Amortization - The gradual reduction of a debt by means of periodic payments sufficient to pay principal, and thereby liquidate the debt.

Annual Escrow Analysis - A report prepared by a mortgage service showing a change in your monthly mortgage payment due to any increase that you might have received in your hazard insurance policy and property taxes.

Appraisal - The act of placing an estimate value on real property, and the process of preparing such an estimate.

Appreciation - An increase in value.

Assessed Valuation - The valuation placed upon real or personal property for the purposes of taxation.

Assignment - A transfer of any present or future interest in property, real or personal.

Balloon Mortgage - Usually a short term fixed rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principle at a time specified in the contract. This is a partially amortized loan

Bankrupt - Any person, firm or corporation unable to pay his or its debts and whose assets become liable to administration under bankruptcy law for the protection of creditors.

Borrower - One who received funds, with the expressed or implied intention of repaying the loan in full, or giving the equivalent.

Breach - Violation of a legal obligation.

Broker - One who, for a commission or fee, brings parties together and assists in negotiating contracts between them. In real estate transactions, the broker usually brings together the buyer and the seller and the mortgage lender.

Certificate of Eligibility - Certificate by the lender that a VA loan is in default and the lender requests that the VA make good on the guaranty. This statement is made on Form VA 4-1874. A Certificate of Claim is also used where foreclosure has been completed and the lender applies for FHA debentures.

Cloud on title - A proceeding or instrument such as a deed, or deed of trust, or mortgage, or a tax or assessment, judgment, or decrees which, if valid, would impair the title to land.

Collateral - Stocks, bonds, evidence of deposit and other marketable properties which a borrower pledges as security for a loan. In mortgage lending, the collateral is the specific real property which the borrower pledges as security.

Commitment - A pledge or engagement; a contract involving financial responsibility or a contingent financial obligation to be performed in the future; a promise by a lender to make a specific loan to a prospective borrower.

Conditional Sale Contract - A contract for the sale of property, the property to be delivered to the buyer, the seller to retain, however, the title thereof until the conditions of the contract have been fulfilled. Also known as "Contract for deed" or "Installment Land Contract".

Construction Loan - A loan which is made to finance the actual construction of improvements on land. It is the practice to divide the loan into four or five equal parts, or disbursements, which are paid as the construction progresses.

Conveyance - The transfer of the title to land from one person or class of persons to another.

CRV - Certificate of Reasonable Value. This is the name of the VA appraisal.

Deed - An instrument in writing under seal, duly executed and delivered, containing a transfer, a bargain, or contract, used in conveying the title to real property from one party to another. There are two general types of deeds - the quitclaim and the warranty. Under the quitclaim deed the seller conveys property to the purchaser, the title being only as good as the title held by the seller, who conveys all claim, interest, or right tot he property as far as his own title is concerned. Under a warranty deed the seller also conveys all claim, right, and title to the property, but also warrants the title to be clear, subject only to such matters as may be shown in the deed. The warranty is recognized by laws as the subject for future restitution of loss to the purchaser if any defects in the title are conveyed by the seller. A seal is not required in some states; the term "grant deed" is used in place of "warranty deed" in some states.

Deficiency Judgment - A personal judgment against any person liable for the debt secured by a mortgage or deed of trust and being the amount remaining due to the mortgagee or beneficiary after foreclosure.

Depreciation - Loss of value over a period of time or use.

Easement - A right or interest in the land of another which entitles the holder thereof to some use, privilege, or benefit, such as to place pole lines, pipeline, roads thereon or travel over.

Encroachment - An unlawful extension of one's right upon the land of another.

Encumbrance - Any right to or interest in land that affects its value. Includes outstanding mortgage loans, unpaid taxes, easements, or deed restrictions. See "Incumbrance.

Equity - Value in excess of a mortgage or deed of trust or value of an interest in a contract of sale.

Escrow - Securities, instruments, or other property deposited by two or more persons with a third person to be delivered on a certain contingency, or the happening of a certain event; when used in the expression "in escrow," the state of being so held. The subject matter of the transaction is the escrow; the terms with which it is deposited with the third person constitute the escrow agreement; and the third person is the escrow agent.

Estate - The degree, quantity, nature, and extent of interest which a person has in a real property.

Estoppel - A certificate most frequently used when the mortgagee is selling the mortgage to a third party and the purchaser wants to be assured of the amount and terms of the mortgage and that the mortgagor acknowledges the full amount of the debt.

Extended Coverage - Insurance agreed to, and paid for, by the insured which covers fire, lightning, windstorm, hail, aircraft damage, vehicle damage, riot, explosion, and smoke damage.

Federal National Mortgage Association - FNMA or Fannie Mae. A government regulated corporation that specializes in buying mortgage loans in the "secondary mortgage market." It provides "liquidity" for primary mortgage lenders. To sell loans to FNMA, lenders must follow FNMA's underwriting guidelines.

FHA - The Federal Housing Administration; An agency, within the U.S> Department of Housing and Urban Development, that administers many loan insurance programs designed to make more housing available.

First Mortgage - A mortgage that is a first lien on the property pledges as security.

First Time Home Buyer - One must reside in property as primary residence and not owned property for at least 3 years proceeding application.

Foreclosure - The legal process by which a mortgagor of real or personal property or other owner of a property subject to a lien, is deprived of his interest therein. The usual modern method is sale of the property by court proceedings or outside of court.

Hazard Insurance - A contract whereby, for an agreed premium, one party undertakes to compensate the other for loss on a specific subject by specified hazards, such as acts of God or war.

Homestead Estate - The rights of record of the head of a family or household in real estate, owned and occupied as a home, which are exempt from seizure by creditors.

Income Property - That property which produces a money income rather than yielding satisfaction to the owner.

Institutional Lender - A mortgage lender that invests its own funds in mortgages and carries a majority of such loans in its own portfolio, i.e., mutual savings banks, life insurance companies, commercial banks, savings and loan associations. Although individuals hold mortgage loans and service them, they are not generally classified as institutional lenders.

Late Charge - Penalty permitted by both FHA and VA covering any monthly payment not made by the fifteenth of the month in which payment is due. Both permit 4% of the monthly payment. Some lenders exact a late charge for delinquencies on installments of conventional loans.

Lease - A species of contract for the possession and profits of lands and tenements either for life or for a certain period of time, or during the pleasure of the parties. (Tenements in such cases means estate or interest.)

Legal Description - A description of a parcel of land sufficient to identify the property.

Lien - A hold or claim which one person has upon the property of another as a security for some debt or charge.

Lis Pendens (Lis Pendis) -A recorded legal document that gives constructive notice that an action affecting a particular piece of property has been filed in a state or federal court. Lis pendens is a Latin term that means "action pending" and is in the nature of a "quasi lien."

Loan - The letting out, or renting, of a certain sum of money by a lender to a borrower to be repaid with or without interest.

Loan-Closing Charges - A term applied to those charges which arise out of the final closing of a loan and the compliance with all the instructions of the mortgage or and mortgagee.

Loan To Value Ratio - The relationship between the amount of the loan and the appraised value of the property usually expressed as a percentage.

Mortgage - A contract by which specific property is hypothecated for the performance of an act without the necessity of a change of possessions.

Mortgage Insurance Premium - The price paid by the borrower for insurance under FHA loans, furnished by the federal government in favor of the lender, insuring payment of the loan in the event of default by the borrower after foreclosure.

Mortgage Note - A negotiable promissory note secured by a mortgage on certain specific real estate.

Origination Fee - Charged by lender to prepare loan documents.

Power Of Attorney - An instrument in writing whereby one person, the principal, authorized another, the attorney in fact, to act for him. The powers are determined by the express terms of the instrument itself; they are not implied, except in so far as may be necessary to carry out the powers expressly granted.

Prepayment Penalty - Penalty for the payment of a debt before it actually becomes due.

Purchase Money Mortgage (PMM) - A mortgage given to the seller to secure in whole or in part the purchase price of real property.

Quitclaim Deed - A deed of release. In instrument by which the grantor relinquishes all right, title, or interest he may have in the property.

Real Property - Land and generally whatever is erected on, or growing upon, or affixed to, land.

Sales Agreement - An agreement by which two contracting parties, called seller, gives a thing and passes the title to it, in exchange for a certain price in current money to the other party, who is called the buyer, or purchaser, who on his part agrees to pay such price.

Satisfaction - A written instrument that evidences the payment in full of a mortgage debt, and extinguishes the mortgage lien.

Secondary Financing - A loan secured by a second mortgage or deed of trust on real property.

Servicing - The collection of payments of interest and principal, and trust fund items such fire insurance, taxes, etc. on a note by the borrower in accordance with the terms of the note. Servicing by the lender also consists of operational procedures covering accounting, bookkeeping, insurance, tax records, loan-payment follow-up, delinquent-loan follow-up, and loan analysis.

Subordination - The act of a creditor acknowledging in writing that the debt due him by a debtor shall be inferior to the debt due another creditor by the same debtor.

Survey - A map of the property.

Term Mortgage - One having a specific term, usually not over a 5 year maturity, during which interest is paid but the principal is not reduced. The is an non-amortized loan.

Title - The means whereby the owner of lands has the just possession of his property.

Unencumbered Property - Property that is free and clear of any assessments, liens, easements, or encumbrances of any kind.

VA - Department of Veterans Affairs; An agency of the federal government which guarantees loans for eligible veterans made by approved lenders.

Zoning - A legislative process by which restrictions are placed upon the use to which real property may be put.