Mortgage Definitions (T - W)

Third Party Origination
When a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market

Title
A document that gives evidence of an individual's ownership of property

Title Insurance
A policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The costof policy is usually a function of the value of the property, and is often borne by the purchaser and/ or seller. Policies are also available to protect the lender's interests

Title Search
An examination of municipal records to determine the legal ownership of property. Usually is performed by a title company

Toal Expense Ratio
Toal obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts

Truth in Lending
A federal law requiring disclousure of the Annual Percentage Rate to home buyers shortly after they aplly for the loan. Also known as Regulation Z

Two Step Mortgage
A mortage in which the borrower receives a-below-market interst rate for a specified number of years (most often seven or 10), and then receives a new interst rate adjusted(within certain limits) to market conditions at that time. The lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. Also call "Super Seven" or "Premier" mortgage

Underwriting
The decision wheather to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount

Usury
Interst charged in excess of the legal rate established by law

VA Loan
A long term, low-or-no down payment loan guaranteed by the Department of VBeterans Affairs. Restricted to individuals qualified by military service or other entitlements

VA MOrtgage Funding Fee
A premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a fixed rate loan. On a $75,000 fixed-rate mortgage with now odwn payment, this would amount to $1,406 either paid at closing or added to the amount financed

Variable Rate Mortgage (VRM)
See adjustable rate mortgage

Verification of Deposit (VOD)
A document signed by the borrower's financial institution verifying the status and balance of his/her financail accounts

Verification Of Employment(VOE)
A document signed by the borrower's employer verifying his/her position and salary

Warehouse Fee
Many mortgage firms must borrow funds ona short term basis in order to originate loans which are to be sold later in teh secondary mortgage market(or to investors). When the prime rate of interst is higher on short term loans than on mortgage loans, the mortgage firm has a econmic loss which is offset by charging a warehouse fee.

Wraparound Mortgage
Results when an exsiting assumable loan is combined with a new loan resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top