Mortgage Terms R - Z:

• radon

  A radioactive gas found in some homes that in sufficient concentrations can cause health problems.

• rate lock

  A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time.

• rate-improvement mortgage

  A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.

• real estate agent

  A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

• real estate settlement procedures act (RESPA)

  A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

• real property

  Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

• recission

  The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed.

• recorder

  The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."

• recording

  The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

• refinance transaction

  The process of paying off one loan with the proceeds from a new loan using the same property as security.

• release

  The discharge of property from a mortgage loan.

• remaining balance

  The amount of principal that has not yet been repaid. See principal balance.

• remaining term

  The original amortization term minus the number of payments that have been applied.

• rent loss insurance

  Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

• repayment plan

  An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are called "relief provisions."

• replacement reserve fund

  A fund set aside for replacement of common property in a condominium, PUD, or cooperative project -- particularly that which has a short life expectancy, such as carpeting, furniture, etc.

• revolving liability

  A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

• right of first refusal

  A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

• right of ingress or egress

  The right to enter or leave designated premises.

• right of survivorship

  In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

• risk score

  A mathematical formula that predicts future credit performance.

• sale-leaseback

  A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

• second mortgage

  A mortgage that has a lien position subordinate to the first mortgage.

• secondary market

  A market that buys and sells mortgags after origination. Mortgages may be pooled in form of securities such as GNMA, FNMA or FHLMC, tha are traded on established national markets

• secured loan

  A loan that is backed by collateral.

• security

  The property that will be pledged as collateral for a loan.

• servicer

  An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

• servicing

  The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

• subdivision

  A housing development that is created by dividing a tract of land into individual lots for sale or lease.

• subordinate financing

  Any mortgage or other lien that has a priority that is lower than that of the first mortgage.

• survey

  A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

• sweat equity

  Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.

• tenancy by the entirety

  A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife.

• tenancy in common

  A type of joint tenancy in a property without right of survivorship.

• tenant-stockholder

  The obligee for a cooperative share loan, who is both a stockholder in a cooperative corporation and a tenant of the unit under a proprietary lease or occupancy agreement.

• title

  A legal document evidencing a person's right to or ownership of a property.

• title company

  A company that specializes in examining and insuring titles to real estate.

• title insurance

  Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

• title search

  A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

• total expense ratio

  Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts.

• trade equity

  Equity that results from a property purchaser giving his or her existing property (or an asset other than real estate) as trade as all or part of the down payment for the property that is being purchased.

• transfer of ownership

  Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device. In cases in which an inter vivos revocable trust is the borrower, lenders also consider any transfer of a beneficial interest in the trust to be a transfer of ownership.

• transfer tax

  State or local tax payable when title passes from one owner to another.

• Treasury index

  An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.

• trustee

  A fiduciary who holds or controls property for the benefit of another.

• Truth-in-Lending

  A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

• two- to four-family property

  A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.

• two-step mortgage

  An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.

• underwriting

  The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.

• unsecured loan

  A loan that is not backed by collateral.

• unsury

  Taking or contracting for a rate of interest greater than permittrd by law.

• VA mortgage

  A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

• waiver of lien

  The written evidence from a contractor (or supplier of material) surrending the right of lien to enforce collection of debt against real property.

• wraparound mortgage

  A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

• yield

  The rate of return paid on an investment

• zoning restrictions

  Restrictions imposed by government on the use of property.