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Cadastral Map
A legal map for recording title to a property. The map indicates legal boundaries and the ownership of the property.
Call Option
Related to the acceleration clause.
Call Protection
A feature that provides assurance to an investor that early or unscheduled redemption of a particular security will not occur due to a decline in interest rates.
Call Provision
A clause in a mortgage giving the lender the right to demand and receive payment of the balance of the unpaid principal in full under certain conditions. A call provision is similar to an acceleration clause.
Callable Debt
A debt security whose issuer may redeem the security on or after a given date, but before the final maturity date.
Canadian Rollover Mortgage
The standard home financing loan in Canada. Like standard mortgages in the U.S., the Canadian rollover mortgage is fully amortizing. However, it differs in that the loan's interest rate is subject to renegotiation every five years, with no limit or cap on how much interest rates, and therefore monthly payments, can increase during the life of the loan.
Cap
A limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.
Capital Improvement
A structure or major piece of equipment built or installed to permanently add value and capacity to property.
Carry-Back Loan
A loan wherein the seller finances the buyer, which allows a property sale to be completed.
Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc).
Cash Reserves
A cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.
Cash-Out Refinance
When a borrower refinances a mortgage at a higher amount than the existing loan balance, intending to use the money for personal use.
Certificate of Claim
A written agreement to reimburse a lender for certain costs incurred in the event of a foreclosure, contingent on proceeds from the sale of the foreclosed property being sufficient to cover these costs.
Certificate of Completion
A document issued by an architect or engineer stating that a construction project has been completed in accordance with approved terms, conditions, plans and specifications.
Certificate of Deposit
A time deposit held in a bank that pays interest to the depositor.
Certificate of Eligibility
A document issued by the U.S. Veterans Administration that verifies a veteran’s eligibility for a VA loan.
Certificate of Reasonable Value (CRV)
Issued by the U.S. Veterans Administration when an appraisal has been performed on a property being purchased with a VA loan.
Certificate of Title
An official document showing that property legally belongs to the current owner; before the title is transferred at closing, there should be no liens or other claims associated with it.
Certificate of Veteran Status
A document allowing veterans to obtain lower down payments on some FHA-insured loans.
Chain of Title
An examination into the transfers of title to property over a number of years.
Chattel
Personal property. All property that is not real property (owned real estate).
Chattel Mortgage
A loan secured by personal property rather than real estate.
Clear Title
A title having no outstanding liens or legal issues pertaining to ownership of the property.
Closing (Settlement)
The time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.
Closing Costs (Settlement Costs)
Customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.
Cloud
An encumbrance or outstanding claim that could impair the owner’s property title.
CMO (Collateralized Mortgage Obligation)
A type of bond having mortgages or mortgage-backed securities as collateral. Principal and interest payments from an underlying pool of mortgages are redirected to pay the CMO holders until the CMOs are retired. A single issue of CMOs contains two or more classes of bonds called tranches, each with a different length of maturity, providing a form of call protection to the holder of a CMO. A holder who wants to lock in a CMO investment for a specific length of time will buy into a tranche with a low risk of being retired early because the underlying mortgages are paid off early. Such low prepayment risk tranches are called planned amortization classes (PACs). Changes in prepayment rates in the underlying pool of mortgages are absorbed first by another tranche, so that the PAC remains unaffected by prepayment risk. CMOs generally pay principal and interest semiannually. CMO were first issued by the Federal Home Loan Mortgage Corporation (Freddie Mac) in June 1983.
Co-Borrower
An additional person who is obligated to the loan and is on the property’s title.
Collateral
The property associated to a home loan. Unless the loan is repaid according to the terms of the mortgage or deed of trust, the borrower risks losing the property.
Collateralized Mortgage Obligation (CMO)
A type of bond having mortgages or mortgage-backed securities as collateral. Principal and interest payments from an underlying pool of mortgages are redirected to pay the CMO holders until the CMOs are retired. A single issue of CMOs contains two or more classes of bonds called tranches, each with a different length of maturity, providing a form of call protection to the holder of a CMO. A holder who wants to lock in a CMO investment for a specific length of time will buy into a tranche with a low risk of being retired early because the underlying mortgages are paid off early. Such low prepayment risk tranches are called planned amortization classes (PACs). Changes in prepayment rates in the underlying pool of mortgages are absorbed first by another tranche, so that the PAC remains unaffected by prepayment risk. CMOs generally pay principal and interest semiannually. CMO were first issued by the Federal Home Loan Mortgage Corporation (Freddie Mac) in June 1983.
Collection
A loan goes to collection when lenders contact borrowers who have fallen behind, in order to collect their dues. The lender must maintain certain documentation, in case foreclosure may be required.
Combined Loan-to-Value
The relationship between the unpaid principal balances of a property's mortgages and its appraised value.
Commercial Mortgage Loan (Income Property Loan)
A mortgage loan secured by real estate used by a business or to generate income.
Commission
An amount, usually a percentage of the property sales price, which is collected by a real estate professional as a fee for negotiating the transaction. Realtors typically earn the largest commissions, followed by lenders.
Commitment
A written agreement by a lender to make a loan on specific terms, or an investor’s promise to purchase mortgages only from certain lenders with certain conditions.
Common Area Assessments (Homeowners Association Fees)
Charges to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD); these fees typically maintain the property and its common areas.
Common Areas
Areas of a property that are owned or managed by a planned unit development (PUD) or condominium project's homeowners' association that are shared among all unit owners; these areas could include recreational facilities or hallways, parking lots, etc.
Common Law
Used in some states, an unwritten body of law based on general English custom.
Community Property
Jointly owned property (such as property belonging to a married couple during their marriage, as is the case in some states).
Comparable Sales
Used to determine a property’s market value, based on the sales of other properties in the surrounding neighborhood. Also known as ‘comps.’
Condominium
A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.
Condominium Conversion
Switching the ownership of an existing building into condominium ownership.
Condominium Hotel
Individually owned condominiums operated as a hotel, with a registration desk, cleaning services, etc.
Conduit
(a) Industry term for a firm through which mortgages flow. The company issues mortgage-backed securities based on mortgage loans it buys from a number of primary lenders. (b) A type of roll-over IRA used by individuals to transfer all or any part of a lump-sum distribution from one retirement plan to another retirement plan. (c) Any intermediary between a lender and an investor.
Confirmation
A document used by securities dealers and banks to state in writing the terms and execution of an oral agreement to buy or sell a security.
Conforming Loan
A mortgage of up to $322,700 in the continental United States (higher limits Alaska and Hawaii).
Constant Payment
A periodic payment of a fixed amount that includes interest and principal. While the total amount of the payment remains the same, the ratio of principal and interest included in the payment changes. As the loan is paid off, the portion of the payment applied to the principal increases. Most home mortgages are constant payment loans.
Construction Loan
A short-term loan to finance construction costs. The lender makes payments to the builder at certain intervals during construction.
Contingency
A condition, such as a home inspection report, that must be met before a contract becomes legally binding.
Contract
A written or oral agreement.
Contract Sale or Deed
A form of installment sale, it is as contract between buyer and seller of real estate to convey title, after all conditions have been met.
Conventional Mortgage
A mortgage loan granted by a bank or thrift institution collateralized solely by real estate and not insured or guaranteed by a government agency.
Convertible ARM
An adjustable rate mortgage that enables the borrower to change the ARM to a fixed-rate mortgage.
Cooperative (Co-op)
Residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.
Cost of Funds Index (COFI)
Is used to determine changes in the interest rate for certain adjustable rate mortgages, based on the averages of several financial institutions in savings, borrowings, and advances.
Coupon Rate
Stated annual percentage of interest paid on a fixed-income investment.
Credit
An agreement allowing a borrower to obtain something of value, by promising to repay the lender at a later date.
Credit Bureau Score
A number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.
Credit History
History of an individual's debt payment; lenders use this information to gouge a potential borrower's ability to repay a loan.
Credit Report
A record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.
Credit Repository
An organization that stores and maintains information about the payment records of individuals being considered for credit.
Credit Risk
Risk of a default by the issuer or other party in its financial obligations to the investor.
Creditor
Someone to whom money is owed.
Current Face
The current monthly remaining principal on a mortgage security. Current face is computed by multiplying the original face value of the security by the current principal balance factor.
CUSIP Number
A unique, nine-digit identification number permanently assigned by the Committee on Uniform Securities Identification Procedures to each publicly traded security at the time of issuance. If the security is in physical form, the CUSIP number is printed on its face.
Custom Pool
A pool issued under the Ginnie Mae II program, which has only one issuer.
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