The act of loaning or giving capital to a failing company in order to prevent it from bankruptcy.
Balance
Sum remaining, especially in on the credit side of an account.
Balloon Payment
A payment that must be made in full, often after a set period of time.
Bankruptcy
A provision of Federal Law whereby a debtor surrenders his assets to the Bankruptcy Court and is relieved of the future obligation to repay current unsecured debts.
Broker
An person of firm which acts as an intermediary between a buyer and seller, usually charging a commission.
Set limits that offer protection from extreme changes, especially in adjustable-rate mortgages.
Closing Costs
The fees and charges a buyer and seller must pay at the time of closing on a home sale, including broker commissions, insurance premiums, attorney’s fees, etc.
Collateral
An asset that is pledged as security for a loan.
Consolidate
As in debt, the act of combining several loans or liabilities into one loan.
Credit
A person’s reputation as a borrower, based upon borrowing history.
Credit Score
Numbers generated from a computer program based upon your borrowing history.
A fixed-rate mortgage in which the monthly payments increase according to an agreed-upon schedule, with the extra funds applied to reduce the loan balance and loan term.
Government-Sponsored Enterprise (GSE)
A privately held corporation with public purposes created by the U.S. Congress to reduce the cost of capital for certain borrowing sectors of the economy.
A loan secured by equity value in the borrower’s home.
Homeowners’ Association
An organization of homeowners residing within a particular area whose principal purpose is to ensure the provision and maintenance of community facilities and services for the common benefit of the residents.
HUD
Department of Housing and Urban Development. The federal agency responsible for encouraging housing development.
Hybrid Loan
A home loan made up of characteristics of both fixed-rate mortgages and adjustable-rate mortgages. Also called a Two-Step Loan.
A limit to the amount a monthly payment can rise over the lifetime of the loan, in dollars.
Percentage Point
The unit for the arithmatic difference of two percentages (for example, 30% – 21% = 9 percentage points).
Periodic Rate Cap
A limit to the amount an interest rate can change at any one time, in percentage points.
PI
Principal and Interest for a mortgage, usually by month.
PIH
Office of Public and Indian Housing, a government agency responsible for providing safe, affordable rental homes for low-income families, the elderly, and disabled.
Predatory Lenders
Lenders that set out to cheat the borrower through deceit and manipulation.
Prepayment Penalty
A fee assessed against the borrower for paying off the loan early, either because the borrower sells the house or refinances the high-rate loan.
Principal
The amount borrowed, or part of the amount borrowed which remains unpaid.
The point at which an Opitional ARM will convert to a conventional mortgage, based on negative amortization.
Recast Period
Estimated time that will elapse before the recast cap is reached while making a minimum payment, stated in months.
Recession
A general slowdown in economic activity over a sustained period of time.
Refinance
Obtaining a new mortgage on a property, often to replace existing loans on the property.
Rehabilitation Mortgage
A mortgage loan made to cover the costs of repairing, improving, and sometimes acquiring an exisiting property.
Revolving Debt
Credit that is extended by a creditor under a plan in which: (1) the creditor contemplates repeated transactions; (2) the creditor may impose a finance charge from time to time on an outstanding unpaid balance; and (3) the amount of credit that may be extended to the consumer during the term of the plan is generally made available to the extent that any outstanding balance is repaid.
Risk-Based Pricing
The way in which lenders determine rates for high-risk borrowers based on factors such as credit score, down payment, and past delinquencies.
Rural Housing Service (RHS)
A government agency part of the United States Department of Agriculture, responsible for administering various housing programs intended to aid in the development of rural America.
An agreement in which the seller of a home provides financing to the buyer with a promissory note secured by the property.
Shareholder
A person who owns shares of stock in a corporation or mutual fund.
Soldiers and Sailors Civil Relief Act
A federal law that restricts the enforcement of civilian debts against military personnel who may not be able to pay because of active military service.
Subprime Mortgage
A home loan geared at borrowers with credit problems, usually with much higher rates. Also called a Non-prime Mortgage.
The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower’s creditworthiness, ability to repay the loan, and the value of the property securing the loan.
The United States Department of Veteran affairs, government-run military veteran benefit system responsible for administering programs of veterans’ benefits for veterans, their families, and survivors.
