive compensating information elsewhere in the application.

Bottom line: Don’t assume you can’t qualify for a mortgage in 2012. Talk to lenders and seek out loan products that offer flexibility where you need it. You just might be surprised.

http://azstarnet.com/search/?l=50&sd=desc&s=start_time&f=html&byline=Kenneth Harney Washington Post Writers Group

Mortgage rates have hit record lows, with the interest rate on a 30-year, fixed-rate loan, the most popular choice of homebuyers, averaging 3.91% this week, according to Freddie Mac’s Primary Mortgage Market Survey.

That’s down from 3.94% last week, and is the lowest in the 40-year history of the survey.

Rates have fallen 0.9% since the beginning of the year. For a homeowner with a $200,000 mortgage, that means a savings of $1,200 a year, said Frank Nothaft, Freddie’s chief economist.

With rates at or below 4% for the last eight weeks, home sales are getting a boost, Nothaft added. Existing homes sold at their fastest pace since January last month, according to the National Association of Realtors, and new home sales edged higher in November as well.

Where homes are affordable

Meanwhile, rates for 15-year mortgages remained unchanged, matching last week’s record low of 3.21%.

“We’ve entered the holiday lull with nothing much happening to change rates one way or the other,” said Greg McBride, senior financial analyst for Bankrate.com.

Mortgages should remain affordable deep into 2012, he added. As the European debt crisis and sluggish U.S. economy keep investors focused on finding safe havens for their cash, demand for U.S. Treasury notes should remain high. That drives down their yields, which mortgage rates closely track.

“For well-qualified buyers, interest rates should be no impediment to home buying in 2012,” said McBride.

Refinancers also are pouncing on the bargain rates.

According to the Mortgage Bankers Association, about 80% of all mortgage applications last week came from existing homeowners looking to refinance their old loans into more affordable ones.

0:00 / 3:35 Zillow CEO: Why we partnered with Yahoo

McBride even expects that lenders will ease up on borrowing requirements — marginally — in 2012.

“Instead of requiring a 740 credit score for the best rates, lenders will dip their toes into 720 waters,” he said.

That is, however, just a baby step towards making mortgages much easier for borrowers with less-than-perfect credit histories to obtain.

“We’re not going back to the Wild West days of the boom,” said McBride.

By Les Christie@CNNMoney

It offered payments ranging from $5,000 to $20,000 to homeowners who agreed to sell, and got positive responses from about 15% of the 20,000 customers to whom it offered the deal.

The program was aimed at homeowners who cannot afford their mortgages, so not all qualified. The amount of the incentive program was based on the size of the mortgage, as well as other factors, according to an article in The Tampa (Fla.) Bay Times.

Apparently, the homeowner doesn’t find out how much the incentive payment will be until after the sale contract has been signed. The payment is made when the sale is closed.

“The bank is not putting in writing how much homeowners will get until the end,” Steve Capen, a short-sale specialist with Keller Williams Realty, told the newspaper. “By that time, homeowners have entered into a contract to sell. We’re going to have issues. Customers are going to be upset.”

About 3,000 BofA customers agreed to participate in the program before the deadline passed last month. The bank has said it would consider offering the program in other states.

Bank of America is not the only lender to offer homeowners financial incentives to sell homes the lenders think are headed for foreclosure. Florida was a logical place to launch a pilot program. Not only are a high percentage of homeowners underwater, but foreclosures take almost two years to complete.

Wells Fargo offers payments of $10,000 to $20,000 to certain homeowners who agree to a short sale or a deed in lieu of foreclosure. JPMorgan Chase also has offered some short-sale incentives of up to $20,000, and Citibank says it offers payments averaging $12,000 on mortgages it owns. (The Orlando Sentinel has more details.)

The federal government’s Home Affordable Foreclosure Alternatives program offers homeowners up to $3,000 in relocation assistance.

The lenders are calculating that the incentive payments are less than they would spend on foreclosure, especially in states such as Florida where foreclosure is a judicial process that has been slowed even more by the repercussions of the robo-signing scandal and problems with law firms hired by the lenders to bring foreclosures.

“The banks have realized, ‘We are losing more on the foreclosures than the shorts,’” Matt Augustyniak, president of Horizon Realty in Bradenton, Fla., told The Herald-Tribune of Sarasota. “And they are even willing to compensate the sellers, to give the sellers money to vacate the property.”

By Teresa at MSN Real Estate

Total filings, including default notices and bank repossessions were down 33% for the year to 2.7 million, according to RealtyTrac, the online marketer of foreclosed properties.

One in every 69 homes had at least one foreclosure filing during the year, while 804,000 homes were repossessed. That’s a significant improvement from the peaks reached in 2010 — when 1.05 million homes were repossessed — and the lowest levels seen since 2007.

More than 4 million homes have been lost to foreclosure over the past five years.

While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays caused by fall-out from the “robo-signing” scandal that broke in late 2010.

During the year, banks spent more time making sure paperwork was legal and proper, creating a backlog in the foreclosure pipeline. As a result, the average time it took to process a foreclosure climbed to 348 days during the fourth quarter, up from 305 days a year earlier.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac.

However, Moore said there were “strong signs” during the second half of the year that lenders are working through foreclosure backlogs in certain markets. He expects foreclosure activity to rise above 2011′s level but remain below the peak hit in 2010.

By Les Christie@CNNMoney

 At this point we are waiting on the following:

 1. Mortgagee Letter detailing the new loan limits

2. Guidance from our Correspondent partners stating when we will be able to begin originating
    and locking loans at the higher limits.

 As soon as we have more information it will be distributed.

• 2.99% 30 year fixed rate (4.44% APR)
• Primary residences only
• Can not have owned a home in the past 3 yrs
• FHA, VA, USDA loans
• Call for details & restrictions

                 APR based on FHA $100,000 loan with 3.5% down

The Government has extended the current programs that do allow home owners to refinance up to 125% of the property’s value.  

 As soon as new information is available we will definitely share it with you.

Thank you for your business and call with any questions.

USDA Rural Housing Loan

100% Financing for Rural America

Make the dream of homeownership come true with the Affordable Housing Program for rural America.

If you are purchasing a home in a USDA Rural Development defined rural area, then you may be eligible for financing with the Rural Housing program which features 103% financing.

Rural housing loans are available in many areas. Please contact me with eligibility requirements today! ]]> http://www.tucsonselect.com/2011/06/22/usda-rural-loans/feed/ 0 http://www.tucsonselect.com/2011/03/22/know-your-mortgage-terms/ http://www.tucsonselect.com/2011/03/22/know-your-mortgage-terms/#comments Tue, 22 Mar 2011 21:05:42 +0000 Killer IDX http://mikemorgan.simplyit.com/?p=86 A B C D E F G H I J/k L M N O P Q R S T U V W XYZ

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Amortization: repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years)

Annual Percentage Rate (APR): calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

Appraisal: a document that gives an estimate of a property’s fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap.

Assessor: a government official who is responsible for determining the value of a property for the purpose of taxation.

Assumable mortgage: a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage.

Balloon Mortgage: a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower.

Bankruptcy: a federal law Whereby a person’s assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.

Borrower: a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Building code: based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.

Budget: a detailed record of all income earned and spent during a specific period of time.

Cap: a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash reserves: a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Certificate of title: a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Closing: also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing costs: customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.

Commission: an amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction..

Condominium: a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S. government.

Cooperative (Co-op): residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.

Credit history: history of an individual’s debt payment; lenders use this information to gouge a potential borrower’s ability to repay a loan.

Credit report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual’s credit history.

Credit bureau score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Debt-to-income ratio: a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

Deed: the document that transfers ownership of a property.

Deed-in-lieu: to avoid foreclosure (“in lieu” of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process doesn’t allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

Default: the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.

Delinquency: failure of a borrower to make timely mortgage payments under a loan agreement.

Discount point: normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.

Down payment: the portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan.

Earnest money: money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

EEM: Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase

Equity: an owner’s financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s)from the fair market value of the property.

Escrow account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Fair Housing Act: a law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannie Mae: Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.

FHA: Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

Fixed-rate mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Flood insurance: insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers.

Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Good faith estimate: an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.

HELP: Homebuyer Education Learning Program; an educational program from the FHA that counsels people about the homebuying process; HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance; in most cases, completion of the program may entitle the homebuyer to a reduced initial FHA mortgage insurance premium-from 2.25% to 1.75% of the home purchase price.

Home inspection: an examination of the structure and mechanical systems to determine a home’s safety; makes the potential homebuyer aware of any repairs that may be needed.

Home warranty: offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner’s insurance; ,overage extends over a specific time period and does not cover the home’s structure.

Homeowner’s insurance: an insurance policy that .combines protection against damage to a dwelling and Is contents with protection against claims of negligence )r inappropriate action that result in someone’s injury or )property damage.

Housing counseling agency: provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and homebuying.

HUD: the U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.

HUD1 Statement: also known as the “settlement sheet,” it itemizes all closing costs; must be given to the borrower at or before closing.

HVAC: Heating, Ventilation and Air Conditioning; a home’s heating and cooling system.

Index: a measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.

Inflation: the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar’s value.

Interest: a fee charged for the use of money .

Interest rate: the amount of interest charged on a monthly loan payment; usually expressed as a percentage.

Insurance: protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.

Judgment: a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor’s claim by providing a collateral source.

Lease purchase: assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Lien: a legal claim against property that must be satisfied When the property is sold

Loan: money borrowed that is usually repaid with interest.

Loan fraud: purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-to-value (LTV) ratio: a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.

Lock-in: since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Loss mitigation: a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan

Margin: an amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Mortgage: a lien on the property that secures the Promise to repay a loan.

Mortgage banker: a company that originates loans and resells them to secondary mortgage lenders like :Fannie Mae or Freddie Mac.

Mortgage broker: a firm that originates and processes loans for a number of lenders.

Mortgage insurance: a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price.

Mortgage insurance premium (MIP): a monthly payment -usually part of the mortgage payment – paid by a borrower for mortgage insurance.

Mortgage Modification: a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

Negative amortization: a rise in the loan balance when the mortgage payment is less then the interest due. Sometimes called “defferred interest.”

Negative amortization cap: the maximum amount of negative amortization permitted on an ARM, usually expressed as a percentage of the original loan amount (e.g., 110%. Reaching the cap trigger an automatic increase in the payment, usually to the fully amortizing payment level, overriding any payment increase cap.

Negative points: points paid by a lender for a loan with a rate above the rate on a zero point loan. On mortgage web sites, negative points are usually referred to as “rebates” because they are used to reduce a borrower’s settlement costs. When negative points are retained by a mortgage broker, they are called a “yield spread premium.”

Net branch: A facility offered by some lenders to mortgage brokers where de jure the brokers become employees of the lender but de facto they retain their independence as brokers. One of the advantages of this arrangement to brokers is that they need not disclose yield spread premiums received from lenders.

Offer: indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.

Origination: the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

Origination fee: the charge for originating a loan; is usually calculated in the form of points and paid at closing.

Partial Claim: a loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date.

PITI: Principal, Interest, Taxes, and Insurance – the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner’s and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

PMI: Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.

Pre-approve: lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.

Pre-qualify: a lender informally determines the maximum amount an individual is eligible to borrow.

Premium: an amount paid on a regular schedule by a policyholder that maintains insurance coverage.

Prepayment: payment of the mortgage loan before the scheduled due date; may be Subject to a prepayment penalty.

Principal: the amount borrowed from a lender; doesn’t include interest or additional fees.

Qualification: the process of determining whether a prospective borrower has the ability, meaning sufficient assets and income, to repay a loan. Qualification is sometimes referred to as “pre-qualification” because it is subject to verification of the information provided by the applicant. Qualification is short of approval because it does not take account of the credit history of the borrower. Qualified borrowers may ultimately be turned down because, while they have demonstrated the capacity to repay, a poor credit history suggests that they may be unwilling to pay.

Qualification rate: the interest rate used in calculating the initial mortgage payment in qualifying a borrower. The rate used in this calculation may or may not be the initial rate on the mortgage.

Qualification ratio: requirements stipulated by the lender that the ratio of housing expense to borrower income, and housing expense plus other debt service to borrower income, cannot exceed specified maximums, e.g., 28% and 35%. These may reflect the maximums specified by Fannie Mae and Freddie Mac; they may also vary with the loan-value ratio and other factors.

Radon: a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Real estate agent: an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

REALTOR: a real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and its local and state associations.

Refinancing: paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rehabilitation mortgage: a mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages – like the FHA’s 203(k) – allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.

RESPA: Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships

Settlement: another name for closing .

Special Forbearance: a loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.

Subordinate: to place in a rank of lesser importance or to make one claim secondary to another.

Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

Sweat equity: using labor to build or improve a property as part of the down payment

Title 1: an FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs) to their home; Title I loans less than $7,500 don’t require a property lien.

Title insurance: insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers.

Title search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

Truth-in-Lending: a federal law obligating a lender to give fuII written disclosure of aII fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan.

Underwriting: the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.

VA: Department of Veterans Affairs: a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default.

Waive escrows: authorization by the lender for the borrower to pay taxes and insurance directly. This is in contrast to the standard procedure where the lender adds a charge to the monthly mortgage payment that is deposited in an escrow account, from which the lender pays the borrower’s taxes and insurance when they are due. On some loans lenders will not waive escrows, and on loans where waiver is permitted lenders are likely either to charge for it in the form of a small increase in points, or restrict it to borrowers making a large down payment

Workout assumption: the assumption of a mortgage, with permission of the lender, from a borrower unable to continue making the payments.

Wrap-around mortgage: a mortgage on a property that already has a mortgage, where the new lender assumes the payment obligation on the old mortgage. Wrap-around mortgages arise when the current market rate is above the rate on the existing mortgage, and home sellers are frequently the lender. A due-on-sale clause prevents a wrap-around mortgage in connection with sale of a property except by violating the clause.

Yield-Spread premium abuse: the practice by mortgage brokers of pocketing a rebate from the lender for delivering a high-rate loan, without the knowledge of the borrower. See Eliminating Yield Spread Premium Abuse.

Yield Curve: a graph that shows, at any given time, how the yield varies with the period to maturity. Usually, the curve slopes upwards but occasionally it slopes down or is flat. A flat yield curve means that yields on long-term bonds are not much higher than those on short-term notes.