Tasks of Origination
-Assist borrower in completing 1003 formm
-Respond to ITP
-Complete LE/provide additional disclosures
-Inform borrower on loan products, prices, risks, etc. and provide appropriate disclosures
Mortgage Broker
Individual who serves as a middle man between borrower and creditor (e.g. New Day) for a fee to assist in origination of loans
-does not fund loans
Mortgage Banker/Lender
Individual(s) that originate/close loans through corresponding lines of credit - for primary function of reselling loans to secondary market
Depository Institution
bank/credit union - they also accept customer deposits and make additional loans outside of mortgages (care loans personal loan, line of credit, etc.)
Primary Market Function
Origination functions (-retail origination & wholesale lending)
Secondary Market Function
to securitize and package loans for resale to GSE, such as Frannie Mae and Freddie Mac
Tasks of Loan Processor
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Tasks of Underwriter
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4 Pillars of Assessing Risk
I - Income (ATR)
C - Credit (Willingness TR)
E - Equity (LTV)
B - Benefits (for consumer)
Tasks of Loan Servicer
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PMI
Private Mortgage Insurance
a mortgage insurance policy that protects the LENDER against monetary loss in the event of default (when LTV is over 80%)
Title Insurance
one time fee that protects both property owner and lender against events that have occurred in the PAST and protects against undiscovered defects in the chain of title
Chain of Title
string of past ownership on property
Purchase Mortgage Loan
loan for purchase by a borrower who does not currently own the home
Refinance Mortgage Loan
loan for purchase by a borrower who currently owns the home to modify existing terms in order to receive lower interest rate, cash out (home improvement), or consolidate debts
Monetary lien
recordation of a voluntary lien where borrower willingly pledges real property as security
2 Parts of a Mortgage Loan
1. The debt itself (note)
2. The security instrument (deed of trust)
Promissory Note
legal evidence that identifies borrower/lender, promise to repay, terms of loan, and identification of collateral
Deed of Trust
security instrument of a mortgage loan, which transfers rights to a third party (trustee) until repayment
Conveyance
the transfer of title/ownership from one person to another via A Deed
Reconveyance
the transfer of title back to the borrower once debt has been paid off
Prepayment
a payment of principle only
Title
document that shows evidence of ownership
Deed
physical legal document that coveys ownership from one individual to another
Title Search
examination of all relevant records that confirm the seller's legal ownership - this identifies any liens, clouds on title, or outstanding claims
Title Opinion
if a title search is clear and marketable this is issued
Power of Attorney
written authorization by borrower granting an attorney the ability to sign documents on their behalf in the matters of business/finance
Specific Power of Attorney
authorization of attorney for a specified, singular transaction
Durable Power of Attorney
generalized authorization which allows for the extension of the PoA beyond competency
Quitclaim Deed
a release of claim, or the transferring of interests or rights (usually used in event of divorce/separation)
Loss Mitigation
the lenders effort to reduce losses, which are likely to lead to foreclosure
Loss Mitigation actions
Forbearance, Short Sale, Deed-in-leui of Foreclosure
Forbearance
the periodic suspension of loan agreement, typically for those going through hardships
Deed-in-Leui of Foreclosure
voluntary forfeit of property to the lender
Short Sale
when the lender agrees to accept a reduced payoff, and release its lien on the property
Types of Ownership
Real Estate(real property), Manufactured/Chattel, Freehold, Fee Simple
Seller Carry-Back
the seller of the property is willing to "privately carry" some or all of the financing
Earnest Money
this is the buyers way to ensure "earnest interest" in a property - held by the realtor
Discount Points
paid to the lender by the borrower to buy down interest rate
Yield Spread Premium (YSP)
paid through the lender/creditor to the borrower as a credit for reduction of fees in exchange for higher interest rate
Principle
amount of money borrowed, or total amount loaned
Amortization
repayment or reduction of loan principal over time
Negative Amortization
when monthly payment does not cover the full amount of interest due
Subordinate Agreement
statement allowing senior lien to take a subordinate position to a more recently recorded lien (defies first in time, first in right)
Piggy-Back Combo
splits a loan into combination of first and second mortgage (e.g. 80/10/10)