Stable Communities

A credit rating/FICO score above 660. This means the consumer has had no late mortgage payments within a one year period. This is the best rating to have when seeking a new loan.

The voluntary surrender of a property, owned or leased, without naming a successor as owner or tenant. Ownership will generally revert to the entity holding interest in the property or, in cases where no owner is apparent, to the state. Abandonment does not relieve obligations associated with the lease or ownership of the property unless the abandonment is accepted by the entity to which the obligation is owed.

A decrease or reduction, usually related to a government-granted decrease in property taxes. Abatement can also refer to a reduction in or termination of other debt.

The act of obtaining ownership of an asset (such as a home) through purchase, trade, or gift. Acquisition is also the asset acquired.

The process of purchasing and rehabilitating a dilapidated property. This process typically includes affordable financing for lower-income buyers or renters.

The act of rehabilitating an existing property so it can serve a new purpose.

A mortgage loan that is subject to interest rate changes. Interest rate changes may increase or decrease and typically cause a change in the monthly payment amount.

The date that the interest rate changes for an adjustable rate mortgage (ARM).

The published market index that is used to calculate the interest rate for an adjustable rate mortgage (ARM).

According to HUD, affordable housing costs less than 30 percent of the resident’s income, including utilities.

A payment plan that allows a borrower to reduce the debt owed through monthly payments, including interest.

The cost of credit, expressed as a yearly rate and including interest and other charges.

An estimate of a property’s fair market value based on the features of the property and sales of comparable homes in the area. Appraisals are created by professional appraisers who provide the document to the lender before the loan is approved to ensure that the loan amount is not greater than the value of the home.

The estimated current market value of a property.

An increase in property value, especially over time. Factors that impact real estate appreciation include inflation, demand for land and building, building additions, removal of negative factors from a property, and Sweat Equity.

A legal dispute resolution, without going to court.

The midpoint in income distribution within a geographic area with adjustments for family size.

The value of a property as determined by local government, used for real estate tax purposes. The assessment is typically less than the market value, or appraisal.

A public official who determines a property’s value for the purpose of taxation.

Managing asset-related activities associated with a property or a company. This may include investments, funds, credit, debt, debit cards and brokerage features such as buying securities or making loans on margin.

Any item that has a measurable value.

A mortgage that is assumable, meaning it may be transferred to a new buyer when the home is sold.

FICO scores between 620-659. This score means the borrower had two late mortgage payments (30 days) and two or three late installment loan payments in the past 12 months. Delinquencies over 60 days are not allowed.

A mortgage that starts off with a low interest rate for an initial period of time (usually five, seven or 10 years) after which the remaining balance is due or refinanced by the borrower.

The final amount due at the end of a balloon mortgage.

A property that is owned by a bank after an unsuccessful sale attempt at a foreclosure auction.

A property owned by the bank, because it has been foreclosed. See REO

A federal law where a person’s assets are turned over to a trustee and used to pay off debts.

An interest rate charged by a mortgage program (often linked with a government or nonprofit program) that is less then the conventional financing rate. Below market interest rate programs are usually in place to help low- to moderate-income households.

A borrower’s ability to make a mortgage payment on time, considering the household’s assets and income after paying housing costs and other financial obligations.

A short-term loan that is paid back quickly. Bridge loans are usually only used until a longer-term loan can be put into place.

A state-licensed individual or firm who, for a fee, acts as a mediator between buyers and sellers, within the parameters of state law. Mortgage brokers arrange funding or negotiate contracts for clients, but do not loan the money. Real estate brokers help customers find a house.

A FICO score ranging from 580-619. This means the borrower had three or four 30-day late mortgage payments and between four and six 30-day late installment loan payments, or two to four 60-day late payments. These are considered subprime cases.

A limit on how much a monthly payment can be or how much an interest rate can increase or decrease, such as the caps placed on adjustable rate mortgages (ARM).

The profit earned based on the difference between the original purchase price and the final sales price.

Improvements made to a property that increase its value. Capital improvements may also refer to public facility improvements such as roads, etc.

The amount of savings, investments or assets that an individual has on hand.

When a mortgage is refinanced at a higher principal so the borrower can obtain additional cash.

An official certificate that verifies that a proposed building plan conforms with local zoning ordinances. Also known as a zoning permit.

A bankruptcy that requires liquidation of assets in exchange for cancellation of debt.

The principal and interest that is written off after it is deemed uncollectible.

A property title with no defects.

The last step in the purchase process where the title is transferred to the buyer from the seller. The seller receives payment for the property at the closing.

The fees associated with the transfer of a property, which are not included in the purchase price. Typical closing costs include origination fees, discount points, appraisal fees, survey, title insurance, legal fees, real estate professional fees, and a tax and insurance payments.

A person who signs a credit application with another person, and agrees to be equally responsible for the amount borrowed.

The act of enforcing a set of rules, principles, or laws (especially written ones) that may include a system of norms or customs associated with the individual property. City or county authorities – such as building inspectors and zoning enforcement officers – usually enforce civil codes.

Funds or a specific piece of property that is pledged as security for a debt.

A group of interacting people living in the same area. This can include formal arrangements such as people living under the same government, or can include groups of people that share other characteristics such as ethnicity or culture.

The Community Development Block Grant (CDBG) is a program of the U.S. Department of Housing and Urban Development (HUD). The purpose of CDBG funding is to improve communities through affordable and safe housing, anti-poverty programs, infrastructure development and expansion of economic opportunities. Local governments receive allocations and participate in either the entitlement program (for cities with over 50,000 people or counties with over 200,000 people) or the States and Small Cities Program (for communities with less than 50,000 people). CDBG funds are subject to less federal oversight than other categorical grants and are largely used at the discretion of the state and local governments.

An institution that lends to lower-income households, Native American reservations and community development projects. CDFIs complement the work of conventional lenders and include a wide array of institutions including community development banks, credit unions, community development loan funds, etc.

A property trust which aims to benefit the surrounding community by ensuring long-term availability and affordability. CLTs restrict the use of a parcel of land (which may or may not include housing) through nonprofit ownership of the land. The land is leased to land users, who typically own the buildings or homes situated there. CLTs are often used to protect low-income housing from speculation.

An evaluation that determines the value of a property by comparing it to similar properties sold within the past year.

Factors that show an individual’s ability to repay a debt based on non-traditional criteria such as employment, rent and utility payment history.

Factors that show an individual’s ability to repay a debt based on non-traditional criteria such as employment, rent and utility payment history.

A loan that does not exceed Fannie Mae’s and Freddie Mac’s loan limits. Fannie Mae and Freddie Mac loans are called conforming loans.

A (state or local) government document describing the housing needs of low- to moderate-income households, which also outlines various strategies to meet those needs. Consolidated Plans are required by HUD in order to receive funding.

A short-term loan that covers construction costs, contractor bills, and other expenses during a construction period.

Interactive workshops lasting one or two hours that provide information on housing, financial or foreclosure-related issues affecting individuals and communities.

A clause in a purchase contract that defines the conditions that must be met before the contract can be executed. Buyers and sellers may both set contract contingencies, but the contingency must be accepted by both parties.

A private sector loan that is not guaranteed or insured by the government.

A provision in some ARMs that allow it to change to a fixed rated at some point during the term. The new fixed rate is generally set at one of the prevailing fixed mortgage rates, and a fee may be charged for the conversion.

An adjustable-rate mortgage that allows the borrower to convert to a fixed rate within a specified time.

An index used to determine changes in interest rates for some adjustable rate mortgages (ARM).

Legally enforceable terms that govern the use of a property. Covenants are transferred with the property deed and cannot be discriminatory.

An agreement that a person will borrow money and repay it over a specific period of time.

An agency that provides financial information and payment history to lenders regarding potential borrowers.

One-on-one or group education and advice on how to improve bad credit and avoid future credit problems.

A method used by lenders to reduce the chance of default by requiring collateral, mortgage insurance or other agreement.

A listing of an individual’s debts and the payment history for each debt. Credit history reports are called credit reports. Lenders use credit reports to rate a potential borrower and determine their ability to repay a loan.

Expenses related to foreclosure combined with charge-offs.

Private, for-profit businesses that claim to help consumers with their credit and debt repayment problems.

A report generated by a credit bureau that outlines an individual’s credit history for the past seven years. Lenders use this information to determine eligibility for loans and lines of credit.

A term used to describe an individual’s potential for default.

A score created using a person’s credit history, which estimates the individual’s capacity to repay the loan on time. Scores range from about 360-840, with higher scores meaning lower risk.

A lending institution that provides a loan or credit.

The borrower.

A legal document that transfers ownership from one person to another. Deeds are recorded on public record with property information and the owner’s signature. The deed is also known as the title.

A clause in a deed that limits the use of the property. Deed restrictions may limit the density of buildings, determine the types of structures that can be erected, prevent buildings from being used for certain purposes, inhibit use all together, limit the resale price, and so on.

When borrowers cannot repay their debt, they may give the deed to their lender “in lieu of,” or instead of, foreclosure. The borrower may not stay in the house after turning over the deed, but is able to avoid the costs, time and effort associated with foreclosure.

A borrower’s failure to make on time monthly mortgage payments, also known as noncompliance with mortgage terms. A loan is considered to be in default when payment has not been made after 60 to 90 days. Once a loan enters default, a lender can begin foreclosure proceedings.

When a borrower fails to make a timely mortgage payment. Borrowers are generally considered delinquent when their payments are more than 15 days late.

The presumed loss in the value of a building because of physical wear and tear and economic factors. Depreciation is annually deducted from a household’s net income to determine a taxable income.

The release of relevant information. Disclosures can be related to particular property features (such as a seller disclosing all information regarding the property for sale) or can refer to other components of the transaction such as loan specifics.

A loan provision that allows the lender to demand full repayment of the loan if the property is sold.

A legal right that gives someone other than the owner access to a property for a specific purpose. Easements may be part of the deed and may affect property value.

Right of a government entity to seize private property for the purpose of constructing a public facility (i.e. schools, roads, utilities, etc.) with monetary compensation (payment of its fair market value).

An outstanding claim or lien on a property.

A federal law that prohibits discrimination in lending based on characteristics such as race and age.

An owner’s financial interest in a property. Equity is calculated by subtracting the amount owed on the loan from the market value of the home.

A lending practice often used by predatory lenders where eligibility and loan payment amounts are based upon the equity in the property instead of the borrower’s actual ability to repay the loan. These loans generally have high fees and payments and exceed 50 percent of the borrower’s monthly income. They are designed to specifically strip equity from a home.

The price of a property that is willingly agreed upon between both a buyer and seller.

The price of a property that is willingly agreed upon between both a buyer and seller.

See Federal National Mortgage Association.

See Federal National Mortgage Association.

A regional cooperative of 12 FHLBanks that provide a source of stable, low-cost funds to financial institutions for loans including home mortgage, small business, rural and agricultural.

A regional cooperative of 12 FHLBanks that provide a source of stable, low-cost funds to financial institutions for loans including home mortgage, small business, rural and agricultural.

A government-sponsored entity that buys mortgages in the secondary mortgage market from insured depository institutions and HUD-approved lenders.

A government-sponsored entity that buys mortgages in the secondary mortgage market from insured depository institutions and HUD-approved lenders.

A government-sponsored entity that provides a secondary market for residential mortgages.

A government-sponsored entity that provides a secondary market for residential mortgages.

Governed by the Federal Trade Commission, the FTCA prohibits unfair and deceptive practices.

Governed by the Federal Trade Commission, the FTCA prohibits unfair and deceptive practices.

The Federal Housing Administration is a department of HUD. The FHA was established in 1934 to promote homeownership for all Americans and help homebuyers by providing mortgage insurance. This insurance was meant to help those who do not qualify for conventional loans.

The Federal Housing Administration is a department of HUD. The FHA was established in 1934 to promote homeownership for all Americans and to help homebuyers by providing mortgage insurance. This insurance is meant to help those who do not qualify for conventional loans.

The FHA’s primary program for rehabilitation and repair of one- to four-unit dwellings. Improvements may include structural alterations, elimination of health and safety hazards, plumbing, well or septic systems, roofing, flooring energy conservation and others. The loans are administered like other FHA loans.

The Federal Housing Administration (FHA) administers various single family mortgage insurance programs. These programs operate through FHA–approved lending institutions which submit applications for property appraisal and credit approval. Lenders fund the mortgage loans which are insured by the Department. HUD does not make direct loans to help people buy homes.

FICO stands for Fair Isaac Corporation and the FICO score is a person’s credit score based on their credit history. Scores are generally between 300 and 850. Lenders use the score to determine if a person would be a good credit customer.

A mortgage that has terms that do not change, meaning the monthly principal and interest payments stay the same for the life of the loan.

A practice often used by predatory lenders where the lender repeatedly refinances the loan and charges new costs and fees each time. The existing balance and the new fees are rolled into the new loan creating higher monthly payments and loan balances.

When a lender decides not to take legal action after a borrower becomes delinquent on a loan, typically because the borrower has made an effort to set up a plan to bring the loan current.

A legal process that involves the sale of a mortgaged property in order to pay the loan of the defaulting borrower. Foreclosure laws are based on the statutes of each state.

A loan that is forgiven when certain conditions are met, such as staying in the home for a specified number of years. Forgivable loans increase affordability by reducing debt.

See Federal Home Loan Mortgage Corporation.

A loan that “bridges the gap” between the cost of a project (or home sale) and the financing available.

A government-owned corporation that is overseen by HUD that pools FHA-insured and VA-guaranteed loans to back securities for private investment. Like Fannie Mae and Freddie Mac, Ginner Mae’s investment income may be then lent to eligible borrowers through lenders.

Formed by the US Congress, GSEs are privately owned financial service corporations that perform specific credit functions and reduce interest rates for farmers and homeowners (for example, Freddie Mac and Fannie Mae).

Mortgages that begin with low monthly payments that gradually get higher over time and eventually reach a fixed level where they stay for the remainder of the loan period.

Green home rehabilitation involves smart design, technology, construction and maintenance elements that lessen the negative impact of homes and construction on the environment, plus improve the health of the people living there.

A loan that includes assured repayment by the federal government of the borrower defaults.

Home equity conversion mortgages, or HECM, are reverse mortgages used by senior homeowners age 62 and older. HECM loans convert the equity in homes into monthly streams of income and/or lines of credit to be repaid when the consumer no longer occupies the home. A lending institution such as a mortgage lender, bank, credit union or savings and loan association funds these FHA-insured loans.

HOME provides formula grants to states and localities that they can use (often in partnership with local nonprofit groups) to fund various activities that create affordable housing for low-income households. This may include building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people.

A loan backed by the value of the home. The loan amount allowed is generally related to the amount of equity in the home. If the borrower defaults or does not pay the loan, the lender has some rights to the property.

A federal law that addresses predatory lending. HOEPA defines “high-cost” home equity loans as those charging eight percentage points above prevailing rates. HOEPA requires disclosure and prohibits many practices.

A property tax credit program that provides property tax reductions to eligible households. Available in some states.

A HUD program developed to aid nonprofit and public agencies in acquiring, rehabilitating, and reselling single-family homes to low-income families.

A free telephone counseling service operated by the Homeownership Preservation Foundation that provides counseling 24 hours a day, seven days a week to help homeowners avoid foreclosure. 888-995-HOPE or www.995hope.org.

An agency that provides counseling, education and other assistance to individuals regarding a variety of issues including home buying, loan default and foreclosure.

A private housing corporation that serves a specific geographic area. HDCs may be for- or nonprofit and generally develop housing, provide technical assistance, lend start-up funds and sponsor housing developments.

A state agency responsible for financing lower-income homeownership and rental housing, plus administering tax credits and subsidized housing programs.

Funds established by local and state governments that commit public revenue sources to support affordable housing.

The Department of Housing and Urban Development. HUD was established in 1965 and works to create suitable living environments for all Americans by addressing housing needs, improving communities and enforcing fair housing laws.

The interest rate changes that lenders use to determine how much an adjustable rate mortgage (ARM) interest rate will change over time.

The fee charged to the borrower for the use of borrowed money.

The amount charged on a monthly loan payment.

When two parties agree to exchange payments that are tied to two different interest rates for a certain period of time.

When two or more individuals share the ownership of a property. If one of the owners dies, his/her portion is passed to the other owners and cannot be willed to any other.

A legal debt repayment requirement. Judgments may include a lien on the property that provides a collateral source to the creditor.

A non-conforming loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits.

A term that describes the purchase, holding and managing of land parcels. When conducted by city or county governments, or nonprofits, the purpose is generally to preserve affordability and manage development.

An agreement that transfers ownership of a property once the contract conditions have been fulfilled, typically after the final payment is made.

A trust agreement pertaining to Real Property. The trust or other nonprofit developer sells the property to a buyer, but retains ownership of the land. The land is leased to the buyer/property owner for the long-term. Land trusts decrease acquisition costs for the buyer and help nonprofits maintain control over development.

The removal of lead-based paint. Although lead-based paints have been banned since 1978, many older structures still have lead paint on walls, woodwork, siding, windows, and doors. Contractors must take strict precautions in removing lead-based paint from homes and follow federal and state disposal regulations.

An agreement between a resident and a property owner that outlines the payments and conditions that the tenant must comply with in order to live in the home or apartment. The lease also includes a specified time period.

A lease combined with an option to buy the property within a certain period of time at an agreed–upon price. Typically the monthly payment is made up of a rental payment plus an additional amount that is set aside for use as a down payment.

A term that refers to any person or company that originates or holds loans.

An individual’s financial obligations including long-term and short-term debt.

A legal claim against a property that must be resolved before the property can be sold. Liens involve a monetary claim and the property is used as security for repayment of the debt. Liens are a defect on the property’s title and must be settled before ownership can be transferred. Lien releases are written reports that determine the settlement and are recorded as public record.

A document that releases the homeowner from paying a debt once it has been paid in full. Lien wavers are typically used by homeowners (who have hired a contractor) to prevent subcontractors or materials suppliers from filing a lien against them for nonpayment.

The limit that an interest rate can increase or decrease over the life of an adjustable rate mortgage (ARM).

A form of affordable, resident-controlled housing. Co-ops can serve affordable housing goals and promote security because they require sharing of responsibilities and liabilities.

Credit extended to a borrower of up to a certain amount to be used within a certain time frame.

A cash asset, or an asset that is easily converted to cash.

A case or lawsuit brought in court to enforce a particular right. Also described as the process of bringing and pursuing a lawsuit.

A clause within a loan document that gives the lender the right to demand payment of the entire balance after one monthly payment is missed.

Intentionally giving incorrect information on a loan application to quality for the loan. Loan fraud may result in criminal penalties.

A representative from a lending or mortgage company who solicits homebuyers, qualifies them and processes their loans.

A charge that covers the administrative costs associated with making a mortgage loan. Origination fees are paid to the lender at closing and the amount varies depending on the lender. The fee is typically one or two percent of the mortgage amount.

The company that collects monthly mortgage payments and disperses property tax and insurance payments. Servicers manage loans and contact delinquent borrowers. Loan servicers may or may not be the original lender. Servicers that are not the original lender operate under contract to the original lender or the investor who owns the loan.

The company that collects monthly mortgage payments and disperses property tax and insurance payments. Servicers manage loans and contact delinquent borrowers. Loan servicers may or may not be the original lender. Servicers that are not the original lender operate under contract to the original lender or the investor who owns the loan.

Policies related to second mortgages that are set by community-based organizations or local governments that outline specific conditions such as a requirement for the borrower to receive individual counseling before refinancing.

An offer by a lender to guarantee a specific interest rate if the loan is closed within a specified period of time.

An assistance process that helps a homeowner avoid foreclosure. Through loss mitigation, lenders try to help borrowers who are unable to make loan payments and are in danger of defaulting on their loans.

A tax credit for investors that serves as an incentive to develop and preserve affordable multifamily rental housing for low- and very low-income households.

The number of percentage points that a lender adds to the index rate to determine the new ARM interest rate after each adjustment.

The amount that a buyer would willingly pay for a home.

The date when the principal balance on a loan becomes due.

When a lender agrees to change the terms of a mortgage loan without having to refinance.

A lien on a property that secures the agreement between a lender and a borrower and names the property as collateral for the loan. The mortgage gives the lender the right to collect payment and foreclose on the home if the loan is not paid.

A clause that allows the lender to demand the entire balance of a loan to be repaid in one lump sum. The acceleration clause is usually triggered when the home is sold, the title is transferred, the loan is refinanced or the borrower becomes delinquent.

A company that originates loans then sells them to the secondary mortgage market such as Fannie Mae or Freddie Mac.

A firm that originates and processes loans for a variety of lenders.

A loss mitigation option that allows the borrower to refinance or extend the loan term in order to reduce monthly payments.

Bonds that are payable from principal and interest repayment revenues that were derived from mortgage loans that were financed from bond proceeds.

The lender.

The borrower.

Local laws that are enacted and enforced by the city, town, city or county government, whose violation is an offense.

When the monthly loan payment does not cover all of the interest costs. The unpaid interest is then added to the unpaid principal balance. This means that the borrower could eventually owe more than they did when the loan was originated.

Not In My Back Yard

A refinance that only amounts to the remaining mortgage amount (the borrower does not obtain cash against the equity).

Although there are variations to this definition, no cost loans are generally those that do not include fees for title insurance, escrow, settlement , appraisal, recording and notary services. No cost loans lessen the need for upfront cash, but may have higher interest rates.

Loans that exceed the loan limits set by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac loans are called conforming loans.

A type of mortgage loan where the borrower is not personally liable. If the borrower defaults, the lender’s option is limited to foreclosing the mortgage.

An asset that is not accruing interest (such as a mortgage).

A legal document that obligates a borrower to repay a loan at a set interest rate over a specific period of time.

A formal written notice that is sent to a borrower that outlines the default on the loan and states that legal actions are possible.

Regulations that limit the number of people that live in a housing unit, plus limit the activities permitted.

The total amount owed on a mortgage prior to any payments being made.

The process of preparing and evaluating a loan application. This typically includes a credit check, employment verification and property appraisal.

The fee charged for originating a loan. The origination fee is usually paid at closing.

When the seller of a home provides all or part of the financing for the buyer.

When a predatory lender charges excessive fees such as closing costs, appraisal costs, recording fees and unnecessary insurance premiums in order to gain high profits from borrowers.

An FHA loss mitigation tool that allows a borrower, with help from a lender, to obtain an interest-free loan from HUD to bring their mortgage current.

A payment that is less than the total amount owed on a monthly mortgage payment. Typically, lenders do not allow partial payments, but may make an exception for borrowers facing sudden financial difficulties.

The limit on how much an adjustable rate mortgage’s (ARM) monthly payment may increase, regardless of the change in interest rate.

The date when a new monthly payment amount takes effect on an adjustable rate or graduated-payment mortgage. The payment change date usually takes place the month after an interest-rate change takes place.

See Principal, Interest, Taxes and Insurance.

A legal document that authorizes a person to act on the behalf of another individual. Power of attorney can complete or limited.

When a borrower sells his or her property for less than is owed in order to avoid foreclosure. The sale satisfies the borrower’s debt to the lender.

Abusive lending practices that include making loans to borrowers who cannot afford to repay them, plus other practices such as repeated loan refinancing with high rates and fees.

Variables that are used to predict a borrower’s potential credit performance. Predictive variables are part of the credit-scoring model.

Prepaying a loan before it has fully amortized. This can be full or partial prepayment. It can be any amount paid to reduce the principal balance on a loan before it becomes due.

A loan provision that charges a fee to a borrower who pays off a loan before it is due.

A mortgage that includes a payment penalty for partial or full payment of principal within a certain time period. Partial payment is typically defined as 20 percent or more of the original principal balance.

The interest rate that banks charge on a loan for preferred customers.

The amount borrowed to purchase a home or the amount that is yet to be repaid to the lender. This does not include the interest on the loan. The principal balance is the amount owed at any given time.

The four components of a monthly mortgage payment. The taxes and insurance portion go into an escrow account so they can be paid when due and the principal and interest are applied to the loan amount.

A written promise signed by borrowers stating they agree to repay a specific amount borrowed over a specific period of time.

The operation and management of commercial, industrial and/or reidential real estate.

The tax charged by local government that pays for municipal services such as schools, police, street maintenance and so on. Property taxes are determined locally.

The US tax code which allows homeowners to deduct their paid property taxes from their total income.

A public agency that is created by local or state government to finance or operate low-income housing.

Court records that are of public interest such as credit, bankruptcy, foreclosure and tax liens.

A deed that transfers ownership of a property but does not guarantee a clear title.

A limit on an adjustable rate mortgage on how much the interest rate may rise or fall or how much the mortgage payment may change.

When a lender guarantees a specific rate over a period of time for a set cost to the borrower.

A licensed individual who can negotiate and arrange real estate deals on behalf of the buyer. Real estate agents work for a real estate broker.

See RESPA

Paying off one loan with another. Typically, borrowers refinance to get a better loan term and lower monthly payment.

A mortgage loan that covers the costs of home construction or improvements. Some programs allow borrowers to combine their rehab loan with the purchase loan.

A phase of the foreclosure process that gives the homeowner a chance to stop the foreclosure by making a payment that is owed to the lender.

The unpaid principal amount.

When a property is owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction. REOs are common because most properties for sale at foreclosure auctions are worth less than the amount owed to the bank.

An agreement between a delinquent borrower and the lender which allows the borrower to make additional payments that cover the amount past due while also making regular payments.

An amount of cash or credit held to cover potential liabilities such as future repairs or negative cash flow.

A government-owned asset-management company charged with liquidating assets (primarily real estate-related assets, including mortgage loans) that were assets of savings and loan associations that were declared insolvent by the Office of Thrift Supervision as a consequence of the Savings and Loan crisis of the 1980s. It also took over the insurance functions of the former Federal Home Loan Bank Board.

A law that protects consumers by requiring lender disclosure during the loan process including settlement costs and practices.

A type of mortgage where the lender makes payments to the borrower using the home’s equity as security. See HECM.

Depository institutions that specialize in originating, servicing, and holding mortgage loans.

The practice of acquiring and rehabilitating a modest number of affordable rental units that are scattered throughout a particular area. These units are generally for low- and very low-income households.

A loan backed by collateral.

A company or business that collects mortgage payments from borrowers and manages their escrow accounts.

See closing

A document that itemizes services and charges related to the closing of a property transfer. Settlement statements are required by RESPA.

A home loan that grants the lender a share of the home’s equity in exchange for providing a portion of the down payment. When the home is later sold, the lender is entitled to a portion of the proceeds.

A loss mitigation option where the lender revises the repayment plan for the borrower. This may include a temporary reduction or suspension of monthly loan payments.

A term meaning the central area of a city and its surrounding suburbs and jurisdictions.

State-chartered authorities that help meet the housing needs in their states through a wide range of affordable housing and community development programs. State HFAs vary from state to state, but most are independent entities that function with direction from a board of directors appointed by the governor.

This is a term used to describe loans that are made to borrowers with low credit (FICO) scores. These loans typically have less stringent lending and underwriting terms and conditions, but have higher interest rates and fees.

An exemption or reduction in local taxes for a certain period of time.

A direct reduction in income tax payments that would otherwise be due. Note the contrast with Tax Deductions, which reduce taxable income.

A public financing tool that helps economic development projects by capturing the projected property tax revenues (that will be created by the development) and investing them in project improvements.

The period of time and the interest rate that a lender and borrower agree upon for repayment of a loan.

When a lender uses another party to originate, process, underwrite, close, fund or package the mortgages that it plans to deliver to the secondary mortgage market.

A legal document that establishes the right of ownership, recorded as public record. The title is also known as a deed.

An FHA-insured loan that finances moderate rehabilitation of a property as well as construction of nonresidential buildings on the property. Title 1 may be used to insure loans of up to $25,000 for up to 20 years on either single- or multifamily properties. Title 1 loans that amount to less than $7,500 don’t require a property lien.

A company that specializes in reviewing and insuring real estate titles.

An outstanding claim on a property that obstructs clear title. A title defect limits the ability to sell the property.

Insurance provided through a title company that protects the owner or lender if the title is imperfect.

When the ownership of a property changes hands. This may include purchase of the property, assumption of mortgage debt, land sales contracts or other land trust process.

Housing for families that are between living in an emergency shelter and permanent housing. Transitional housing can be for six months to two years and generally involves a secure and supportive environment that helps the family become self-sufficient.

May be used as the basis for adjustable rate mortgages. The Treasury Index is based on the auction results that the US Treasury holds for its Treasury bills and securities.

A fiduciary relationship where the title of a property is transferred to a trustee who acts on behalf of the beneficiary who holds equitable title to the property.

A person who holds or controls a property on behalf of a beneficiary.

A federal law that obligates a creditor to calculate and fully disclose in writing all fees, terms and conditions associated with a loan.

An adjustable rate mortgage that has one interest rate for the first five to seven years and a different interest rate for the remainder of the loan term.

The process of analyzing a loan application to determine the eligibility of the applicant and the risk involved in making the loan. Underwriting includes a review of the applicant’s credit history and an analysis of the property.

The fees that lenders charge homeowners at closing. This includes points, broker’s fees, insurance and so on.

A mortgage guaranteed by the VA. The VA is a federal agency that guarantees loans for veterans. This guarantee protects lenders against potential loss.

The ratio between the number of vacant units and the total number of units in a building or specified area.

A fee charged to realtors if their (or their clients’) properties are listed as vacant/abandoned.

See Abandoned Property

Ordinances that require owners of properties that have become vacant or abandoned to register formally with the local government. A contact is provided in case the property becomes a public nuisance. The ordinance may encourage the owner to devise a timely rehabilitation plan and may impose fees which help cover the costs that the city incurs in monitoring, inspecting, and re-inspecting the property.

Household expenses that vary from month to month, such as gasoline, groceries, etc.

A legal document that guarantees that the seller is the true owner of the property and has the right to sell the property. It also states that there are no claims against the property.

An upfront subsidy, generally from an affordable housing developer, government agency or the property owner, which reduces the asking price of the property to make it affordable to lower-income households.

The division of cities or towns into districts to control land use. This can include residential, commercial or industrial uses.

Concessions made to a property owner that are granted because strict zoning enforcement would create undue hardship for the property owner.