A - B -C - D - E -F - G - H - I - J - L - M - N - O - P - Q - R - S - T - U - V - W

1031 Tax Deferred Exchange - A section of the U.S. Internal Revenue code that applies to business use or investment properties including rental, land and commercial real estate. It provides a safe and legal procedure for rolling sales profits into new property as a non­taxable exchange. These exchanges are often referred to as Starker exchanges.

ABA (American Bankers Association) Number - A 9-digit bank identification number. This number is assigned by the Federal Reserve Bank and used to identify each financial institution. Also referred to as a routing number.

Abstract of Title - A written history of the title transaction of conditions bearing on the title to a designated parcel or land. It covers the period from the original source of title to the present and summarizes all subsequent instruments of public record by setting forth their material parts.

Access Cards - A method by which borrowers may access their available credit line on a Home Equity Line of Credit (HELOC) loan.

Acknowledgement - A written certification or declaration stating that an execution of an instrument, such as a deed or note, is of a person's own free will, and has been made before a notary public or other attesting officer.

Active Duty - Because of Public Law 97-66, service in the armed forces, for the purpose of Eligibility for Entitlement, does not commence until entry in to actual active duty status regardless of any reserve duty prior to that date OR enlistment under the Delayed Entry Program (considered in the reserves until reporting to active duty).

Addendum - An agreement or list added to a contract, agreement, or other document such as a letter of intent. FHA and VA require that an addendum be added to or incorporated into any sales contract if it is written prior to the appraisal. An addendum is also referred to as amendatory language.

Add-On Interest - The full amount of interest calculated on the original principal for the term of the loan. This interest is added to the original principal, thereby becoming a part of the face amount of the promissory note. Add-Ons - See Price Add-Ons.

Adjustable Mortgage Loan (AML) - See Adjustable Rate Mortgage (ARM). Adjustable-

Rate Mortgage (ARM) - A mortgage loan that allows the lender to adjust the interest rate in accordance with a specified index periodically and as agreed to at the inception of the loan. Also referred to as a variable rate mortgage (VRM).

Affordable Second Loan - A subsidized second mortgage that often has deferred payments and carries a low, or no interest rate and is used to assist borrowers with the down payment and/or closing costs. An Affordable Second Loan is typically combined with a conventional first mortgage originated and serviced by a Fannie Mae®-approved lender. The funds may be provided by any of the following non-interested parties: non­profit organization, church, state/county/local housing agency, or borrower's employer. An Affordable Second Loan has specific guidelines for borrower qualification and program administration. This type of loan is also referred to as a Community Seconds® Loan.

Agreement for Sale - A written document in which the purchaser agrees to buy certain real estate (or personal property) and the seller agrees to sell under stated terms and conditions. Also referred to as a sales contract, binder or earnest money contract.

AITD - See All-Inclusive Trust Deed. Alaska Natives -Alaska Natives (Indian, Eskimo and Aleut) who hold land under a system imposed by the Alaska Natives Claims Settlement Act of 1971.

All-Inclusive Trust Deed (AITD) - A refinancing technique that involves the creation of a new trust deed that includes the remaining balance due on the existing note plus the new funds advanced. Also see Wraparound Mortgage.

Allonge - A separate piece of paper on which is written endorsements to a Bill of Exchange or promissory note. This is usually done when the original document was not endorsed. The piece of paper must be securely attached to the instrument that is being ndorsed.

ALTA - See American Land Title Association.

Alternative Documentation - A documentation option that allows lenders to obtain documentation related to a borrower's income, employment, funds for closing, and mortgage payment history directly from the borrowers, rather than from the borrowers' employer, bank, or mortgage servicer. Samples of alternative documentation include W-2 forms, bank statements, pay stubs, and canceled checks.

Amendment Date - The date any amendment is made to the Presidential Declaration that declares a county (or counties) as a major disaster area. Once declared, the county is eligible for a variety of federal assistance programs.

American Land Title Association (ALTA) - A national association of title insurance companies, abstractors, and attorneys, specializing in real property law. The association speaks for the title insurance and abstracting industry and establishes standard procedures and title policy forms. ALTA has adopted many title insurance policy forms that standardize coverage nationally for property owners and lenders. Many states require ALTA standardized title insurance policies. Amortization /

Amortized - The repayment of a mortgage debt with periodic payments of both principal and interest, calculated to fulfill the debt obligation at the end of a fixed period of time.

Amortization Schedule - A table listing the amounts of principal and interest due at regular intervals and the unpaid mortgage balance after each payment is made. This is also referred to as a curtail schedule.

Annual Fee - An amount that may be charged annually to the borrowers that have a home equity line of credit (HELOC). Annual Percentage Rate (APR) - The actual cost of borrowing money expressed in the form of an annual rate to make it easy to compare costs between lenders. The rate includes such items as the base interest rate, origination fees, commitment fees, prepaid interest, and any other credit costs that may be paid by the borrower to obtain the loan.

Appraisal Report - An opinion of estimated value for a specific purpose of a described property on a given date. An appraisal can be either written or verbal.

Appraised Value - An opinion of value determined by an appraiser based upon knowledge, experience, and a study of pertinent and comparable data.

Appraiser - A person qualified by education, training and experience to estimate the value of real and personal property.

APR - Annual percentage rate. ARM Loan - See Adjustable Rate Mortgage (ARM).

ARM Rider - An ARM Rider amends the terms of the Security Instrument by specifying the allowable changes in the interest rate and monthly payment of the adjustable rate loan.

Arm's Length Transaction - A transaction between a buyer and a seller and there is no degree of relationship. The parties involved are entirely independent of each other, deal with each other as strangers, and have no reason for collusion. Also see Non-Arm's Length Transaction.

As Improved Appraised Value - An estimate of the value of the property after completion of rehabilitation work.

ASA - American Society of Appraisers. Assignment - The transfer of ownership, rights, or interests in property, such as a mortgage, lease, or deed of trust/security deed, from the current legal owner to another party or entity. An assignment is also referred to as a corporate assignment.

Assignment of Mortgage/Deed of Trust/Security Deed - A written agreement that transfers the ownership of a mortgage/deed of trust/security deed from one party to another.

Assignment of Rents - A written agreement wherein the owner of a property transfers possession of the property, but not its ownership, to another party - usually a mortgagee or creditor - and the right to collect rents, manage the property, and apply the net income toward delinquent mortgage payments.

Assistance Expiration Date - The final date to file an application for federal assistance affecting property located in a county that has been declared a major disaster area.

Attorney-in-fact - An individual, not necessarily an attorney, who is authorized to act for another in a specific or general assignment. This individual has privileges afforded as under power of attorney.

Automated Underwriting System (AUS) - AUS is a simple, easy to use application that allows lenders to obtain a preliminary or full underwriting decision, credit grade determination, or credit report within minutes.

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Bailee Letter - A letter from a warehouse bank that releases collateral documents in exchange for purchase proceeds. The bailee letter includes written instructions on where to wire the funds. Also see Wire Instructions.

Balloon Document Date - The date the Balloon Rider was prepared. The balloon document date must be the same as the Note document date.

Balloon Maturity Date - The date the balloon payment is due as shown on the Balloon Rider.

Balloon Mortgage - A mortgage that has level monthly payments that will fully amortize it over a stated term, but that provides for a lump sum payment to be due at the end of a specified term.

Balloon Payment - The remaining balance of a mortgage that must be paid in a lump sum either at the end of the mortgage term or at the end of a specified earlier period. The amount may represent slightly more than a monthly payment or may be substantial. This occurs because the fixed installment did not fully amortize the mortgage. The final payment is referred to as the balloon or bullet.

Bankruptcy - A proceeding in federal court in which a person, who owes more than his /her assets, can relieve the debts by transferring his/her assets to a trustee. This affects the borrower's personal liability for a mortgage debt but not the lien of the mortgage. The three most likely types to be encountered are:

Chapter 7 - Straight or liquidation bankruptcy used by those who do not have the ability to repay their debt.

Chapter 11 - Designed for businesses and deals with reorganization of the business debt.

Chapter 13 - Debt adjustment or wage earner plan, and is used by those who have the ability to repay their creditors or whose debts are not able to be discharged through Chapter 7.

Basis Point - A basis point is equal to 1/100th of 1%. For example, 7 ½ basis points equal .075% or .00075. Basis points are used to describe the yield of a debt instrument including mortgages and mortgage-backed securities. B/C Loan - See Subprime Loan.

Beneficiary - One in whose favor a trust operates, or in whose behalf the income from a trust estate or trust deed is drawn. For example, the lender is the beneficiary with a deed of trust or a Note as security on the loan.

Best Effort Commitment - A commitment given for specific borrowers and a specific property. Also see Bulk Commitment.

Binder - The written evidence of temporary hazard or title insurance coverage that runs for a limited time and must be replaced by a permanent policy. A binder may also be called a commitment or guarantee to insure.

BLM - Bureau of Land Management. Borrower - In a real estate purchase transaction, it is the party that receives funds in the form of a loan with the obligation of repaying the loan in full with interest, if applicable. A borrower is also referred to as a mortgagor. The primary borrower is defined as the occupying borrower with the highest income. In the case of a non-occupant co-borrower with a higher income, the occupying borrower would still be the primary borrower. Also see Co-Borrower.

Bridge Financing - A loan spanning the gap between the termination of one loan (generally short-term) and the start of another (generally permanent long-term loan. Also referred to as gap financing.

Bridge Loan - A short-term form of second mortgage that is collateralized by the borrowers' present home (which is usually for sale) in a manner that allows the proceeds to be used as down payment funds for closing on a new house before the present home is sold. Also referred to as a swing loan or gap financing. Builder Bailout - Schemes promoted by the builder or developer to move property quickly in a depressed real estate market.

Builders Risk Insurance - This is specific coverage for fire and extended insurance coverage for a building under construction. Coverage increases automatically as the building progresses and terminates at completion.

Bulk Commitments - A commitment that is taken for a specified dollar amount, a specified loan program, a specified interest rate range, and a specified number of days. Also see Best Effort Commitment.

Buydown - Money advanced by a third party (usually the property seller) to reduce the borrower's monthly payments for a home mortgage. The buydown period may be for a specified number of years or for the entire term of the loan. A permanent buydown requires buying down the margin for the life of the loan. Also see Temporary Buydown.

Buydown Account - An account in which funds are held be applied as part of the monthly mortgage payment as specified in the buydown plan.

Buydown Amount - The amount of the buydown funds required to fund the buydown account is the difference between the borrower's payment at the buydown rate and the Note rate that is in effect.

Buydown Mortgage - A mortgage with a below-market interest rate made by a lender in return for an interest rate subsidy in the form of additional discount points paid by the builder, seller or buyer.

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CAIVRS - See Credit Alert Interactive Voice Response System.

CAIVRS Number - The authorization number provided by the Credit Alert Interactive Voice Response System (CAIVRS) that identifies if the borrower has been delinquent or is currently delinquent on any government loan.

California Land Title Association (CLTA) - The standard form of title policy approved by the California Land Title Association covering competency of the deed and parties in the claim of title. This policy is also known as the homeowner's policy, and is issued in California only to homeowners and non-institutional lenders. CLTA policies are significantly less comprehensive than ALTA policies; they exclude unrecorded encumbrances and facts disclosed by a physical inspection.

Call Option - A provision in the mortgage that gives the holder of the contract the right, but not the obligation, to call the mortgage due and payable at the end of a specified period for whatever reason.

Cap - The established limit on how much the interest rate of an adjustable rate mortgage can change, either at each adjustment or during the life of the mortgage. ARM loans may contain one or more types of caps.

Capacity - A borrower's ability to repay the proposed mortgage debt using his/her income and assets.

Cash Out Refinance - A refinance transaction in which the amount of money received from the new loan is greater than the total amount needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. The additional cash may be used by the borrower for any purpose. NOTE: A refinance transaction is determined to be a cash out if the amount received exceeds the lesser of 2% of the new mortgage principal amount or $2,000.00.

CC&Rs - Covenants, conditions, and restrictions.

CD - Certificate of Deposit. Ceiling Rate - The highest interest rate that can be charged over the life of the loan. For example, if the start rate is 7% and the life cap is 5%, the ceiling rate would be 12%.

Certificate of Commitment - For FHA loans, it is the Firm Commitment issued by FHA approving the borrower. For VA loans, it is the VA's commitment to the lender that it will guarantee a loan that was submitted for Prior Approval.

Certificate of Completion - A document issued by an architect or engineer stating that a construction project is completed in accordance with the terms, conditions, approved plans, and according to specifications.

Change Date - The date on which the adjustable interest rate for an ARM loan may change.

Charge-Offs - A charge-off is an account deemed by a creditor to be an underperforming receivable that has been, for accounting purposes, converted to a loss recovery account. The borrower remains contractually liable for the unpaid balance and related charges, except if the charge-off balance is legally uncollectible, such as following a settlement. Also known as a P&L (Profit & Loss) account and usually reflected on the credit report as R-9, I-9, U-9. A charge-off is a major adverse credit account.

CHUMS - Computerized Homes Underwriting Management Systems.

Closed-End Second (CES) - A fixed rate amortized mortgage loan secured by the equity in the borrowers' home, that has rights secondary to a first mortgage. For example, the proceeds from a foreclosure sale must pay the first mortgage before any funds can go to repay the second mortgage. Note: Unlike a home equity line of credit loan, the borrower cannot obtain additional funds under the same closed-end second loan.

Closing - The conclusion of a transaction. In real estate, it includes the delivery of a Deed of Trust/Mortgage/Security Deed, financial adjustments, the signing of documents, and the disbursement of funds necessary to the sale or loan transaction.

Closing Costs - The money paid by borrower and property sellers to affect the closing of a mortgage loan. Closing costs may include an origination fee, discount points, title insurance, survey, attorney's fees, and such prepaid items as taxes and insurance escrow payments.

Closing Statement - A financial disclosure giving an account of all funds received and expected at closing, including escrow deposits to taxes, hazard insurance, and mortgage insurance. All FHA, VA, and most conventionally financed loans use a uniform settlement statement called the HUD-1. Also see Settlement Statement.

Co-Borrower - The person's name appearing on the loan application with the borrower's. The co-borrower's income, assets, and debts are added together with the borrowers for underwriting and ratio analysis. A co-borrower does not have to take title to the property, but if their income is used to qualify, they must sign the mortgage Note. Also referred to as a co-mortgagor.

Collateral - The property that is pledged as security for the satisfaction of a debt.

Collateral Package - All documents required to warehouse the loan upon purchase by JimPrieto.com, including the original Note and all riders endorsed to JimPrieto.com by all assignors, copy of the Deed of Trust/Mortgage/Security Deed signed and executed for all fundings, copy of applicable trust agreement, power of attorney, and all assignments, including intervening assignments.

Collection Account - A collection account is an account in default of the contractual terms, and has been assigned to additional collection efforts by the creditor, or sold or consigned to a professional collection agency. This type of account is usually reflected on the credit report as R-9, I-9, U-9). A collection is a major adverse credit account.

Collection Report - An itemized statement used by a mortgage servicer in reporting collections of payments, including payments in full, repayments of advances, tax and insurance funds for foreclosed mortgages, and any other items not remitted as regular installment payments.

Combined Loan-To-Value (CLTV) Percentage - The relationship between the unpaid principal balances of all the mortgages on a property and the lesser of the property's appraised value or sales price.

Commitment - A written agreement between an approved Seller and JimPrieto.com for the sale and purchase of loans under specific terms and delivery requirements.

Community Seconds® Loan - A subsidized second mortgage that often has deferred payments and carries a low, or no interest rate and is used to assist borrowers with the down payment and/or closing costs. An Affordable Second Loan is typically combined with a conventional first mortgage originated and serviced by a Fannie Mae-approved lender. The funds may be provided by any of the following non-interested parties: non­profit organization, church, state/county/local housing agency, or borrower's employer. An Affordable Second Loan has specific guidelines for borrower qualification and program administration. This type of loan is also referred to as an Affordable Second Loan.

Community Water or Sewage System - A central system that is owned, operated and maintained by a private corporation or a non-profit owners association.

Co-Mortgagor - See Co-Borrower. Co-Signer - A person who agrees to assume the debt obligation if the principal borrower defaults on the mortgage payments. A co-signer assumes only personal liability and has no ownership interest in the property.

Comparable Properties / Comparables - 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 that may be used to offset high debt-to-income ratios in the underwriting process. In underwriting a mortgage loan, exceptions can be made to the loan program guidelines, based on but are not limited to: A large down payment from the borrower (in excess of 20%). The borrower has substantial cash reserves. The borrower receives compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage and all other obligations.

Concurrent Closing - A loan that is closed in the Seller's name using JimPrieto.com's funds and is purchased from the Seller by JimPrieto.com at the time of (that is, concurrently with) closing. Also see Piggyback.

Condominium - A real estate project in which each unit owner holds title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas. Condominium

Conversion - Changing the ownership of a building, usually a rental project, to the condominium form of ownership.

Condominium Declaration - A legal document establishing a condominium or PUD project. It describes the entire project, including each unit and all common areas, and specifies essential elements of ownership that permanently govern its operation. Also known as a Master Deed or Condominium Constituent Documents.

Condominium Hotel - See Condotel. Condotel - A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and which is operated as a commercial hotel even though the units are individually owned. A condotel is often referred to as a condo hotel or a condominium hotel.

Conforming Loan - A mortgage loan that meets the underwriting guidelines, loan amount limits, and regulatory parameters set by Freddie Mac and Fannie Mae.

Construction Loan - A short-term loan intended for the construction of a home. Disbursement of the loan funds is usually made in stages as construction progresses. A construction loan may also include funds for land acquisition.

Consumer Credit Counseling - A consumer program that provides education, counseling, debt management, and debt repayment plan services to debtors.

Consumer Credit Reporting Agency - An organization that is engaged in the preparation of reports used by credit grantors to determine the credit and public records history of an individual. The agency obtains data for these reports from repositories of accumulated credit records as well as from other sources.

Consolidation and Extension Loans (C&E Loans) - A loan modification procedure limited to the state of New York, that reduces the borrowers tax liabilities. Also referred to as a MECA loan.

Construction Loan - A short-term loan for construction of a home. Disbursement of the funds is made in stages as construction progresses.

Consumer Price Index (CPI) - A measure of changes in the cost of goods and services. This statistical information is furnished by the Bureau of Labor Statistics of the Department of Labor. The CPI is often used as an index in leasing.

Contingency Reserve - A reserve account in which funds are held until certain specified conditions are satisfied.

Contract of Sale - For the acquisition of real estate, it is a written agreement between two or more parties stating the terms or conditions of the sale. Also see Purchase Agreement.

Contributions - Closing costs that are normally paid by the borrower are considered contributions if paid by another party.

Conventional Mortgage - A mortgage that is not insured or guaranteed by the federal government (FHA or VA). The terms of the loan adhere to conventional standards within legal limit, by mutual consent of the lender and borrower. Although it is not mandatory and even if the loan amounts are more than conforming guidelines, most conventional loans are made to conform to Fannie Mae and Freddie Mac guidelines.

Conventional Mortgage-Backed Security (MBS) - Mortgage-backed securities not guaranteed by a federal agency. Conventional MBSs are collateralized by conventional home loans with private mortgage insurance. Individually pooled loans usually carry more than the standard 80% LTV ratio.

Conversion Option - On an adjustable rate loan, a conversion option allows the borrower to change the loan terms from an adjustable rate to a fixed rate loan, at a specified adjustment period, without refinancing.

Convertible ARM - A type of adjustable rate mortgage that includes an option for the borrower to change the mortgage to a fixed-rate mortgage in the early years of the mortgage term.

Conveyance - The document, such as deed, lease or mortgage that is used to affect a transfer of ownership.

Cooperatives (Co-ops) - A Cooperative is a type of property ownership evidenced by all of the following characteristics: A corporation holds Title to the property. Ownership is gained by receiving shares of stock in the corporation. A Proprietary Lease or Occupancy Agreement details the owner's rights and privileges.

Corporation - A legal entity organized to have legal power to carry on certain activities. Ownership in a corporation is through shares of stock, but a corporation's stockholders may not be held personally or financially liable for the activities of the corporation. Income for the corporate officers is folded into the officer's individual tax returns (IRS Form 1040).

Cost Approach to Value - A valuation approach in which the value of a property is determined by computing the replacement value of improvements, depreciation, and the value of the land. This approach is most often used in appraising new construction.

Cost-of-Funds Index (COFI) - An index that is used as a base to determine interest rate changes for certain ARM plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.

CPA - Certified Public Accountant, designation awarded by the AICPA. CPI - See Consumer Price Index.

Credit Alert Interactive Voice Response System (CAIVRS) - The system checks the Social Security Number of all borrowers for FHA insured loans (except for Streamline refinances) for delinquent federal debts. Additionally, it checks for suspension or debarment from HUD's Limited Denial of Participation (LDP) list and the government-wide General Services Administration (GSA) List of Parties Excluded from Federal Procurement or Non-procurement Programs.

Credit Analysis - A determination of the risk inherent in extending credit to a particular person or business. Credit analysis considers a loan applicant's income, expenses, liabilities, assets and past use of credit and general business acumen to manage their financial affairs.

Credit History - A borrower's demonstrated willingness to repay debt.

Creditor - The entity named on the Note and other loan closing documents.

Credit Package - Prior approval packages, also known as credit packages, are documents assembled by the Seller that contain information about the borrower's ability to repay the loan. The underwriter reviews the credit package and makes a decision to approve or deny the loan based on the three Cs of underwriting: capacity, credit, and collateral. The credit package contains the original processing documents necessary to obtain a loan approval and to sell a loan into the secondary market. This includes the typed, signed, and dated 1003, handwritten 1003, typed 1008, original credit report and supporting documents, signed copies of tax returns and profit and loss statements for self-employed borrowers, original verification of deposit for alternative documentation, original appraisal, copy of purchase contract signed by all parties, and/or copies of closing/escrow instructions.

Credit Rating - A rating given to a person or company that establishes creditworthiness based upon present financial condition, experience, and past credit history.

Credit Report - A detailed account of the credit, employment and residence history of an individual used by a prospective lender to help determine creditworthiness. Credit reports also list any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual.

Credit Repository - An organization engaged primarily in gathering, recording, updating, and storing financial and public record information concerning the debt repayment histories of individuals.

Credit Score - A numeric value based on quantitative models designed to measure a borrower's credit risk.

Credit Worthiness - A borrower's combined credit and capacity to repay debt.

Creditor - The person to whom a debt is owed, especially money or goods.

CUNA - Credit Union National Association.

Cut Rate Buydown - A type of buydown where the funds for the buydown are supplied by the lender.

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DD Form 13 - Statement of Service document that may be issued when a veteran is still on active duty to verify military service.

DD Form 214 - A Report of Separation From Active Duty form for veterans separated after January 1, 1950.

Debt-to-Income Ratio (DTI) - A borrower's monthly payment obligation on long-term debts divided by gross monthly income, expressed as a percentage. The DTI ratio consists of two separate calculations: a monthly housing expense-to-income ratio and a total obligations-to-income ratio. Both ratios that are used in determining whether a borrower can qualify for a mortgage. Also see Income Analysis.

Declaration - A legal document establishing a condominium or PUD project that describes the entire project, including each unit and all common areas, and specifies essential elements of ownership that permanently govern its operation.

Declaration Date - The month and year in which a Presidential Declaration was issued, declaring a specific area a major disaster area.

Declaration of Trust - An instrument that identifies a property held by a trustee for another individual.

Deed - A written instrument by which title to real property is transferred or conveyed from one party to another.

Deed-In-Lieu - A deed given by the borrower (also referred to as a mortgagor) to the lender (also referred to as the mortgagee) to satisfy a debt and avoid foreclosure. This is also called a voluntary conveyance.

Deed of Trust - A type of security instrument in which the borrower conveys title to real property to a third party (referred to as trustee) to be held in trust as security for the lender, with the provision that the trustee shall reconvey the title upon the payment of the debt, and conversely, will sell the land a pay the debt in the event of a default by the borrower. Also see Mortgage and Security Deed.

Deed Restriction - A limitation placed in a deed limiting or restricting the use of the real property.

Delivery - The physical transfer of loan documents to an investor or agent in conformance with the commitment.

Department of Housing and Urban Development (HUD) - Established by Congress in 1965 and is responsible for the implementation and administration of government housing and urban development programs. These programs include community planning and development, housing production and mortgage insurance (FHA), secondary mortgage market activities (GNMA) and equal opportunity in housing.

Direct Endorsement (DE) - Lenders authorized by FHA to underwrite loans on behalf of HUD. Lenders certify that the loan has been closed according to HUD's regulations and policies.

Direct Trade - A commitment for a group of loans delivered to fill a trade negotiated directly with JimPrieto.com under the terms of a customized contractual agreement.

Discount - In loan originations, a discount refers to an amount withheld from the loan proceeds by a lender. The purpose of the discount is to adjust the yield upward, either in lieu of interest or in addition to interest.

Documentary Stamp - A form of tax in some states imposed on the transfer of real property.

Domestic Partner - An eligible borrower and one other person (of the same or opposite sex) sharing a committed relationship that includes the following features: a) common residence, b) financial interdependence, c) joint responsibility for each other's welfare, and d) couples who consider themselves to be life partners. Roommates, siblings, parents and people sharing other blood relationships are not considered to be domestic partners.

Donee - The person receiving a gift or contribution.

Donor - The person making a gift or contribution.

Double Escrow - One of the methods utilized to avoid down payment requirements. Parties involved in property flipping schemes often use double escrows in the original acquisition of the property.

Draw - An advancement of money such as the periodic advancing of funds according to a schedule of payments in a construction loan agreement. Also referred to as an advance, disbursement, payout, progress payment or takedown.

Draw Period - The time period in which the borrower may access and use the home equity line of credit (HELOC).

Due Diligence - The attention and care legally expected or required of a person when in the performance of a specific activity. For example, an appraiser uses due diligence to ensure the reliability of the comparable data used. If data is provided by a party that has a financial interest in the property, such as the real estate broker, the appraiser must re­verify the data with an uninterested party.

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Easement - The right, privilege or interest to the limited use or enjoyment of land held by another. It is created by grant or agreement for a specific purpose, such as enabling sewer lines or utility lines to be laid.

ECOA - See Equal Credit Opportunity Act. Encroachment - The trespass of a structure or construction, partly or wholly, on the property of another.

Encumbrance - Anything that affects or limits the fee simple title to property, such as mortgages, easements, or restrictions of any kind. Liens are special encumbrances that make the property security for the payment of a debt.

Endorsement - The signature of the payee on the back of a negotiable instrument.

Energy Efficient Mortgage - An energy efficient property uses cost-effective design, construction, materials, equipment, and site orientation to conserve energy that can result in increased savings on monthly utility bills. Borrowers that receive a high energy rating from the appraiser or an energy consultant may be eligible for increased ratios in the credit underwriting process for eligible conforming loan programs.

ENO - Errors and omissions insurance.

Equal Credit Opportunity Act (ECOA) - Also referred to as Regulation B. A federal law enacted in 1975 that requires lenders and other creditors to make credit equally available regardless of race, sex, color, religion, national origin, marital status, age or receipt of public assistance or the exercise of rights under the Consumer Credit Protection Act.

Equity - The difference between fair market (or appraised) value of a property and outstanding mortgage balances.

Equity Exchange - Real estate transaction in which a property is exchanged for a similar or like property. These transactions are typically done for tax purposes and require a pricing adjustment.

Equity Line of Credit - A type of secondary financing where the borrower is approved for a maximum loan amount (line of credit) but does not have to use the total loan amount at one time. The interest rate is based on a pre-determined index and margin and the borrower makes monthly payments based on the actual funds drawn from the total amount approved.

Equity Skimming - This involves investment property. The owner/investor collects the monthly rents and fails to make the mortgage payments.

Equity Take Out - All of the proceeds from a refinance transaction that are not used for purposes related to the property.

ERISA - Employee Retirement Income Security Act.

Escrow Account - A trust account established to hold funds allocated for the payment of real estate taxes, hazard or mortgage insurance premiums, and so on as they are received each month and until such time as they are disbursed to pay related bills. Also referred to as an impound account.

Escrow Agent - A person or organization having a fiduciary responsibility to both the borrower and lender to ensure that the terms of the purchase are carried out.

Escrow Holdback - Any portion of a loan that is held until some additional requirement, such as completion of or an improvement project is attained. Escrow holdbacks are a borrower accommodation that allow the loan to close and the borrower to occupy the property while incidental work is in progress. JimPrieto.com will allow escrow holdbacks for property repairs that cannot be completed within 30 days due to inclement weather. If the repairs cannot be completed within the specified time, an extension may be allowed. Also see Holdback.

ESOP - Employee Stock Ownership Plan.

Estoppel - A ban preventing a person from making an allegation or a denial that contradicts hat that person previously stated as the truth.

Estoppel Certificate - A written statement setting forth certain facts about a piece of real estate, such as the precise amount of indebtedness remaining.

Execute - To sign a deed and/or any security instrument.

Extenuating Circumstance - An event over which the borrower had no control (such as an extended illness, an extended period of unemployment resulting from corporate downsizing or layoffs, the death of a spouse or co-borrower, and so on), has been resolved, and is not likely to recur.

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Factory-Built Housing - Housing in which the actual unit and/or components are constructed in a factory and then transported to the site where the structure will be permanently located. Manufactured, mobile, modular, panelized and prefabricated are all classifications of factory-built housing.

Fair Credit Reporting Act - The act is designed to regulate the consumer reporting industry; place disclosure obligation on users of consumer reorts, and ensure fair, timely and accurate reporting of credit information. The act does not apply to commercial transactions.

Fair Market Value - See Market Value. Family Member - The borrower's spouse, child, parent, or any other individual related to the borrowers by blood, adoption, or legal guardianship.

Fannie Mae - See Federal National Mortgage Association.

FASB - See Financial Accounting Standards Board. FCRA - Fair Credit Reporting Act. FDIC - See Federal Deposit Insurance Corporation.

Federal Deposit Insurance Corportion (FDIC) - This agency insures most commercial banks and savings banks in the United States.

Federal Home Loan Mortgage Corporation (FHLMC) - Also referred to as Freddie Mac. A quasi-governmental agency that purchases conventional mortgages in the secondary mortgage market. It sells participation sales certificates secured by pools of conventional loans; their principal and interest are guaranteed by the federal government through FHLMC. It also sells GNMA bonds to raise funds to finance the purchase of mortgages.

Federal Housing Administration (FHA) - A division of the Department of Housing and Urban Development (HUD) that was established in 1934 to increase home ownership by providing an insurance program to safeguard lenders against borrower default. The FHA sets standards for property construction and credit underwriting, but it does not lend money, plan or build housing.

Federal National Mortgage Association (FNMA) - Also referred to as Fannie Mae. A government-sponsored private corporation created by Congress to support the secondary mortgage market. It is the largest purchaser and seller of conventional residential mortgages, as well as mortgages insured by the FHA or guaranteed by the VA.

Federal Savings and Loan Insurance Corporation (FSLIC) - An agency of the federal government that insures the savings accounts of federally chartered thrift institutions. Private companies may insure savings and loan asociations without th backing of the federal government.

Fee Land - This generally refers to an estate in land that is absolute and unrestricted. The owner is entitled to dispose of the entire property or various interests in the property without hindrance. This is also referred to as fee title or fee simple title.

Fee Simple - This is the highest form of ownership a person can have in real estate, including the right to occupy, dispose of, and bequeath the property.

FHA - See Federal Housing Administration.

FHA Case Number - The 13-digit number used to identify the case on HUD/FHA's records during processing and, if insured, through the life of the loan. The number consists of: The 3-digit prefix that identifies the state and the HUD/FHA field office where the loan was accepted for processing. The 7-digit case serial number. The 3-digit suffix that identifies the loan as an ARM or fixed rate.

FHA Mortgage - A mortgage that is insured by the Federal Housing Administration; it is referred to as a government mortgage.

FHA Mortgagee Number - The 10-digit number assigned to a mortgage lender's branch office when approved to do business with HUD/FHA.

FHA Prefix Number - The 3-digit code identifying the state and the HUD/FHA field office where the loan was accepted for processing.

FHA Ratios - FHA uses Effective Gross Income to qualify loans. The ratios of 31%/43% may be exceeded only when significant compensating factors are present as set forth in HB 4155.1 REV-4, Section 2-13. FHA Suffix Number - The 3-digit code identifying the type of FHA loan involved and what insuring section the loan is insured under.

FHLMC - See Federal Home Loan Mortgage Corporation (Freddie Mac).

Fidelity Insurance - A type of insurance that a condominium or PUD homeowners' association (HOA) obtains to protect itself against economic loss from dishonest acts of anyone who either handles (or is responsible for) funds that the homeowners' association holds or administers, whether or not that individual received compensation for services.

Fiduciary - A person who acts in a financial role for the benefit of another.

Financial Accounting Standards Board (FASB) - This is a private independent entity that set standards for financial accounting and reporting. Financed Single Premium Mortgage Insurance (FSPMI) - Under this program, borrowers may elect to purchase and finance a life-of-loan policy, instead of making monthly mortgage insurance payments.

First Mortgage - A mortgage that is the primary lien against a property.

Fixed Rate Mortgage - A mortgage that provides for only one interest rate for the entire term of the mortgage. If the interest rate changes because of enforcement of the due-on­sale provision, the mortgage is still considered a fixed rate mortgage.

Flood Certificate - A flood certification issued by an independent flood service company is required by JimPrieto.com for all loans. This certification must identify the current flood zone in which the subject property resides. Flood insurance is only required for properties located in special flood hazard areas or flood zones.

Flood Insurance - Insurance that compensates the property owner for physical property damage resulting from flooding. Flood insurance is required if the property improvements are located in federally designated Special Flood Hazard Areas. If the land is in the flood hazard area, but the improvements are not, flood insurance is not required.

Floor - On an adjustable rate mortgage (ARM), the minimum interest rate the loan could reach over the adjustment periods.

Flow Business - Commitments that are priced per an extended contract between JimPrieto.com and the Seller. Assignment of trade and direct trade commitments are considered to be flow business.

FNMA - See Federal National Mortgage Association (Fannie Mae). Forbearance - Refraining from taking legal action despite the fact that the mortgage is in arrears. It is usually granted only when a borrower makes satisfactory arrangements by which the arrears will be paid at a future date.

Foreclosure - A legal procedure in which a mortgaged property is sold by the trustee to pay the outstanding debt following default. The proceeds of the sale are applied to the mortgage debt. Also referred to as Sheriff's Sale or Court Sale. Also see HUD Repo.

Foreclosure Bailout - This loan may be either a refinance or purchase transaction when the true purpose of the loan is to bailout the property owner from an existing lien that is in foreclosure. These transactions can be structured as either a refinance or a purchase.

Foreign National - A citizen of another country who periodically visits the United States and is purchasing a property to reside in during visits to the U.S. A foreign national is not a permanent or non-permanent resident alien, and does not have full or partial diplomatic immunity. Foreign nationals must meet the standard requirements of an eligible borrower, and provide the following documentation: Residency visa to visit or live in the U.S. for a limited amount of time. Eligible visas are: B-1, B-2, E-1, E-2, G1 through G5, I, J-1, J-2, K-1, O-1 and R-1. Copy of unexpired passport. Social Security Number or Certificate of Foreign Status form W-8.

Fraud - The intentional perversion of truth in order gain an advantage over another.

Fraud for Housing - The borrower or other interested parties misrepresents information provided to the lender in order to qualify for a loan.

Fraud for Profit - A variety of schemes designed to misrepresent information about the value or ownership of a property in order to create financial gain for the persons involved in the schemes.

Freddie Mac - See Federal Home Loan Mortgage Corporation (FHLMC).

FSLIC - See Federal Savings and Loan Insurance Corporation.

FSPMI - See Financed Single Premium Mortgage Insurance.

Full Documentation - The use of standard FNMA/FHLMC verification forms mailed directly to and received directly from the borrowers' employer, bank, mortgage company or landlord, to document the borrowers' income, employment, available funds, and mortgage payment history. When Full documentation is used, no additional documentation (such as bank statements or pay stubs) is required.

Fully-indexed Rate - An interest rate on an adjustable rate mortgage (ARM) that equals the index plus the margin.

Funding Date - The date when payment is disbursed to the Seller for a mortgage purchased.

Funding Fee - See VA Funding Fee.

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Gap Financing - See Bridge Loan.

General Partner - The co-owners of a business venture who are liable for all the debts and other obligations of the venture, as well as for the management and operation of the partnership. The general partner can have control of the business and can take actions that are binding on the other partners.

General Partnership - A business owned by two or more persons who share in the right and responsibility to manage the business, with each partner responsible for all the debts and obligations of the business. The partnership is immediately dissolved upon the incapacity or withdrawal of any of the partners. Also see Limited Partnership.

Gift Funds - Funds given to the borrower by a relative, domestic partner, fiancé/fiancée, church, municipality or non-profit organization that do not have to be re-paid. Gift funds may be applied towards the down payment, closing costs and/or reserves.

GI Loan - A mortgage loan available to qualified veterans and guaranteed by the VA.

Ginnie Mae - See Government National Mortgage Association (GNMA).

GNMA - See Government National Mortgage Association (Ginnie Mae).

Good Faith Estimate - At the time of application, the borrowers must be provided with a Good Faith Estimate, or its equivalent, itemizing closing costs.

Government Loans - Loans guaranteed by the VA or insured by FHA.

Government National Mortgage Association (GNMA) - Also known as Ginnie Mae, it was created in 1968 by an amendment to Title III of the National Housing Act. This governmental corporation guarantees securities backed by mortgages that are insured or guaranteed by other government agencies, such as FHA and VA.

Graduated Payment Mortgage (GPM) - A mortgage with lower initial monthly payments than required for full amortization of the loan. Payments are then increased by a specified percent each year of the graduated payment period. At the end of the period, payments are in an amount that will fully amortize the mortgage.

Grant - Money given to a borrower by an organization for a special purpose. Eligible sources include a church, public or non-profit organization and may be used for down payment, closing costs or to satisfy reserves requirements.

Grant Deed - A written instrument by which some degree of ownership interest in real estate is transferred from the Grantor to the Grantee.

Grantee - The person to whom an interest in real property is conveyed.

Grantor/Trustor/Settlor - The persons who established or created the trust and contributed the property, and its obligations, directly to the trust. The use of the term grantor, trustor, or settlor depends on the state where the trust was created or originated.

Gross Rent Multiplier (GRM) - Determined by dividing the sales prices of the comparable properties that were rented at the time of sale by their monthly market rent, which is then reconciled to a single GRM for the subject property.

Ground Lease or Rent - A lease of land alone, as distinguished from a lease of land with improvements on it, usually on a long-term basis. Ground Rent - The amount of money that is paid for the use of land when title to a property is held as a leasehold estate, rather than as fee simple.

GSA (General Services Administration) - The GSA provides a list of debarred, suspended, voluntarily excluded, or otherwise ineligible parties from a HUD-insured mortgage. The list represents all federal agencies in the nation.

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Hard Costs - Land acquisition and construction costs.

Hazard Insurance - Insurance coverage that compensates the property owner for physical damage to the dwelling caused by wind, fire, or other natural disasters. It generally does not over damage caused by flood, earthquake and/or other types of hazards that typically require special coverage or separate endorsements.

High-Rise Condominium - A condominium project that is 5 or more stories high. These types of projects are restricted to market areas where the appraisal validates that high-rise condos are common to the area and acceptable to buyers.

HMDA - See Home Mortgage Disclosure Act.

HOA Fee - See Homeowners Association Fees.

HOEPA - See Home Ownership and Equity Protection Act of 1994.

Holdback - In construction or interim lending, a percentage of the contractor' s draw is held back to provide additional protection for the interim lender, often an amount equal to the contractor's profit, that is given over when the interim loan is closed. The term also applies to that portion of a loan not funded until some additional requirement, such as completion or an improvement project, is attained. Also see Escrow Holdback.

Home Equity Line of Credit (HELOC) - A revolving line of credit loan based on the equity in the subject property. The HELOC is typically in a subordinated lien position and permits borrowers to obtain cash advances based on the approved line of credit.

Home Mortgage Disclosure Act (HMDA) - Also known as Regulation C. This refers to federal legislation that requires lenders to compile and disclose data on where their mortgage and home improvement loans are being made to assist the federal government in determining if the lender is refusing to make loans in certain urban areas (known as redlining).

Homeowners Association (HOA) - A nonprofit corporation or association that manages the common areas of a PUD or condominium project. In a condominium project, it has no ownership interest in the common areas. In a PUD project, it holds title to the common areas.

Homeowners Association Fees (HOA Fees) - A fee typically paid monthly by a homeowner to a homeowners association in order for the association to take care of common-owned areas of a condominium project or PUD.

Home Ownership and Equity Protection Act of 1994 (HOEPA) - The Act was designed to notify consumers when their loan is classified as a high-rate or high-fee mortgage. HOEPA was implemented by Section 32 of Regulation Z, and so these loans are called either HOEPA loans or Section 32 loans. If a loan falls under HOEPA, an additional disclosure is required and must be given to and acknowledged by the borrower and any other party (spouse or other) that signs the mortgage or Deed of Trust and has an interest in the property at least three business days prior to the borrower's signing final loan documents.

Homestead - In some states, the home and property occupied by an owner are protected by law, up to a certain amount, from attachment and sale for the claims of creditors. Depending upon state law, certain judgments are not protected by homestead, and homestead can be waived. Also referred to as Homestead Estate.

HomeStyle Mortgage Loan - A rehabilitation program that offers the borrower (individuals and investors) a loan to finance a first mortgage home improvement loan based on an as-improved value. Borrowers may obtain cash to perform repairs, remodeling, or renovations. HomeStyle loans are a standard FNMA fixed or one year ARM loan with a financed escrow repair holdback and an additional appraisal requiring underwriter review. Also see Community HomeStyle Mortgage Loan.

House America® - The House America loan programs are designed to make mortgage financing more accessible to low-and moderate-income families, minorities, new immigrants, residents of central cities and distressed communities. The programs offer flexible down payment requirements, minimal or no cash reserve requirements, and more liberal debt ratios.

Household - All persons occupying a housing unit that has either direct access to the outside or a public area or separate cooking facilities, regardless of whether the members are legally related or not.

Housing Expense-to-Income Ratio - The amount of a borrower's total housing expenses (principal, interest, taxes and insurance) expressed as a percentage of the borrower's income. One of the criteria used by lenders to calculate the risk involved in making a loan to a prospective borrower. Also referred to as Housing Expense Ratio and Housing Ratio.

HUD - See Department of Housing and Urban Development.

HUD-1 Uniform Settlement Statement - A standard form used to disclose at closing. All charges imposed in the transaction, including escrow deposits for taxes, hazard insurance and mortgage insurance must be disclosed separately.

HUD Case Binder - Original processing documents necessary to obtain endorsement for a HUD loan. The documents are assembled in a pre-printed HUD Case Binder file folder.

HUD Repo - (Foreclosure) A HUD property disposition sale of a loan that was underwritten and originated according to HUD guidelines.

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Identity Theft - The unlawful act of capturing someone's personal identifying information, such as name, address, driver's license, date of birth, Social Security number, account information, account login credentials, or family identifiers, and using it to open up or take over a credit, deposit, or other financial account in that person's name.

IHA - See Indian Housing Authority.

Illinois Land Trust - An Illinois Land Trust is a form of property ownership that is used primarily to protect assets. The trust splits ownership between a trustee, who holds legal and equitable title to the property on behalf of the beneficiary, and the beneficiary who holds the powers of management and control of the property. An Illinois Land Trust is created by a trust deed that conveys title from the beneficiary to the trustee and a trust agreement between the trustee and beneficiary that defines their relative interest, rights and duties.

Impound - A specified portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, or mortgage insurance as they become due. In some states, it is also referred to as escrow or reserves.

Impound Account - An impound account is established by the loan servicer to hold funds allocated for the payment of real estate taxes, hazard, and/or mortgage insurance premiums.

Inclusionary Zoning - Any project where deed restrictions are placed on a specified number or percentage of the units as a condition of securing zoning approval, density approval, building permits or conversion approval. Such deed restrictions may limit the rights of the mortgagee or subject the unit to sale or resale controls. Properties subjected to such restrictions are restricted units. Non-controlled properties are unrestricted units

Income Approach to Value - An appraisal valuation method where the value of a property is based on the market rent or income that the property can be expected to earn.

Income Limits - Income limit restrictions established for low-to-moderate income borrowers to qualify for admission to subsidized housing programs. The limits are established by law and are based on family size and geographic location.

Index - The interest rate for an adjustable rate mortgage is tied to a published rate called an index. The index is the base for the cost of the money that is loaned to the borrower. By law, the index to which an adjustable rate mortgage is tied must be published regularly and cannot be under the control of any one financial institution. In addition, the borrower must be able to independently verify the index. The most commonly used indexes used for adjustable rate mortgages are the LIBOR, U.S. Treasury (T-Bill), and COFI.

Indian - Any person recognized as being Indian or Alaska Native by an Indian Tribe, the federal government, or any state, and includes the term Native American.

Indian Area - The area where an Indian Housing Authority (IHA) or Tribal Housing Entity (THE) is authorized to provide housing.

Indian Housing Authority (IHA) - Any entity that is authorized to engage in or assist in the development or operation of low-income housing for Indians, and that is established either (1) by exercise of power of self-government by an Indian Tribe independent of State law; or, (2) by operation of State law providing specifically for housing authorities for Indians, including regional housing authorities in the State of Alaska. Individual Taxpayer Identification Number (ITIN) -ITINs are for federal tax reporting only, and are not intended to serve any other purpose. An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit. ITINs are not valid identification outside the tax system. ITIN numbers are often used by undocumented aliens who are unable to obtain a Social Security number.

In-File Credit Report - An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.

Initial Interest Rate - The original interest rate of the mortgage when it is closed. This rate changes for ARM loans.

Installment Debt - Borrowed money that is repaid in several successive payments, usually at regular intervals, for a specific amount and for a specified term. For example, an auto loan.

Institutional Lender - A financial institution that invests in mortgages carried in its own portfolio. Excluded are brokers, submitting brokers, and any private party/property seller carryback financing.

Interest Rate - The percentage paid for the use of money, usually expressed as an annual percentage.

Interest Rate Buydown Plan - An arrangement wherein the property seller (or any other party) deposits money into an account so that it can be released each month to reduce the borrower's monthly payments during the early years of a mortgage. During the specified period, the borrower's effective interest rate is "bought down" below the actual mortgage interest rate.

Interest Rate Cap - A limit on the interest rate increases and/or decreases during each interest rate adjustment (referred to as the adjustment period cap) or over the term (referred to as the life cap) of the adjustable rate mortgage.

Interest Rate Change Date - The date when the interest rate and payment amount will change, as shown on the ARM Note and Addendum.

Interest Rate Floor - On an adjustable rate mortgage it is the lowest level to which the interest rate may adjust.

Interested Party - Person or entity who benefits from the completion of the property sales transaction and may be the property seller, builder, developer, real estate agent, or lender.

Investment Property - A one-to-four unit property that the borrower does not occupy. This definition is used whether or not the property produces revenue.

Investment Quality - A mortgage made to borrowers from whom timely repayment of the debt can be expected. The mortgage is secured by real property providing value to recover the lender's investment if the loan defaults.

Investor - Any person or institution that invests in mortgages or mortgage-backed securities.

IRS - Internal Revenue Service.

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Joint Loan - A VA loan made to a veteran and a non-veteran who is not the veteran's spouse OR two or more individual veterans take title together and each use an equal portion of his/her available eligibility to guarantee the loan.

Joint Tenancy - Joint ownership by two or more persons giving each tenant equal interest and equal rights in the property, including the right of survivorship.

Jointly Owned Property - Property held in the name of more than one person.

Judgment - The decision of a court of law. When recorded, the judgement becomes a lien on the real property of the defendant. A vacated judgment is a judgement that has been set aside or annulled and has no legal effect.

Jumbo Loan - A mortgage loan that has a principal balance greater than the amount eligible for purchase by FNMA or FHLMC.

Junior Lien - A lien that is subordinate to the claims of the holder of a prior (senior) lien. Also referred to as a junior mortgage.

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Late Charge - An additional charge that a borrower is required to pay as a penalty for failing to pay a regular installment when it is due.

Layered Risk - The presence of more than one risk factor on a loan that may change the overall risk of a mortgage due to the overlap (or layers) of factors. Lease - A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.

Lease Option - A lease with a clause stating that the lessee has the right to purchase the property. The price and terms must be set forth in writing for the option to be valid. Lease Purchase

Agreement - An arrangement whereby part of the rent payment is applied to the purchase price and when the prearranged total amount has been paid, title is transferred.

Leasehold or Leasehold Estate - A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it. When the lease expires, all rights revert back to the owner. The lease term should be at least 5 years longer than the term of the mortgage.

Lender Appraisal Processing Program (LAPP) - Designed to speed the time to loan closing by allowing VA-authorized lenders to receive appraisal reports directly from appraisers and process them without VA involvement.

Lender Paid Mortgage Insurance (LPMI) - See Tax Advantage Mortgage Insurance (TAMI). LIBOR - See London Interbank Offered Rate.

Lien - A legal hold or claim of one person on the property of another as security for a debt or charge.

Life Cap - This is the maximum limit the interest rate may change over the life of an ARM loan. Life Estate - A freehold estate giving a beneficiary all property rights, except the right to sell. The estate is terminated upon the death of the beneficiary. Limited Denial of Participation (LDP) (List of Parties Excluded from General Procurement of Non-Procurement Program) - A list of parties that may not be eligible for a HUD-insured mortgage. Also see GSA.

Limited Partnership - A partnership that consists of one or more general partners who are fully liable, and one or more limited partners who are liable only for the amount of their investment. The limited partner has limited decision-making ability, to the extent of their investment into the partnership. A limited partnership is not dissolved upon the incapacity or withdrawal of any of the partners. Individual partners pay taxed on their proportionate share of the net income on the individual income tax return (IRS Form 1040). Also see General Partnership.

Limited Review - Under a limited review, the lender does not have to evaluate the project to determine whether it satisfies the criteria for FNMA Type A, B or C, or FHLMC Class I, II or III projects. The limited review is permitted on mortgages acceptable for certain attached and detached condominium and attached PUD projects. Line of

Credit - An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specific borrower. A home equity line of credit is secured by the mortgage against the borrower's home.

Loan-To-Value (LTV) Percentage - See Loan-to-Value (LTV) Ratio.

Loan-To-Value (LTV) Ratio - The relationship between the unpaid principal balance of the mortgage and the lesser of the property's appraised value or sales price.

Loft Style Condominium - A condominium project with units on one or more floors of old warehouse of factory-type buildings in urban areas.

Look-Back Period - The date on which the index value that will be used to establish the next interest rate change for an Adjustable Rate Mortgage (ARM) loan is determined. It is a specified number of days, usually 30 to 45, before the interest rate change date.

London Interbank Offered Rate (LIBOR) - The LIBOR index is based on the average rate of interest that major London banks are willing to pay each other for U.S. dollar deposits for various terms. Low-Rise Condominium - A real estate project of no more than four stories, in which each unit owner holds title to a unit in a building, an undivided interest in the common areas of the project, and sometimes, the exclusive use of certain limited common areas.

LPMI (Lender Paid Mortgage Insurance) - See Tax Advantage Mortgage Insurance (TAMI).

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Major Metropolitan Area - A major metropolitan area is a large population nucleus, together with adjacent communities having a high degree of social and economic integration with the core. Major metropolitan areas comprise one or more entire counties, except in New England, where cities and towns are the basic geographic units.

Mandatory Commitment - A commitment by the Seller to deliver a specific dollar amount of a specific product within a specific time frame.

Manufactured Housing - Single family housing unit that is constructed off-site in a factory according to a federal building code established by HUD and which became effective June 15, 1976. Sections are transported to a permanent site and attached to a foundation.

Margin - The amount that is added to an index value to create the mortgage interest rate for an ARM loan.

Market Approach to Value - An approach method where the value of a property is based on an analysis of comparable sales, contract offerings, and listings of properties that are the most comparable to the property that is being appraised.

Market Value - The highest price that a buyer would pay and the lowest price that a seller would accept, neither one being compelled to buy or sell.

Marketable Title - A title that is free and clear of objectionable liens or encumbrances.

MBA - See Mortgage Bankers Association of America.

MBB - See Mortgage-Backed Bond. MBS - See Mortgage-Backed Security. MCC - See Mortgage Credit Certificate.

Mechanic's Lien - A lien to protect and secure the payment for labor or materials.

MERS (Mortgage Electronic Registration System) - An electronic registration system that tracks the mortgage rights of a loan. When a loan is registered with MERS, there is no longer a need for an assignment of the security instrument as changes in servicing and beneficial ownership rights are tracked by MERS over the life of the loan.

Metes and Bounds - A description of a parcel of land in a deed in which the boundaries are defined by directions and distances.

MI - See Mortgage Insurance.

MIP - See Mortgage Insurance Premium.

Mixed Use Property - A mixed use property is a property that has a business use in addition to its residential use, such as a property with space set aside for a day-care facility, a beauty or barber shop, a doctor's office, and so on.

MLS - See Multiple Listing Service.

Mobile Home - The term used for manufactured homes built prior to June 15, 1976 before the HUD building code went into effect. JimPrieto.com will not purchase loans secured by mobile homes.

Modification, Extension, and Consolidation Agreement (MECA) - A loan modification procedure limited to the state of New York that reduces the borrower's tax liabilities. Also referred to as a C&E loan.

Modular Home - A factory-built residence composed of modular sections that are transported to a permanent site and erected on a permanent foundation. Built to state building codes where the home will be located.

Mortgage - A conveyance of an interest in real property given as security for payment of a debt.

Mortgage-Backed Bond (MBB) - A bond that is backed by a pool of mortgages. The bond is a general obligation of the issuikng institution. It is a non-pay-through security secure by the mortgage collateral that is owned by the issuer.

Mortgage Backed Security - Securities or investments that represent an undivided interest in a pool of loans secured by mortgages or deeds of trust. Principal reductions from the underlying mortgages are used to pay off the bond or securities.

Mortgage Bankers Association of America (MBA) - A nationwide association devoted exclusively to the field of mortgage and real estate finance.

Mortgage Credit Certificate (MCC) - A non-refundable tax credit bearing from 10% to 50% of the interest paid on a home mortgage loan. There are qualifying restrictions such as limiting the program to first-time homebuyers with restricted income limits and sales prices.

Mortgage Insurance (MI) - Insurance that protects mortgage lenders against loss in the event of default by the borrower. Also see Private Mortgage Insurance (PMI).

Mortgage Insurance Premium (MIP) - For FHA loans only, a fee paid by the borrower (mortgagor) that insures an FHA lender (mortgagee) against loss. MIP does not pay off the loan if the borrower dies. Mortgagee - The lender in a mortgage transaction.

Mortgagor - The borrower in a mortgage transaction who pledges property as a security for a debt.

Multiple Listing Service (MLS) - A joint effort by real estate brokers to pool their listings so that all members of the multiple listing services will have an opportunity to sell the listing. A multiple listing is an exclusive right to sell with an additional obligation of liting the property in a multiple listing service.

Mutual Help Units - A HUD housing program offering home ownership opportunities for Native American families. Mutual Help participants may use the Section 184 program to acquire the property or acquire and rehabilitate their home, or may use Section 184 to rehabilitate Mutual Help homes that have been paid off.

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Negative Amortization - A loan payment schedule that produces additions to the principal, not a reduction. The unpaid interest is added to the mortgage principal in a loan. This causes the principal balance to increase rather than decrease because the mortgage payments do not cover the full amount of interest due.

Negotiable Instrument - Any money instrument (check, Certificate of Deposit, stock, promissory note) that is transferable from one person to another.

Negotiated Commitments - A commitment taken for a group of loans in excess of $1,000,000 for which the parameters of the loans being delivered are outside the scope of JimPrieto.com's standard loan programs or delivery profiles (such as a group of seasoned loans.) A unique agreement can be drafted for the acquisition of these loans.

Negotiated Transactions - Multiple loans delivered under agreed-upon terms.

New Construction - Newly constructed property that has never been occupied.

No Cash-Out Refinance - A refinance transaction in which the amount of money from the new loan is used to repay the existing first mortgage, to pay closing costs, point, prepayment penalties, and any seasoned subordinate mortgage liens. Incidental cash back may not exceed the lesser of 2% of the principal amount of the new mortgage or $2000. Also referred to as a Rate and Term refinance.

No Income No Asset (NINA) - A documentation option eligible on select non-conforming loan programs. The borrower's employment, income or assets are not disclosed anywhere in the loan file or verified during the underwriting process.

No Ratio - A documentation option eligible on select non-conforming loan programs. The borrower's source of income is verified while the amount of income is neither disclosed anywhere in the loan file nor verified during the underwriting process.

Non-Arm's Length Transaction - A transaction with a family member or relative, or when a personal or business relationship exists between the borrowers and the builder or property seller. This relationship may influence the transaction. Also see Arm's Length Transaction.

Non-Conforming - A mortgage loan that does not meet the loan amount limits and credit characteristics set by Freddie Mac and Fannie Mae.

Non-Credit Payment Reference - A continuing obligation (such as rent, utilities, and insurance) that requires periodic payments, at least quarterly. Establishes a minimum payment history; the non-credit payment reference must have existed for at least 12 months.

Non-Farm - An area located in a rural area but cannot be used to grow crops that provide income.

Non-Occupant Co-Borrower - A co-borrower that does not occupy the subject property or a unit thereof.

Non-Owner Occupied - A property that is not occupied by the borrower. Also referred to as investment property. Non-Permanent Resident Alien - Non-United States citizens who have no valid evidence of permanent residency, but have valid visas. Acceptable visas are H-1, H-2A, H-2B, H-3, L-1, E-1, and G series.

Non-Traditional Mortgage Credit Report - A credit report derived from parties other than normal credit grantors to document all non-traditional or non-credit payment references.

Non-Warrantable - Condominium projects that do not comply with the standard condominium warranties for minimum pre-sale requirements or maximum concentrations. Non-warrantable condos are only eligible under select non-conforming loan programs.

Notary - A licensed witness to a legal action with a current commission (not expired) and evidenced by a notary stamp.

Note - A written promise to pay a specified sum of money at a stated interest rate during a specified term.

Note Rate - The interest rate paid by the borrower, as stated on the note. Occupancy - Physical possession of real estate.

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Occupant Borrower - When the borrower is the owner and occupant of the property.

Original Appraised Value - On construction-to-permanent loans, the estimate of value based on plans and specifications at the time of application.

Origination Fees - The fees charged by a lender to prepare loan documents, make credit checks, inspect, and sometimes appraise a property. The fees are usually computed as a percentage of the face value of the mortgage.

OTMIP - One-time mortgage insurance premium (used on HUD and FHA loans).

Outbuilding - An accessory structure other than the main structure on the land.

Over-improvement - Property that has a sales price (or value) and/or improvements that exceed the upper price range and/or typical improvement for the neighborhood. In some instances, the property can be classified as an over improvement for the neighborhood, and yet be within the neighborhood price range.

Owner-Occupant - An individual who meets all of the following requirements: Is the owner of the subject property and resides there as his/her permanent residence. Is listed as an owner of record (by deed). Has executed the Note and the security instrument.

Owner Occupied - A property that meets the following requirements: Owners reside in the mortgaged premises, using it as a primary residence. Property is listed by owner of record (by deed). Ownership - The right to hold, possess, control and dispose of property.

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Pair-Off - A process under which a Seller that is unable to meet the terms of a mandatory delivery commitment pays a fee calculated against the unused portion of the commitment.

Panelized Home - A factory-built home in which panels, such as a whole wall with windows, doors, wiring inside and outside, are transported to the site and assembled. Built to the local building codes of the jurisdiction in which it is permanently located. Partnership A partnership is formed when two or more individuals create a business and share profits and losses, as well as the responsibility of running the business. There are two types of partnerships: general and limited.

Passive or Unearned Income - Income that may not be readily verifiable by an outside, independent third party source. Examples include dividend/interest income, trust income, child support, alimony or separate maintenance, foster care, unemployment, disability, social security and other retirement income, rental income, and installment sales or land contract income.

Payment Shock - This may occur at the first adjustment of an ARM loan and it causes a dramatic increase in the monthly mortgage payment. The result is that the borrower may not be able to afford the payments.

Payoff - Payment-in-full of a loan at or before maturity. Periodic Cap - The limit on the maximum amount the interest rate can change in any adjustment period following the initial interest rate change on an ARM loan.

Permanent Buydown - The payment of discount in order to lower the interest rate, and thereby the monthly payment amount, of a mortgage loan for the life of the loan.

Permanent Resident Alien - A non-U.S. citizen holding acceptable evidence of permanent residency issued by the Immigration and Naturalization Service (INS).

Piggyback - JimPrieto.com defines piggyback loans as a first and second lien loan secured by the same subject property that close concurrently and both loans are sold to JimPrieto.com at the same time.

Pipeline - Loan applications that are in process but have not been closed or delivered.

P & I - Principal and interest. PITI - Principal, Interest, Taxes and Insurance.

Planned Unit Development (PUD) - A development that has all of the following characteristics: The individual unit owners own a parcel of land improved with a dwelling. This ownership is not in common with other unit owners. The development is administered by a homeowners association that owns and is obligated to maintain property and improvements within the development (for example, greenbelts, recreation facilities and parking areas) for the common use and benefit of the unit owners. The unit owners have an automatic, non-severable interest in the homeowners association and pay mandatory assessments. A "detached" PUD is a free-standing residence within the development. This type of PUD is viewed in the same fashion as a single family residence. An "attached" or semi-detached PUD shares a common wall with one or more units.

PMI - See Private Mortgage Insurance. POC - Paid outside closing.

Poolable Margin - The securitizable margin, consisting of the margin less the Tax Advantage Mortgage Insurance (TAMI) add-on.

Poolable Note Rate - The securitizable note rate, consisting of the loan Note rate less the TAMI add-on interest rate.

Portfolio - A collection of loans held for investment or servicing.

Power of Attorney - A legal document authorizing a person or an organization to act on behalf of another person. The person or organization that is appointed is referred to an Attorney-In-Fact. There are three types of Power of Attorney: General, Special/Specific/Limited, and Durable.

Pre-Approved Loans - A complete underwriting review and approval by JimPrieto.com of an original credit package prior to the Seller closing the loan. Also see Prior Underwriting.

Pre-Fabricated Homes - Factory-built housing in which building materials are factory cut to design specifications, transported to the site and assembled. Built to the local building codes of the jurisdicition in which it it permanently assembled. Pre-fabricated homes include kit, log, and dome homes.

Preliminary Title Report - A report generated by a title search company for the purpose of determining if a real property has clear title or if there are recorded encumbrances, judgments, labor liens, and so on, that would affect the salability of the property.

Preliminary Title Search - A title search by a title company prior to issuance of a title binder or commitment to insure.

Prepaid Interest - Mortgage interest that is paid in advance of when it is due to obtain tax advantages.

Prepayment - Paying off a loan prematurely.

Prepayment Penalty - A charge that a borrower may be required to pay during the early years of a mortgage (typically within the first 5 years) if it is paid in full or if a large payment is made in order to reduce the unpaid balance.

Prepayment Penalty Option - Available on certain loans only, and is designed specifically for borrowers who are not planning to refinance their mortgage within the first 5 years of the loan.

Price - In mortgage banking, price refers to the amount paid relative to the face value of the instrument.

Price Add-Ons - Adjustments made to the loan's base price depending on the type of loan and certain associated factors. The most common factors that affect price add-ons are: Cash out Non-owner Subordinated financing Low credit score High LTV.

Primary Borrower - See Borrower.

Prime Loan - Refers to loans with credit grade A (perfect or excellent) credit scores, typically 620 and above. Also see Subprime Loan.

Prime Rate - The interest rate commercial banks charge their most creditworthy customers for short-term loans.

Principal Residence - A borrower's primary residence. At least one of the borrowers must occupy and hold title to the property, and also execute the Note and mortgage. Also see Owner-Occupant.

Prior Approval - Also referred to as Prior Underwriting. FHA loans - FHA mortgages are underwritten and approved by examiners in the local HUD/FHA office prior to closing.

Conventional loans - Loans may be submitted to JimPrieto.com for review and approval prior to the Seller closing and delivering the loan for purchase.

Prior Underwriting - The complete underwriting of an original credit package performed by JimPrieto.com prior to the Seller closing the loan.

Private Mortgage Insurance (PMI) - Mortgage insurance written by a private company that protects the lender or investor against loss caused by default. Conventional loans with an LTV ratio greater than 80% must have PMI.

Promissory Note - A written promise to pay a specific amount at a specified time. Also referred to as a mortgage note.

Property - The exclusive right of possessing, enjoying and disposing of a thing; that belongs exclusively to a person, commonly used to denote anything that is subject to ownership, and has an exchangeable value. Also see Real Property.

Property Flip - Schemes that occur when ownership of one property changes several times in a brief period. Flips are often used to artificially inflate the value of a property to obtain larger loans than what might otherwise be possible, and to skim the equity off of the property. Flips are also used to conceal the identity of the true buyer or seller of the property.

Property Related Refinance - Proceeds from a loan that are used for purposes related to the property, such as disbursements to repay the existing mortgage, costs incurred in the refinance transaction, or improvements to the property.

Proposed Construction - Property to be constructed. The construction is subject to compliance inspections during construction or is warranted as so constructed.

Public Records - Records that give constructive notice of matters relating to land and court actions involving individuals.

Public Water or Sewage System - A central system owned, operated and maintained by a municipality, county, or other local unit of government with the power of taxation or assessment. PUD - See Planned Unit Development.

Purchase Agreement - A written proposal by a buyer to purchase real estate that becomes binding upon the acceptance of the property seller. Also see Contract of Sale.

Purchase Loan - A mortgage loan in which the funds are used to purchase a property.

Purchase Money Transaction - The acquisition of property through the payment of money or its equivalent.

Purchasing - The process of paying the Seller and setting the loan up on JimPrieto.com's loan servicing system.

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Qualifying Ratios - Calculations used in determining whether or not a borrower can qualify for a mortgage. The ratios consist of two separate calculations: monthly housing expense-to-income and total monthly obligations-to-income.

Quality Control - Policies and procedures designed to maintain optimal levels of quality, accuracy and efficiency in the production, selling and servicing of mortgage loans. Quitclaim Deed - A deed relinquishing all interest, title or claim an owner has in a property. A quitclaim deed implies no warranty or covenants for title.

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Rate and Term Refinance - A refinance transaction in which the amount of money from the new loan is used to repay the existing first mortgage, to pay closing costs, point, prepayment penalties, and any seasoned subordinate mortgage liens. Incidental cash back may not exceed the lesser of 2% of the principal amount of the new mortgage or $2000. Also referred to as a Rate and Term refinance. Also see No Cash Out Refinance.

Real Estate Settlement Procedures Act, (RESPA) - A federal law that regulates the settlement practices within the real estate industry. The law requires the provision of Good Faith Estimates of Closing Costs, prohibits kickbacks for referrals of related services, and standardizes the closing with a required form and format (HUD-1). Regulation X implements the Act.

Real Estate - See Real Property. Real Estate Investment

Trust - A trust that invests at least 75% of its money in real estate or mortgages.

Real Estate Owned (REO) - Property a lender acquires as the result of foreclosure.

Real Estate Settlement Procedures Act (RESPA) - Provides property buyers and sellers with closing cost information so that they fully understand the settlement procedures.

Real Property - Land and improvements permanently attached to it, such as buildings. In some states this is referred to as real estate.

Reason Codes - Credit repositories return up to 4 reason codes (sometimes referred to as score factor codes) with each score. These codes provide an explanation as to why the borrowers did not receive a higher score.

Recast - Recasting is a re-amortization of a mortgage to the remaining term at the current interest rate and current unpaid principal balance. When the loan is recast, the payment required to fully amortize the loan over the remaining term becomes the new minimum payment and the payment cap does not apply. The purpose of recasting is to ensure the loan is paid off within the scheduled amortization period.

Reconveyance - The transfer of the title of land from one person to the immediate proceeding owner. It is used when the performance of debt is satisfied under the terms of a deed of trust.

Redemption Period - The specified period in which a borrower can reclaim foreclosed property by making full payment of the mortgage debt, under a legally enforceable right of redemption in some states.

Reduced Documentation - A documentation option available for non-conforming and non-conforming expanded criteria loans that provides borrowers with income sources difficult to verify (such as self-employment or passive income sources,like a trust) the opportunity to qualify for a loan with limited employment and income documentation requirements.

Refinance Loan - A mortgage loan that renews or reorganizes an existing loan with the same borrowers and property. See Cash Out Refinance and Rate and Term Refinance.

Regulation B, Equal Credit Opportunity Act (ECOA) - A Federal Reserve regulation enacted in 1979 prohibiting discrimination against consumer credit applicants on the basis of race, color, religion, national origin, sex, marital status, age or dependency to public assistance. The regulation also established guidelines for collecting and evaluating credit information.

Regulation C, Home Mortgage Disclosure Act (HMDA) - See Home Mortgage Disclosure Act. Regulation X, Real Estate Settlement

Procedures Act (RESPA) - A Federal law that requires the borrower must be provided with a good faith estimate of closing costs. Prepaid items are not required in the estimate. Lenders are required to use a uniform settlement statement HUD-1 form. All charges in connection with closing must be included in the settlement statement.

Regulation Z, Truth in Lending - A federal regulation that requires borrowers be provided in advance with a full disclosure of all costs included in securing a loan, including the calcula;tion of an annual percentage rate (APR).

REIT - See Real Estate Investment Trust. Relative - The borrower's spouse, child, or dependent, or any other individual related to the borrower by blood, marriage, adoption, or legal guardianship. Rent income - Bases value on the assumption that market value is related to the market rent or income that a property can expect to earn. Rent Loss Insurance - Insurance that protects the 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. Rental Pools - The rental of an individual unit is an option to the borrower and is not mandatory.

REO - See Real Estate Owned. Replacement Cost - The cost to replace a structure with one of equivalent value and function, but not necessarily identical in design or materials. Repository of

Credit Information - An organization engaged primarily in gathering, recording, updating, and storing financial and public record information relative to payment habits of individuals who are being considered for credit extension. The following national organizations meet this definition: Equifax Credit Information Services. Experian Information Systems and Services. Trans Union Credit Information Company.

Repossessions - Repossession is the seizure of the property that is the collateral for a debt. A voluntary or involuntary repossession, which results in a deficiency balance, is considered a collection account.

Rescission - The cancellation or annulment of a transaction or contract by law or by mutual consent.

Resident Alien - An individual who is not a citizen of the United States but is a resident. The Immigration and Naturalization Service (INS) issues permanent resident aliens an Alien Registration Card (also called a green card) as evidence of permanent residency. Also see Permanent Resident Alien.

Residential Mortgage Credit Report (RMCR) - A detailed account of the credit, employment, and residence history of an individual; used by a prospective lender to help determine creditworthiness. Credit reports may also list any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual.

RESPA - Real Estate Settlement Procedures Act. - See Regulation X. Restoration of Entitlement - When the VA restores the amount of guaranty previously used by the veteran.

Revolving Debt - An arrangement for credit in which the customer receives purchases or services on an on-going basis prior to payment. Repayment is usually at regular intervals but not for a specified amount of term. An example is a charge card.

Rider - A document attached to the note or security instrument modifying the terms of the original document.

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.

Risk Factors -Weight given to derogatory credit information or late payments occurring within the past 2 years.

Risk Grades - Subprime loans are divided into risk grades, each with their own separate and distinct underwriting and pricing requirements.

Row Houses - Dwelling units that are attached by common walls but are not classified as a condominium or PUD. Sometimes known as townhouses and typically found in urban areas in the East, Northeast and West Coast of the United States. JimPrieto.com classifies it as an Attached Single Family Residence.

Rural Area - An area designated as rural by the Rural Housing and Community Development Service (RHCDS), and as shown on maps in the local Rural Housing Service (RHS) office servicing the area where the property is located.

Rural Properties - Properties that are located a distance away from common amenities, such as employment centers, schools, hospitals, or shopping areas. Properties must be accessible by all-weather roads and have adequate utilities available and in service.

Rural Housing Community Development Service (RHCDS) - An agency of the U.S. Department of Agriculture. Sales Comparison

Approach to Value -A method of measuring the value of a property based on an analysis of comparable sales, contract offerings, and listings of properties that are the most comparable to the property that is being appraised.

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S Corporation - A corporation that meets the requirements of and elects to be taxed under Subchapter S of the Internal Revenue Code. S Corporations are generally small, start-up businesses that are taxed in the same manner as partnerships. They pass gains and losses onto their shareholders, who are then proportionately taxed at the tax rate for individuals.

Seasoned Loan - JimPrieto.com defines a seasoned loan as a loan in which the borrower has made at least 1 or more payments.

Seasoned Mortgage - CLD considers a loan to be seasoned if at least 1 payment has been made. Seasoned Subordinate Lien - A subordinate lien on which the borrower has made payments for at least 12 months.

Seasoning - The maturing of a mortgage; the period of time that has passed since origination. Also see Seasoned Mortgage. Second Home - A property that the borrower occupies for some portion of the year, in addition to their primary residence. The property must be located in an area that can reasonably function as a second home and must be suitable for year-round occupancy. Typically, this property is located far from the borrower's primary residence, and near either a resort or vacation area, such as mountains, oceanfront, desert, and so on. Second homes may also be located in a major metropolitan area that the borrower visits on a regular basis.

Second Mortgage - A mortgage that is subordinate to the first mortgage. For example, the proceeds from a foreclosure sale must pay the first mortgage before any funds can go to repay the second mortgage.

Secondary Financing - Any loan other than the first or primary loan, which is secured by a mortgage on a property.

Secondary Mortgage Market - A market where existing mortgages are bought and sold to investors, such as, Fannie Mae, Freddie Mac, or Ginnie May. Frees funds for continual lending and aids in distributing mortgage funds on a national level from money-rich to money-poor areas. Also referred to as the secondary market. Section 8 Programs - Monthly income subsidies underwritten by the Department of Housing and Urban Development (HUD), and provided through an approved Public Housing Authority (PHA). Section 8 funds can be used towards the borrower's income on certain loan programs.

Section 32 Loan - As defined under Section 32 of Regulation Z, any high rate or high fee consumer loan secured by the borrower's primary residence. Loans subject to Section 32 requirements are refinances of primary residences and non-purchase money subordinated liens on primary residences with the exception of equity lines of credit.

Section 184 - Indian Housing Loan Guarantee Program - A government program designed to increase the availability of mortgage capital for Native American borrowers selecting home sites on Tribal trust land or within an Indian area. Program is under the jurisdiction of HUD's Office of Native American Programs (ONAP).

Security Deed - State of Georgia's version of a mortgage or deed of trust. Security Instrument - The mortgage, deed of trust or security deed evidencing the pledge of real estate security, as distinguished from the Note or other credit instrument.

Self-Employed Borrower - A borrower who has an ownership interest of 25% or more in a business. The business may be a sole-proprietorship, a general or limited partnership, or a corporation.

Service Release Premium (SRP) - A pricing premium paid to the Seller when JimPrieto.com retains the servicing of the loan after its sale.

Settlement Costs - Money paid by borrowers and property sellers to effect the closing of a mortgage loan. Examples of settlement costs may include an origination fee, discount points, title insurance, appraisal, survey, attorney's fee, and such prepaid items as taxes and insurance escrow payments.

Settlement Statement - A financial disclosure that details all the debits and credits incurred at the closing of a loan. The disclosure is commonly called the HUD-1. Also see Closing Statement.

Settlor/Grantor/Trustor - See Grantor/Trustor/Settlor. SFR - See Single Family Residence.

Short Sale - A workout program where the lender accepts an amount as payment in full that is less than the total payoff due. Typically, this occurs when the borrower sells the property and the sales market has changed making the current value of the property less than the existing loan. Also referred to as Sheriff's Sale or Court Sale.

Signatory - In general, a person who signs a document personally or through his agent and who becomes a party thereto.

Simple Documentation - A documentation option eligible only for Subprime loans that allows borrowers to document their income using bank statements for the most recent and consecutive 6-month period. This option is designed as a convenience for those borrowers with adequate income to qualify. This documentation option is not intended for borrowers who could not qualify for a Full documentation loan.

Simultaneous Loans - A first and second lien mortgage loan secured by the same subject property that are originated and closed together. Also see Concurrent Closing.

Single Family Residence - A residential property on a single lot designed for the use of one family. It can be an attached or a detached dwelling.

Single Width Manufactured Housing Unit - A manufactured housing unit that consists of a single section, that is usually 12 feet wide and from 40 to 64 feet long.

Site Condominium - A condominium project composed solely of one-unit detached dwellings and no common area improvements other than greenbelts, private streets and parking.

Soft Costs - Architectural, engineering, and legal fees as distinguished from land and construction costs. Soft Market - Any area that shows evidence of declining property values, an over supply of property, or a marketing time of more than 6 months.

Sole Proprietorship - A sole proprietorship is a business owned by one person. The individual owner is personally liable for all debts of the business and, therefore, has unlimited liability. There is no distinction between the owner's personal assets and the assets used in the business. Business income or loss is reported on Schedule C of the borrowers' individual tax return (IRS Form 1040).

Source of Funds - The source of the buyers funds for the required cash investment.

Special Warranty Deed - A deed containing a covenant whereby the grantor agrees to protect the grantee against any claims arising during the grantor's period of ownership.

Specification of Repair - Describes work to be done and provides an indication of when various jobs or stages of completion are scheduled and includes a description of materials that document the quantity, quality and cost of the rehab work. Appraisers use the specification of repair to determine property value.

Spot Business - Commitments that are priced individually each time a commitment is taken down. Best effort, mandatory and negotiated commitments are considered to be spot business.

Spot Loan - Single loans that are delivered on an individual basis.

Spot Relocation Mortgage - A mortgage that is made to a transferred employee of a corporation to finance the purchase of a primary residence. The mortgage involves a significant employer contribution to the mortgage financing and is made according to an employee relocation program administered by the employer.

Stand Alone Loan - A loan, usually in junior position, closed independently and at a later date than the first mortgage.

Stable Income - A borrower's verified gross monthly income from all verifiable sources that can be reasonably expected to continue for at least 3 years. Sources of income may vary, as long as the total income remains stable.

Stated Documentation - A documentation option eligible only for Subprime loans that allows borrowers who have difficulty documenting all or part of their income to state the amount they earn on the 1003 in lieu of providing income documentation.

Straw Borrower - An individual used to serve as a "cover" for a questionable transaction. The use of a straw borrower will occur when the true identity or motivation of the actual borrower is concealed to gain loan approval.

Streamlined Refinance - A documentation option for Rate and Term Refinance transactions that allows Sellers to use reduced documentation to verify a borrower's employment and income.

Sublease - A lease executed by a lessee to a third person for a term no longer than the remaining portion of the original lease.

Subordinate Lien - Any mortgage or other lien that has priority lower than that of the first mortgage. Also referred to as a Junior Lien.

Subprime Loan - A loan that does not meet the credit underwriting guidelines of Fannie Mae, Freddie Mac, FHA, VA or major non-conforming purchasers. Subprime loans allow borrowers to qualify with more severe mortgage delinquencies and higher debt ratios. Often referred to as B/C loans.

Survey - A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any improvements.

Suspense Condition - During JimPrieto.com's review of a loan for purchase, suspense conditions may be generated that indicate items are missing from the loan file or the information provided is incorrect or incomplete. A suspension affects the salability of the collateral and/or credit package received from the Seller. JimPrieto.com will not purchase the loan until all suspension conditions have been resolved.

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

Swing Loan - See Bridge Loan.

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Tax Advantage Mortgage Insurance (TAMI) - A mortgage insurance option wherein the lender increases the loan's interest rate to incorporate the cost of the monthly mortgage insurance payment. The borrower may deduct the loan interest from their taxes and is not required to make additional monthly mortgage insurance payments. Also referred to as Lender Paid Mortgage Insurance (LPMI).

Temporary Buydown - An arrangement wherein the property seller or other party deposits money to an account so that it can be released each month to reduce the borrower's monthly payments during the early years of a mortgage. During the specified period the borrower's effective interest rate is "bought down" below the actual mortgage interest rate by this subsidy.

Termination Fee - A penalty imposed on a home equity line of credit (HELOC) loan when the loan is paid before it is due.

Third Party Originator (TPO) - A lender who was not the originating party in a loan transaction. Also, a lender who accumulates loans from correspondents for later sale to an investor.

Title - The evidence of the right to or ownership in the property. In the case of real estate, the documentary evidence of ownership is the title deed that specifies in whom the legal estate is vested and the history of ownership and transfers. Title may be acquired through purchase, inheritance, devise, gift, or through foreclosure of a mortgage.

Title Binder - Written evidence of temporary title insurance coverage that only runs for a limited time and must be replaced by a permanent policy.

Title Defect - Any legal right held by others to claim property or to make demands upon an owner.

Title Insurance - A type of insurance that insures against defects in the title that were not listed in the title report or abstract.

Title Insurance Policy - A contract by which the insurer agrees to pay the insured a specific amount for any loss caused by defects of title to a parcel of real estate (wherein the insured has an interest as purchaser, mortgagee or otherwise), other than encumbrances, defects and matters specifically excluded by the policy.

Title Vesting - The way legal title is held by an owner of a property. For example, "John and Mary Smith, husband and wife as joint tenants." Title vesting denotes ownership and liability. Total

Points and Fees - The prepaid finance charges, excluding prepaid interest, disclosed for Section 32 loans that includes any fees paid by the borrowers to the lender or to a mortgage broker, plus fees, if paid, to the lender or its affiliates.

Townhouse - A residential unit on a small lot that has coincidental exterior limits with other similar units. Title to the unit and its lot is vested in the individual buyer with a fractional interest in common areas, if any. Tradeline - The type of credit obligation, and its associated information, such as the date opened, balance and periodic payment history, and so on, that typically appears on a credit report.

Transfer of Ownership - Any means by which the ownership of a property changes hands, such as: The purchase of a property "subject to" the mortgage. The assumption of the mortgage debt by the property purchaser. . Any exchange of possession of the property under a land sales contract or any other land trust device.

Treasury Index (T-Bill) - An index that is used as a base for interest rate changes on certain ARM loan programs. It is based on the results of auctions that the U.S. Treasury holds for its treasury bills and securities.

Trust - A fiduciary relationship whereby legal title to a property is transferred to trustee with the intention that such property be administered by the trustee for the benefit of another, or beneficiary, who holds equitable title to such property.

Trust Deed - An instrument given by a borrower, or trustor, to a trustee vesting title to a property in the trustee as security for the borrower's fulfillment of an obligation.

Trustee - A person who holds or controls property and manages it for the benefit of another (the beneficiary). Under an inter vivos trust, the person who, according to properly executed trust documentation, has been granted the power to mortgage the subject property and administer the trust. The trustees must be or must include the individual who established the trust, or an institutional trustee that customarily performs trust functions under the laws of the state.

Trustor/Settlor/Grantor - See Grantor/Trustor/Settlor.

Truth in Lending Act (TILA) - The Truth in Lending Act is referred to as the National Consumer Credit Protection Act. It requires that all costs involved in securing a loan be disclosed to the borrower in advance with an effective annual percentage rate clearly specified.

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.

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UFMIP - See Upfront Mortgage Insurance Premium.

Unallowed Loss - A cash loss for self employed borrowers that could not be deducted from income for tax purposes.

Unallowed Loss Carryover - An unallowed loss from previous years that may reduce the income amount for tax purposes in the current year.

Underwriting - The analysis of risk, the determination of the appropriate loan amount, and the setting of loan terms and conditions, based on the borrower's creditworthiness and the value of the real property that will secure the loan.

Unearned Income - See Passive Income.

Uniform Commercial Code (UCC) - A comprehensive codification and modernization of commercial law that excludes law dealing with real property, and regulates the transfer of personal property.

Uniform Standards of Professional Appraisal Practice (USPAP) - The standards for appraisals sold to VA or HUD.

Unit Mortgage - A mortgage (or share loan) on an individual residential unit in a planned unit development (PUD), condominium, or cooperative project.

Upfront Mortgage Insurance Premium (UFMIP) - One-time fee on FHA loans for a mortgage insurance premium that goes to fund the FHA guaranty program. May be paid by either the borrower or the property seller. The borrower must also pay an annual fee for the on-going mortgage insurance premium.

USPAP - Uniform Standards of Professional Appraisal Practice. USPAP establishes the standards for the development and communication of real estate appraisals within the appraisal profession.

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VA - See Veterans Administration.

Valuation - An estimation of the value or price of the subject property using an appraisal.

Variable Rate Mortgage (VRM) - See Adjustable Rate Mortgage.

Verbal VOE - A written record of verbal contact with a mortgage applicant's employer to confirm the applicant's employment information. For self-employed borrowers, employment verification can be obtained from a satisfactory third party, such as a CPA, attorney, business license, or fictitious name filing.

Verification of Employment (VOE) - Documentation of a mortgage applicant's work history and/or occupation that is intended to assist with the lender's credit investigation and decision process. See also Verbal VOE.

VA Guarantee Package - A separate file folder containing original processing documents necessary to obtain the guarantee for a VA loan.

VA Funding Fee (VAFF) - In order to issue a guarantee to a lender against borrower default on a mortgage, the VA charges a fee computed as a percentage of the loan amount. This funding fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.

Vested - The right of absolute ownership. Vesting - How title is held on a property, such as husband and wife, joint tenancy with right of survivorship. Also see Vested. Veteran - Any person who served on active duty in the Armed Forces for a period of at least 90 days and was discharged under conditions other than dishonorable.

Veterans Administration (VA) - An independent agency of the federal government that is authorized to administer a variety of benefit programs for veterans. The VA home loan guaranty program is designed to encourage lenders to offer long-term, low down payment mortgages to eligible veterans by guaranteeing the lender against loss.

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Waiver - Written evidence surrendering the right to enforce a condition of an agreement.

Warehouse Line - A revolving line of credit used by a lender to fund loans.

Warehousing - The holding of real estate mortgages for later re-sale in the secondary market.

Warranty Deed - A deed conveying title and containing a convenant from the grantor to the grantee that title is free and clear of encumbrances other than any stated in the contract deed.

Wire Instructions - Instructions provided by the Seller to JimPrieto.com as to where funds are to be wired once the purchase of the loan is complete. Also see Bailee Letter. Wire

Transfer - The electronic transfer of funds from one bank account to another. Wraparound Mortgage - A refinancing technique that includes the remaining balance of 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.

Wire Transfer - The electronic transfer of funds from one bank account to another.

Wraparound Mortgage - A refinancing technique that includes the remaining balance of 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.