This glossary is Alphabetical please choose your letter below.




Callable Debt
A debt security whose issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity.


Cap (interest)
A limit on the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan. For example a 4/1 cap would mean a maximum interest increase of 4% over the life of the loan and no more than 1% each year.


A customers ability to make mortgage payments on time. This depends on the customers amount of income, income stability, assets, reserves, and the amount of income available each month after housing costs, debts and other obligations have been paid.


Caps (payments)
Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change. Mortgage may change per year and/or the life of the loan.


Cash out Refinance
Refinancing for an amount in excess of the balance on the old loan plus settlement costs. The borrower takes "cash-out" of the transaction. This way of raising cash is usually an alternative to taking out a home equity loan.


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.


Cash to Close
Liquid assets that are readily available to be used to pay the closing costs involved in a closing of a mortgage transaction.


Central Bank
The government agency that oversees the banking system and is responsible for the amount of money and credit in the economy.


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.


The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.


The meeting between the buyer, seller and lender or their agents where the property and funds legally changes hands. Also called settlement. Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording, credit report charge and other costs assessed at settlement. The cost of closing usually are about three to six percent of the mortgage amount. Commitment and agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.


Closing Agent
A person that coordinates closing-related activities, such as recording the closing documents and disbursing funds.


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. See also settlement costs.


Closing Date
Date on which closing occurs.


Closing Statement
A form used at closing that gives an account of the funds received and paid at the closing, including the escrow deposits for taxes, hazard insurance, and mortgage insurance.


One or more persons who have signed the note, and are equally responsible for repaying the loan. Unmarried co-borrowers who live together are advised to agree beforehand on what happens if they separate.


Property pledged as security for a debt, such as the real estate pledged as security for a mortgage.


The servicing procedure followed to bring a delinquent mortgage current and to file the required notices to bring foreclosure when necessary.


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.


A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgages from a lender with specific terms or conditions. Construction loan (interim loan) - A loan to provide the funds necessary to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as it progresses.


Commitment Fee
Any fee paid by a potential borrower to a lender for the lender's promise to lend money at a specified rate and within a given time period.


Commitment Letter
A formal offer by a lender stating the terms under which it agrees to loan money to a homebuyer.


Common Stock
A security that represents ownership in a company but gives no legal claim to a definite dividend or to a return of capital.


Comparable Properties
Properties used for comparative purposes in the appraisal process that have been recently sold and have characteristics similar to property being appraised, thereby indicating the approximate fair market value of the subject property.


Compensating Factors
Positive characteristics of a borrower's credit, employment or savings history which may be used to offset high debt-to-income ratios in the underwriting process.


A second borrower who signs a mortgage loan with a mortgagor. The co-mortgagor's income, assets and debts are combined with the mortgagor's for underwriting and ratio analysis purposes. The co-mortgagor's name must appear on the FHA Certificate of Commitment and the mortgage or deed of trust. For full guarantee under the VA's program, the co-mortgagor must be either a spouse or another eligible veteran. See also Co-Borrower.


A discount or other inducement given by a landlord or seller to a prospective tenant or buyer to induce them to sign a lease or purchase property.


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.


A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for maintenance for building and property upkeep, taxes and insurance on the common areas and reserves for improvements.


Conforming Mortgage
A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac.


Construction Loan
A short term interim loan for financing the cost of construction. The lender advance funds to the builder at periodic intervals as the work progresses.


Consumer Price Index ( CPI )
The Consumer Price Index (CPI) is a measure of the average change in prices over time in a market basket of goods and services. The CPI is used to calculate how prices have changed over the years.


A condition that must be met before a contract is legally binding.


Contract Knavery
See predatory lending


Contract Sale or Deed
A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.


Conventional Loan
A mortgage loan that is not insured or guaranteed by the federal government.


Conventional Mortgage
A mortgage loan that is not insured or guaranteed by the federal government.


Conversion Option
The option to convert an adjustable-rate mortgage to a fixed-rate mortgage at some point during its life. These loans are likely to carry a higher rate or points than ARMs that do not have the option.


Convertible ARM
An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions. See also conversion option.


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.


A lender who delivers loans to a (usually larger) wholesale lender against prior price commitments the wholesaler has made to the correspondent.


Cost of Funds Index (COFI)
One of many interest rate indexes used to determine interest rate adjustments on an adjustable rate mortgage. Slang terms are "coffee loan" or "coffee ARM"


Cost of Savings Index ( COSI )
One of many interest rate indexes used to determine interest rate adjustments on an adjustable rate mortgage.


Co-signing a Note
Assuming responsibility for someone else's loan in the event that that party defaults.


Counter Offer
An offer made in return by the person who rejects the previous offer.


A clause in a contract that obligates or restricts the parties and which, if violated, can result in legal action.


The ability of a person to borrow money, or obtain goods with payments over time, as a consequence of the favorable opinion held by a lender as to the person's financial situation and reliability.


Credit Bureau
A company that gathers information on consumers who use credit and sells that information in the form of a credit report to credit lenders.


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.


Credit Enhancement
A method to reduce credit risk by requiring collateral, letters of credit, mortgage insurance, corporate guarantees, or other agreements to provide an entity with some assurance that it will be recompensed to some degree in the event of a financial loss.


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 Loss Ratio
The ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.


Credit-Related Expenses
The sum of foreclosed property expenses plus the provision for losses.


Credit-Related Losses
The sum of foreclosed property expenses plus charge-offs.


Credit Report
A report documenting the credit history and current status of a borrower's credit standing. Credit is rated for mortgage purposes from A, excellent, down to D, very poor. To obtain a conforming loan that can be resold to Fannie Mae, the Borrower usually needs A grade credit.


Credit Scoring
A process that uses recorded information about individuals and their loan requests to assess - in a quantifiable, objective, and consistent manner - their future performance regarding debt repayment.


The ability to qualify for credit and repay debts.


Cross Default
Language often in a second mortgage that states that a failure to pay or a default on the first mortgage is a default on the second mortgage. Also that if the borrower has more than one mortgage with the same lender, then a default on just one of the mortgages puts ALL the other mortgages into default.


Cumulative Interest
The sum of all interest payments to date or over the life of the loan.


Current Index Value
The most recently published value of the index used to adjust the interest rate on an indexed ARM.