GLOSSARY OF TERMS
COOPERATIVE (CO-OP): A type of multiple ownership in which the residents of a multi-unit 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 HOUSING: An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation, which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.
COOPERATIVE MORTGAGES: Mortgages related to a cooperative project.
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 employers 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.
COVENANT: A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
COMMITMENT: A written letter of agreement detailing the terms and conditions by which the lender will lend and the borrower will borrow funds to finance a home.
CREDIT HISTORY: A record of an individuals 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 individuals credit history prepared by a credit bureau and used by a lender in determining a loan applicants creditworthiness.
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.
CURE: A loan that is removed from a delinquency status with no loss to the insurer.
DEED OF TRUST: Like a mortgage, a security instrument whereby real property is given as security for a debt. However, in a deed of trust there are three parties to the instrument: the borrower, the trustee, and the lender, (or beneficiary). In such a transaction, the borrower transfers the legal title for the property to the trustee who holds the property in trust as security for the payment of the debt to the lender or beneficiary. If the borrower pays the debt as agreed, the deed of trust becomes void. If, however, he defaults in the payment of the debt, the trustee may sell the property at a public sale, under the terms of the deed of trust. In most jurisdictions where the deed of trust is in force, the borrower is subject to having his property sold without benefit of legal proceedings. A few States have begun in recent years to treat the deed of trust like a mortgage.
DEFAULT: Failure to make mortgage payments on a timely basis or to comply with other conditions of a mortgage.
DEFICIENCY JUDGEMENT: A court order to pay the balance owed on a loan if the proceeds from the sale of the security are insufficient to pay off the loan. Deficiency judgments are not allowed in all states.
DELINQUENCY: A loan in which a payment is overdue but not yet in default.
DEPOSIT: A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.
DEPRECIATION: A decline in the value of property; the opposite of appreciation.
DISCOUNT POINTS: See Points.
DOCUMENTARY STAMPS: A State tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies with each State.
DOWER: The rights of a widow in the property of her husband at his death.
DOWN PAYMENT: The part of the purchase price, which the buyer pays in cash and does not finance with a mortgage
DUE-ON-SALE PROVISION: A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
EARNEST MONEY: The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earnest money is applied against the down payment. If the sale does not go through, the earnest money will be forfeited or lost unless the binder or offer to purchase expressly provides that it is refundable.
EASEMENT RIGHTS: A right-of-way granted to a person or company authorizing access to or over the owners land. An electric company obtaining a right-of-way across private property is a common example.
EFFECTIVE AGE: An appraisers estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
EFFECTIVE GROSS INCOME: Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.
EMINENT DOMAIN: The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.
EMPLOYER-ASSISTED HOUSING: A special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.