Mortgage Definitions (D - F)

Debt-to-income Ration
The ration, expressed as a percentage, which reesults when a borrower's monthly payment obligation on long term debts is divided bt his or her gross monthly income. See housing expenses-to-income ration.

Deed of trust
In many states, this document is used in place of a mortgage to secure the payment of a note

Default
Failure to meet legal obligations in a contract, specifcally, failure to make the monthly paymetn on a mortage.

Deferred Interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deffered by adding it to the loan balanc. See negative amortization.

Deliquency
Failure to make payment on timee. This can lead to foreclosure.

Department of Veterans Affairs(VA)
An independent agency of the federal governmernt which guarantees long term, low-or-no-down payment mortgages to eligible veterans.

Discount Points
See point

Down Payment
Money paid to make up the difference between the purchase price and the mortgage amount.

Due-on-Sale-Clause
A provision in a mortage or deed of trust that allows the lender to demand immediate payment of the balance of the mortage if the mortgage holder sells the home.

Earnest Money
Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment

Entitlement
The VA home loan benefit is called an entitlement(i.e entitilement for a VA guaranteed home loan). This is also known as eligibility.

Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and oth er creditors to make credit equally available without discrimination based on race, color , religion, national orgin, age, sex, marital status, or receipt of income form public assistance programs

Equity
The difference between the fair market value and current indebtedness, also referred to as the owner's interst. The value an owner has in real estate over and above the obligation gainst the property.

Escrow
An account held by the lender into which the home buyr pays money for tax or insurance payments. Also earnest deposits held pending loan closing.

Escrow Disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortage insurance, and other property expenses as they become due.

Escrow Payment
The part of a mortage's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortage insurace, lease payments, and other items as tehy become due.

Fannie Mae
See Federal National Mortgage Association.

Farmers Home Administration (FmHA)
Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

Federal Home Loan Bank Board(FHLBB)
The former name for the reguatory and supervisory agency for dederally chartered savings institutions. The agency is now called the Office of Thrift Sueprvision

Federal Home Loan Mortgage Coporation(FHLMC) also called "Freddie Mac"
A goverment sponsored entity that purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers.

Federal Housing Administraition (FHA)
A division of the Depaartment of Housing and Urban Development. Its main activity is the insuring of residential mortage loans made by private lenders. FHA also sets standard for underwriting mortgages.

Federal National Mortagge Association(FNMA) also know as "Fannie Mae"
A governmetn sponsored entity that purchases and sells conventional residential mortages as well as those insured by FHA or guaranteed by VA

FHA Loan
A loan insured by the federal housing administration open to all qualified home purchasers.While there arelimits to the size of FHA loans, they are generous enough to handle moderately priced homes almost anywhere in the counrty.

FHA Mortgage Insurance
Requires a fee(up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortage insureance requires an annual fee of up to 0.5 percent of the current loan amount, paid in monthy installments,. The lower the down payment, the more years the fee must be paid.

FHLMC
The federal home loan mortgage corporations prvides a secondary market for savings and loans by purchasing their conventional loans.Also known as "Freddie Mac"

Firm commitment
A promise by FHA to insure a mortage loan for a specified property and borrower. A prmise froma lender to make a mortage loan.

First Mortgage
The primary lien against a property.

Fixed Installment
The monthly payment due on a mortgage loan including payment of both principal and interst.

Fixed Rate Mortgage
The mortgage interst rate will remain the smae on these mortageges throughout the term of the mortage for the original borrower.

Fully Amortized ARM
And adjustable rate mortage(ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interst accrual rate, over the amortization term.

FNMA
The Federal National Mortgage Associationis a secondary mortage institution. FNMA buys VA, FHA and convetional mortgages from primary lenders. Also known as "fannie Mae"

Foreclosure
A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortagge. Also known as a repossession of property.

Freddie Mac
See Federal Home Loan MOrtgage COrporation