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Mortgage Terms

  • Appraisal
    A report that states an appraiser’s opinion regarding the value of the property based on its characteristics and the selling price of similar or comparable properties in the area.
  • Auction, Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS): if the borrower does not catch up on their payments the lender will file a notice of sale (the lender intends to sell the property). This notice is published in local paper and contains information pertaining to the date, time and subject property address.
  • Good Faith Estimate
    A document that tells the borrower the fees associated with closing the loan.
  • Government Sponsored Enterprises (GSE’s) Congress established GSE’s to improve the efficiency of capital markets and to overcome market imperfections which prevent funds from moving easily from suppliers of funds to areas of high loan demand.  The two largest housing GSE are Fannie Mae and Freddie Mac.  On September 7, 2008, Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs) into conservatorship. FHFA explained it took this action “to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their [housing] mission, and mitigate the systemic risk that has contributed directly to the instability in the current market.” Now under debate is the future structure of Fannie Mae and Freddie Mac.
  • Loan to Value
    The percentage of the loan amount compared to the lower of the sales price or appraised value.
  • Mortgage Insurance
    Typically, if the Loan to Value (LTV) is higher than 80%, the lender will require mortgage insurance. Mortgage Insurance helps protect the lender’s investment and pays them if you default on your loan. You pay mortgage insurance until your equity in the property is approximately 20%. Mortgage Insurance does not protect you if you can’t pay your mortgage.
  • NOD is a Notice of Default. This is the first legal notification from a  lender that the borrower on a mortgage loan has defaulted under the terms of their mortgage and the lender intends to foreclose unless the loan is brought current. The Notice of Default is filed in the public records against the house.

Once the Notice of Default is filed, the homeowner is “on the clock” to bring the loan current. The time the borrower has to bring the loan current depends on the state where the property is located but can be as quick as a couple weeks before the home is sold in a foreclosure sale. The time frame will depend on whether the property is located in a Mortgage or Deed of Trust state. The foreclosure process in a Deed of Trust state is much quicker because there is not a requirement for a judge to be involved.

  • Real Estate Owned or REO properties : “REO” stands for “real estate owned” and typically refers to the inventory of real estate that banks and mortgage companies have foreclosed on and subsequently purchased through the foreclosure auction if there was no offer higher than the minimum bid.
  • Truth in Lending or TIL
    A statement that tells borrowers how much they will be repaying over the term of the loan. The Truth in Lending Disclosure statement will show you annual percentage rate – the costs of your credit as a yearly rate, the finance charge – the dollar amount your credit will cost you, the amount financed – the amount of credit provided to you or on your behalf and the total dollar amount of payments – the amount you would pay if you made every payment for the term of the loan.