the Uniform Underwriting and Transmittal Summary (Fannie Mae Form 1008 / Freddie Mac Form 1077): the one-page underwriting summary of a loan file — income, proposed payment, qualifying ratios, funds to close, months of reserves, representative score, and the underwriter's comments — that travels with the loan when it is sold.
1099-only
a program qualifying from the gross amounts reported on IRS Forms 1099 issued to the borrower, less a program expense factor, rather than from the net profit those forms produce on a tax return.
2-1 buydown
the common form of temporary buydown: the effective rate is reduced by 2 percentage points in year one and 1 percentage point in year two, after which the note rate applies for the remaining term.
24-month average
the standard method for converting variable income to a monthly qualifying figure: the sum of the component over twenty-four months divided by twenty-four.
A
Ability-to-Repay (ATR)
Regulation Z § 1026.43's requirement that a creditor make a reasonable, good-faith determination at or before consummation, using income, assets, and obligations verified from reasonably reliable third-party records, that the consumer can repay the loan according to its terms; the value of the dwelling securing the loan may not be the basis.
Account executive (AE)
the wholesale lender's salesperson, whose customer is the broker rather than the borrower; the broker's route to scenarios, exceptions, pricing requests, and escalation.
Accountant letter
a signed statement from the borrower's tax professional confirming specific facts about the business; it can confirm preparation, continuous operation, and ownership percentage, but cannot substitute for returns or create income.
Add-back
an amount deducted on a tax return that did not represent cash leaving the business, restored to income on the cash-flow worksheet.
Adjustable-rate mortgage (ARM)
a loan with an initial fixed-rate period followed by periodic rate adjustments tied to an index.
Adjusted household income
USDA's eligibility measure, counting the income of all adult household members whether or not they are borrowers, less allowed deductions, compared to a published ceiling by area and household size.
Adjusted value
for FHA purposes, the lesser of the purchase price and the appraised value; the base against which both the minimum required investment and the loan-to-value ratio are computed.
Adjustment grid
the section of the Form 1004 listing each comparable's characteristics alongside the subject's, applying a dollar adjustment for each difference and producing an adjusted sale price for each comparable. Adjustments are always applied to the comparable, never to the subject.
Advance rate
the percentage of a loan amount that a warehouse line will advance at funding; the remainder must come from the lender's own cash.
Adverse action notice
the written notice required when a creditor denies credit or grants it on materially different terms the applicant does not accept; states the action taken and the specific principal reasons or the right to obtain them. Generally due within 30 days of a completed application.
Affiliated business arrangement (AfBA)
an arrangement in which a person in a position to refer settlement business, or an associate, has an affiliate relationship with or an ownership interest of more than one percent in a provider and refers business to it; exempt from Section 8 only with disclosure at or before referral, no required use, and a return limited to a return on ownership interest.
Affordability
whether a household can actually carry a housing payment alongside everything else it must pay, with margin for the ordinary emergencies of owning a building. Not a ratio, not a threshold, and not computed by any underwriting system.
Affordable lending product
a first mortgage designed to reach borrowers with limited down payment, limited reserves, or moderate income, through a lower minimum investment, reduced mortgage insurance coverage, flexible sources of funds, or a combination.
After-improved value
an appraiser's opinion of what a property will be worth once specified work is completed, developed from plans and specifications and delivered subject to completion; also called the as-completed or subject-to-completion value.
Agency / non-agency
agency loans are eligible for purchase by Fannie Mae or Freddie Mac or for inclusion in a Ginnie Mae pool; non-agency loans are everything else — jumbo, non-QM, and portfolio loans — and are financed on a balance sheet or through private-label securitization.
Aggregate accounting
the required escrow computation method, which treats the account as one pot, finds the lowest projected balance over the computation year, and sets the initial deposit so that the low point equals the cushion.
Aggregate adjustment
the reconciling entry between single-item analysis and aggregate accounting, shown in the initial escrow section of the Closing Disclosure as zero or a credit; never a charge.
Aggregator
an entity that buys loans meeting published guidelines and pools them into securities; the agencies and large banks perform this role.
Agreement or understanding
the second element of a Section 8(a) violation; need not be written or verbalized and may be established by a practice, pattern, or course of conduct (Regulation X § 1024.14(e)). Repeated receipt of a thing of value connected to the volume or value of referrals is itself evidence of one.
Air loan
a loan on a fabricated transaction: a property, a borrower, or an entire chain of parties that does not exist, supported by counterfeit verifications and sometimes an entire counterfeit verification infrastructure.
Amortization
the repayment of principal over the life of a loan through scheduled payments, so that the balance reaches zero at maturity.
Amortization (tax)
on a tax return, the write-off of an intangible asset such as goodwill, a covenant not to compete, or startup costs; a non-cash deduction and an add-back. Not to be confused with loan amortization.
Amortization schedule
the month-by-month record of how each payment splits between interest and principal, and the resulting balance.
Amortizing loan
a loan in which each scheduled payment retires part of the principal, so that the balance reaches zero at maturity.
Amount financed
the loan amount less the prepaid finance charges.
Annual fee
USDA's recurring charge, a percentage of the average scheduled unpaid principal balance collected in monthly installments; not mortgage insurance and not subject to Homeowners Protection Act cancellation.
Annual fee (USDA)
USDA's ongoing monthly charge, which continues for the life of the loan.
Annual MIP
FHA's ongoing mortgage insurance premium, expressed as an annual percentage of the loan amount and collected in twelve monthly installments; the factor depends on loan amount, term, and loan-to-value, and not on the borrower's credit score.
Annual percentage rate (APR)
the cost of credit expressed as a yearly rate, computed by solving for the rate that equates the amount financed to the loan's payment stream.
Anti-steering (compensation rule)
the Regulation Z prohibition on steering a consumer to a transaction because the originator will receive greater compensation in it than in other transactions the originator could have offered, unless the transaction is in the consumer's interest; distinct from steering as a fair-lending violation.
Anti-steering safe harbor
deemed compliance achieved by presenting, for each type of transaction in which the consumer expressed an interest, the loan with the lowest interest rate, the loan with the lowest interest rate lacking specified risky features, and the loan with the lowest total dollar amount of discount points, origination points, and origination fees.
Application
a formal request for a specific loan on a specific property. Under the integrated disclosure rule it exists once six items are present: the consumer's name, income, and Social Security number; the property address; an estimate of the value of the property; and the mortgage loan amount sought. Its existence triggers disclosure obligations whether or not anything has been signed.
Application date
the date the creditor received the sixth of the six items and an application therefore existed; the date from which the disclosure deadlines run, and not necessarily the date printed on a signed form.
Application trigger (the six items)
under the TILA-RESPA rule, an application exists when a creditor receives the consumer's name, income, and Social Security number (to obtain a credit report), the property address, an estimate of the value of the property, and the mortgage loan amount sought. No form, signature, fee, or purchase contract is required.
Application volume
the count of new loan applications taken in a period; the leading indicator of a shop's future closings and the first number to move when rates change, typically about six weeks ahead of closed volume.
Appraisal
an independent, supported opinion of a property's market value as of a specific effective date, developed and reported by a licensed or certified appraiser under professional standards.
Appraisal bias
discrimination in the valuation of residential property; covered by the Fair Housing Act and an active federal enforcement priority.
Appraisal contingency
a provision making the buyer's obligation to close contingent on the property appraising at or above a stated figure, usually the contract price.
Appraisal fraud
material misrepresentation of a property's value or condition relied on by a lender; comprises value inflation, fabricated or misappropriated reports (including reports issued in a real appraiser's name without their involvement), and property misrepresentation.
Appraisal gap
the additional cash a buyer must produce when the appraised value comes in below the contract price; equal to the maximum loan-to-value ratio multiplied by the shortfall.
Appraisal management company (AMC)
a third-party firm that maintains a panel of appraisers, receives and assigns appraisal orders, reviews returned reports for completeness and compliance, and delivers them to the lender; one of the common ways lenders separate the ordering function from the sales function.
Appraisal waiver / value acceptance
an agency offer, appearing in the findings for a specific casefile, to accept the stated property value without a traditional appraisal. Fannie Mae calls it value acceptance; Freddie Mac's is automated collateral evaluation (ACE); both also offer property-data hybrids. Eligibility criteria change and the offer may not survive a re-run.
Appraisal-gap coverage
a contractual promise by the buyer to pay some or all of the difference between contract price and appraised value in cash, usually up to a stated ceiling; it binds the buyer and never binds the lender.
Appraised value
the opinion of market value an appraisal concludes at; used together with the purchase price to determine the loan-to-value basis, the lender taking the lesser of the two.
Appraiser independence
the federal and investor requirement that no party with an interest in a transaction may influence, coerce, or attempt to influence the development, reporting, or review of an appraisal, and that the appraisal ordering function be separated from loan production.
Approve/Eligible
the recommendation in which the risk assessment endorses the borrower and the loan meets the product and program parameters. A recommendation, not an approval: the lender's underwriter still decides and the lender's overlays still apply.
Approve/Ineligible
a creditworthy borrower on a loan that breaks a product or program parameter — loan amount above the limit, LTV or CLTV above the maximum, ineligible property type or occupancy, a term or program condition not met. It means fix the structure, not decline the borrower.
APR redisclosure trigger
the rule that a delivered Closing Disclosure whose disclosed annual percentage rate has become inaccurate requires a corrected disclosure and a new three-business-day waiting period; generally the APR is accurate within one-eighth of one percentage point above or below for a regular transaction.
Area median income (AMI)
the median household income for a metropolitan area or county, published by HUD, adjusted for household size and revised annually; the basis on which most assistance program income limits are expressed.
Artificial intelligence in underwriting
the use of statistical and machine-learned models in credit evaluation; not new in kind, since credit scores and automated underwriting systems are models, but newly opaque, which is what creates the legal constraint.
Asset depletion / asset utilization
qualification that converts a documented pool of eligible liquid assets, reduced by program haircuts and by the funds the transaction itself consumes, into monthly income by dividing by a program-specified number of months. The terms are used loosely and inconsistently across investors.
Assumability
the feature permitting a qualified buyer to take over an existing loan on its original terms; generally available on FHA and VA loans.
Attorney state
a jurisdiction in which an attorney must conduct or supervise a residential real estate closing. Requirements vary by state and sometimes by county; verify locally.
Authoritative copy
the unique, identifiable version of an electronic transferable record that is unalterable except in ways that are themselves identifiable; the electronic counterpart of "the original."
Authorized user
a person permitted to use another party's account without contractual liability for the debt; the tradeline appears on their report with the primary holder's history, and both scoring models and underwriters may discount it.
Automated underwriting system (AUS)
software that evaluates a loan application and credit report against a published rulebook and a proprietary risk model, returning a recommendation, an eligibility assessment, and the documentation required to support them. It evaluates data a human entered; it never sees a document.
Average prime offer rate (APOR)
the published benchmark rate for a comparable transaction against which high-cost, higher-priced, and General QM pricing tests are measured, as of the date the interest rate is set.
B
Back-end ratio / debt-to-income (DTI)
PITI plus all other counted monthly obligations, divided by gross monthly income; the book's default meaning of "DTI."
Bailee letter
the document shipping with a note to an investor that preserves the warehouse bank's security interest in the collateral until the purchase proceeds are applied to the advance.
Balloon mortgage
a loan whose entire remaining principal comes due at the end of a short term, generally expected to be refinanced rather than repaid.
Bank Secrecy Act / anti-money-laundering (AML) program
the federal framework requiring covered financial institutions, including non-bank residential mortgage lenders and originators since a rule effective in 2012, to maintain an AML program and report suspicious activity. The source of the annual fraud training and the internal escalation path.
Bank statement loan
a non-QM program that derives qualifying income from deposits into a personal or business bank account over a defined look-back period, commonly 12 or 24 months, excluding non-revenue deposits and applying an expense factor to business accounts.
Base pay
the fixed component of compensation established by the employment arrangement: a salary, or an hourly rate times contracted hours. Taken at the current rate and never averaged.
Base price
the price printed on the rate sheet at a given note rate, before any loan-specific adjustment. On the Linden Street file, 100.750 at 6.625% for a 15-day lock.
Basic entitlement
the fixed statutory layer of VA entitlement, long stated as \$36,000; verify the current figure with the VA.
Basis point (bp)
one one-hundredth of one percent, or 0.0001; one hundred basis points equals one percent. On a \$365,750 loan, one basis point is \$36.575.
Batching
grouping like work into fixed calendar blocks so that each type of work is entered and left once, rather than interleaving acquisition and administration and paying the context-switch cost repeatedly. The governing rule is: batch everything except the irreversible.
Binder (insurance)
temporary written evidence that coverage is in force, issued by an agent with authority to bind the carrier pending issuance of the policy; a quote is not a binder.
Bonus
incentive compensation paid periodically or annually; variable income, commonly requiring a two-year history and averaged over 24 months, with the employer's continuance statement as the forward test.
Bonus entitlement
the additional (secondary or Tier 2) layer of VA entitlement tied to the applicable county loan limit, bringing total available guaranty to 25% of that limit.
Book of business
the accumulated set of past clients and referral relationships that produces transactions without a fresh act of prospecting behind each one; the asset a loan officer is actually building, as distinct from a pipeline, which empties.
Borrower authorization
the borrower's signed permission for the lender to verify employment, income, assets, and credit and to obtain tax transcripts; a lender and investor requirement rather than a federal disclosure, and required from each borrower individually.
Borrower-paid compensation (BPC)
compensation paid to the loan originator directly by the consumer, disclosed as a charge and paid at closing or from loan proceeds, with generally better pricing available in exchange.
Branch manager
a manager who owns a profit centre, including hiring, production, cost, and compliance. A branch's economics are not the sum of its originators' economics, because rent, technology, compliance, licensing, operations staff, and overhead land whether or not anyone closes.
Branch profit and loss (P&L)
the statement of a branch's revenue and cost, per file or per period, that determines whether production is profitable to the company as distinct from profitable to the originator.
Break-even (points)
the cost of discount points divided by the monthly payment saved, expressed in months.
Break-even (refinance)
the horizon at which a refinance leaves the borrower better off; correctly computed as the month at which cash paid plus balance owed is lower under the new loan than under the old one, and not as closing costs divided by the monthly payment reduction.
Break-even loan amount
the loan size at which a file's contribution margin exactly covers the non-compensation cost of making it; below it, a branch loses money on every file at that cost structure and compensation rate.
Bridge financing
short-term borrowing, usually secured by a departing residence, used to fund a down payment before that residence sells. The one openly borrowed down-payment source; its payment generally counts in the debt-to-income ratio unless a program excludes it.
Budget-first conversation
a conversation in which the borrower's target monthly payment is established before any purchase price is discussed, and the price is then derived from the payment rather than the reverse.
Builder relationship
a referral arrangement with a homebuilder's sales organization; high value, concentrated in one or two individuals, frequently competing against the builder's affiliated preferred lender, and often tied to the employer rather than to the originator.
Building and loan association
a member-owned cooperative in which savers bought shares and borrowers drew from the pooled funds; the ancestor of the savings and loan.
Burnout
the exhaustion of the pool of in-the-money loans after a refinance wave, which is why refinance volume collapses rather than declines when rates rise.
Business day (general definition)
under Regulation Z, a day on which the creditor's offices are open to the public for carrying out substantially all of its business functions; the definition that governs the three-business-day Loan Estimate deadline.
Business day (precise definition)
all calendar days except Sundays and the federal legal public holidays specified in 5 U.S.C. 6103(a); governs the seven-business-day waiting period, the three-business-day Closing Disclosure receipt rule, the mailbox presumptions of receipt, and rescission. Saturday counts.
Business day (specific definition)
under Regulation Z, all calendar days except Sundays and the federal legal public holidays specified by statute, so that Saturday counts; the definition that governs waiting periods, the mailing presumption, and rescission.
Business email compromise (BEC)
the delivery mechanism for most real estate wire fraud: a compromised or spoofed email account belonging to a party in the transaction, used after a period of reconnaissance to send altered payment instructions timed to the closing.
Business funds
funds held in an account titled to a business the borrower owns. Usability depends on documented access, evidence that the withdrawal will not harm the business, and not double-counting dollars already reflected in the income calculation.
Business liquidity
the business's capacity to meet its short-term obligations, measured from the balance sheet by the current ratio (current assets ÷ current liabilities) and the quick ratio ((current assets − inventory) ÷ current liabilities); the analysis generally required before business funds may be used for a down payment.
Business narrative
a short borrower-written description of what the business does, who its customers are, and what explains anything unusual in the returns; not required by any guideline, and one of the cheapest underwriting tools available.
Business-purpose loan
credit extended primarily for a business purpose, which is not consumer credit and therefore falls outside Regulation Z, and with it outside Ability-to-Repay and the Qualified Mortgage definition. The classification depends on the loan's actual purpose, not on the form in which the borrower takes title.
Buy-up / buy-down grid
the rate-and-price ladder on a rate sheet: what each eighth of rate costs in price going down and pays in price going up. The cost per eighth typically escalates as the rate moves further below the coupon the loan delivers into.
Buyer's agent
the real estate licensee representing the buyer; on most purchase files, the loan officer's referral source and primary transactional counterpart.
C
C-corporation
a corporation taxed as a separate entity, filing Form 1120 and paying federal income tax on its own earnings; the owner's income appears on the personal return only as W-2 wages and dividends.
the HUD-maintained federal database of delinquent and defaulted federal debt; a hit renders a borrower ineligible for a federally related loan until the debt is resolved or the applicable exclusion period has elapsed.
Capacity
the number of files an originator can carry at a defined service level, as opposed to the number that can technically be open. Exceeded gradually and detected late, because the symptom is a feedback loop rather than a threshold.
Capital markets desk
the group inside a lender, also called secondary marketing, that prices locks, hedges the pipeline, chooses each closed loan's execution, and delivers loans for sale.
Caps
limits on an ARM's rate movement, quoted as three numbers for the first adjustment, each subsequent adjustment, and the life of the loan.
Cash Flow Analysis (Form 1084)
Fannie Mae's published worksheet for converting a self-employed borrower's tax returns into qualifying monthly income; Freddie Mac's counterpart is Form 91 and the trend companion is Form 1088. Revised periodically — work from the current version.
Cash to close
the amount the borrower must actually deliver at closing: down payment plus costs and prepaids, less credits and earnest money already paid. Chapter 4 establishes the arithmetic; the assets-side question is which verified account each dollar comes from.
Cash-out refinance
a refinance for more than the payoff of the existing lien plus costs, with the difference delivered to the borrower; defined by what the proceeds retire rather than by whether a check is written at the table, so retiring a non-purchase-money second lien is cash-out even when the borrower receives nothing.
Caution
Loan Product Advisor's equivalent of a Refer.
Certificate of Eligibility (COE)
the VA's document establishing that an applicant is eligible for the home loan benefit and stating available entitlement and funding fee status; it is not an approval and does not set a loan amount.
Chain of title
the sequence of recorded conveyances and interests running from a starting point in the past forward to the current record owner.
Changed circumstance
one of the enumerated reasons permitting a creditor to issue a revised Loan Estimate and reset the tolerance baseline, and only for the charges the reason actually affects.
Character and general fitness
the broad licensing standard requiring a regulator to determine that an applicant will operate honestly, fairly, and efficiently.
Charge-off
the original creditor's accounting write-off of a balance after prolonged nonpayment, commonly around 180 days. The debt is not forgiven, remains collectible, and remains reportable.
Churning
refinancing a borrower repeatedly, at intervals too short for each transaction's costs to be recovered, principally for the benefit of the party originating the loans.
Clear to close (CTC)
the underwriter's sign-off on every prior-to-document condition, authorizing the closing department to prepare closing documents. Not the same as permission to close today.
Closed-end second
a fixed-amount, fixed-rate, fully amortizing mortgage in second lien position, disbursed once at closing with no revolving feature.
Closer
the lender's employee who prepares the closing package and Closing Disclosure and authorizes funding.
Closing (consummation)
the signing event at which the borrowers execute the note and security instrument and funds are collected; conducted by a title company, escrow company, or attorney depending on state practice.
Closing agent
the neutral party — title company, escrow company, or attorney — who conducts the signing, disburses funds, and records documents.
Closing agent (settlement agent)
the neutral party who conducts the signing, holds and disburses funds, and submits documents for recording; a title company, an escrow company, or an attorney, depending on state and local practice.
Closing date
the date named in the purchase agreement for the transfer of title; the date from which every loan deadline is built backward.
Closing Disclosure (CD)
the five-page form disclosing the actual terms and costs of the loan, which the consumer must receive no later than three business days before consummation.
Cloud on title
any recorded claim or apparent defect that would impair title if valid; validity is not required for it to be a cloud, because the record is what the record says.
Co-marketing
the shared purchase of advertising by two parties who both appear in it; lawful under RESPA only where each party pays for the share of the benefit they actually receive, measured and documented.
Collateral file
the original note, the recorded security instrument, and the title policy, held by a document custodian as proof of the right to enforce the debt.
Collected funds (good funds)
money actually and irrevocably available to the settlement agent, which is why closings require wires or acceptable certified funds rather than personal checks.
Collection
a debt placed with or sold to a third-party collection agency, which reports it as its own tradeline; the original creditor's charged-off account may appear separately, making one debt look like two.
Combined loan-to-value (CLTV)
the total of all liens against the property, at their balances, divided by the property's value.
Commercial mortgage origination
lending underwritten on a property's income rather than a borrower's, typically with five- to ten-year terms and a balloon, adjustable or short-fixed pricing, negotiated documentation, and debt service coverage ratio in place of debt-to-income. An adjacent career with generally different licensing that varies by state; income can be substantially higher and is lumpier.
Commission income
compensation paid as a share of sales or production; variable income requiring history, averaging, and an employer statement of continuance. W-2 commission is employee income; 1099 commission is generally treated as self-employment income.
Commission split
a division of the compensation paid on a file between the individual originator and the branch or team, in exchange for services the branch supplies.
Comparable ("comp")
a recently closed, arm's-length sale of a property a buyer for the subject would plausibly have considered instead, adjusted in the grid for its differences from the subject.
Compensating factor
a documented strength in the file, aimed at a documented weakness, offered in support of a creditworthiness argument. Never applicable to eligibility, and never valid if it merely restates a requirement.
Compensation plan
the document, usually an addendum to an offer letter, setting an originator's basis points, the base they are computed on, any floor or ceiling, payment timing, chargebacks, draw terms, and the employer's right to amend.
Compliant co-marketing
a marketing arrangement between a settlement service provider and another party in which each pays for and receives marketing value proportionate to what they paid, at fair market value determined without reference to referrals, and in which no portion of the payment is consideration for referrals.
Condition / stipulation ("stip")
a specific item the underwriter requires before a conditional approval becomes final. Classified by source (borrower-supplied, third-party, lender-internal) and by timing (prior to document, prior to funding, prior to purchase).
Condition and quality ratings
the standardized C1–C6 (condition) and Q1–Q6 (quality of construction) scales used in the uniform appraisal dataset so that ratings carry the same meaning across reports, markets, and time.
Condition owner
the single named person responsible for seeing that a specific condition gets cleared. Distinct from the stip sheet's source column, which names who produces the document rather than who chases it.
Conditional approval
an underwriting decision approving a loan subject to delivery and satisfaction of a specified list of conditions.
Conditional Commitment for Loan Note Guarantee
USDA Rural Development's approval of a lender-underwritten file, required before closing; a second underwrite on a queue the lender does not control.
Conforming loan
a conventional loan meeting Fannie Mae's or Freddie Mac's requirements for purchase, including a maximum loan amount.
Conforming loan limit
the maximum loan amount the government-sponsored enterprises will purchase, set annually by the FHFA, with a baseline figure and higher limits in designated high-cost areas.
Conservatorship
the legal status, imposed on Fannie Mae and Freddie Mac in September 2008, in which a regulator assumes control of an institution to conserve its assets.
Construction-to-permanent loan
financing that funds the building of a house in draws and then becomes the long-term mortgage on the completed property.
Contingency
a condition in a purchase agreement that must be satisfied or waived before a party is obligated to perform; until then the protected party generally may terminate.
Contingency reserve
a percentage of the repair cost held in the rehabilitation escrow for unforeseen work; the required percentage is set by HUD or the investor, varies with scope and property condition, and is revised.
Continuing education (CE)
the 8 hours of NMLS-approved instruction required annually of licensed originators: 3 hours federal law, 2 hours ethics, 2 hours non-traditional mortgage lending, 1 hour elective.
Contract amendment
a written, signed modification to an executed purchase agreement; only the buyer and seller can make one, and every amendment is a loan event.
Control (of an electronic note)
the legal position, established by the transferable record provisions of E-SIGN and UETA, that corresponds to possession of a paper note; the controller is the party entitled to enforce.
Conventional loan
a loan that is not insured or guaranteed by a government agency. The term says nothing about loan size or down payment.
Correspondent lender
a lender that underwrites and closes loans in its own name using a warehouse line of credit, then sells the closed loans to investors.
Correspondent lending
origination in which the lender underwrites and closes loans in its own name, funding with its own borrowed capital, to guidelines published by the investor that has agreed to buy them, then sells the closed loans typically within weeks.
Cost of carry
the interest and fees a lender pays on a warehouse advance for every day between funding a loan and being paid for it by the investor.
Coupon
the stated rate a security pays its holders; for an agency pass-through, the pass-through rate. Never the borrower's note rate.
Credit supplement
a written verification or update of a specific credit item obtained by the credit reporting agency directly from the source at the lender's request — a current balance, an actual payment, a payoff, a missing credit limit, a rent history. It updates the file, not the score.
Credit utilization
reported revolving balance divided by credit limit, measured both per account and in aggregate across all revolving accounts; the largest component of a credit score that can change within a single reporting cycle.
Creditworthiness
the holistic question of whether a particular borrower will repay a particular loan, evaluated on a gradient across capacity, credit, capital, and collateral. Where compensating factors live.
CRM (customer relationship management system)
the software that holds the database, schedules contact, and produces the lead-source report.
Curtailment
a required paydown of a warehouse advance with the lender's own funds, typically triggered when a loan exceeds the facility's aging limit.
Customer relationship management (CRM)
the system of record for people rather than loans: past clients, referral partners, and not-yet borrowers, with contact history and follow-up scheduling.
Cybersecurity and borrower data
the protection of nonpublic personal information under the Gramm-Leach-Bliley Act, applicable safeguards rules, and state law, together with the operational defenses against wire fraud, credential compromise, and unauthorized disclosure.
D
Data integrity
the loan officer's ownership of the accuracy of every field submitted to the AUS. The condition on which a findings report has any value at all: a mistyped income or a miscoded occupancy produces a confident, precisely computed, worthless recommendation.
Database
the structured record of everyone a loan officer has closed, quoted, pre-approved, or met professionally, carrying enough detail — identity, reach, loan facts, the people involved, the human context, event triggers, and a dated contact history — to support a specific conversation years later.
Database marketing
the practice of driving business from a structured record of past clients, referral sources, and future-dated events, rather than from fresh prospecting; distinguished from lead management by the presence of future-dated triggers and a relationship graph.
Days quiet
the number of business days since anything at all happened on a file: any document, call, milestone, or third-party response. The column most pipeline reports omit and the one that detects a dead window.
Debt service coverage ratio (DSCR)
gross rental income divided by the property's debt service (PITIA: principal, interest, taxes, insurance, and association dues). A DSCR of 1.00 means the rent exactly covers the payment as the lender computes it. The ratio contains no vacancy, management, maintenance, or capital cost.
Debt-to-housing gap ratio
a field on the 1008: the total debt ratio minus the housing expense ratio, expressing how much of a borrower's obligation is the house and how much is everything else.
Decision date
the date the underwriter rendered the decision, printed on the approval; the reference point for the approval's expiration and for measuring a file's age.
Declarations
Section 5 of the application: the borrower's yes-or-no statements about occupancy, prior ownership interest, relationship to the seller, undisclosed borrowed funds, new credit before closing, priority liens, co-signed debt, judgments, federal debt delinquency, lawsuits, and prior foreclosure, short sale, deed in lieu, or bankruptcy.
Declining income
a variable income stream lower in the most recent period than in the prior one. The 24-month average is not usable; the lower, most-recent figure governs, because the underwriter is forecasting rather than auditing.
Deed of trust
a three-party security instrument involving a trustor (borrower), a trustee (neutral party holding title or a power of sale), and a beneficiary (lender); generally permits non-judicial foreclosure.
Deferred second
a subordinate lien with no monthly payment and no forgiveness; the full balance comes due on sale, refinance, payoff of the first mortgage, or the end of a stated term. Identical to a forgivable second at application and completely different at exit.
Depletion
the deduction for the consumption of a natural resource such as oil, gas, timber, or minerals; a non-cash deduction and therefore an add-back.
Depository lender
a bank, savings institution, or credit union that takes federally insured deposits, may hold loans in portfolio, and is supervised by a federal banking agency; its loan originators are registered with the NMLS rather than state licensed.
Depreciation
the deduction allocating a tangible asset's cost across its useful life; the largest and most common add-back, because the cash left in the year of purchase rather than the year of deduction.
Derogatory
any credit report item reflecting a failure to pay as agreed, ranging from a single 30-day late payment to a bankruptcy; severity and recency are separate dimensions and both matter.
Desktop appraisal
an appraisal developed and signed by a licensed appraiser who does not personally inspect the property, using multiple listing service data, public records, floor plans, and other data sources.
Desktop Underwriter (DU)
Fannie Mae's automated underwriting system, introduced in the mid-1990s. Returns Approve or Refer paired with Eligible or Ineligible, and produces an Underwriting Findings report.
Digital verification
borrower-permissioned electronic verification of assets, income, or employment drawn from a financial institution's or payroll source's own records, in place of borrower-supplied paper.
Disbursement
the settlement agent's payment of loan proceeds and other funds according to the settlement statement: payoff of existing liens, seller proceeds, commissions, and the fees disclosed on the Closing Disclosure.
Discount point
one percent of the loan amount, paid at closing to obtain a lower interest rate.
Discovery call
the structured conversation, typically about twenty minutes, in which a loan officer collects enough about a household's income structure, obligations, assets, and timeline to compute a supportable purchasing power and to name what remains unverified.
Disparate impact
a facially neutral policy producing a discriminatory effect without adequate business justification, where a less discriminatory alternative exists.
Disparate treatment
treating an applicant differently because of a prohibited basis; requires no animus, and is established by comparison to similarly situated applicants.
Dispute
a consumer's formal challenge to the accuracy or completeness of information on their credit report, triggering an FCRA reinvestigation generally within 30 days, extendable to 45. It belongs to the consumer, it is the right tool for inaccurate information, and a disputed tradeline can freeze a loan in process.
Divisor (asset depletion)
the number of months by which net eligible assets are divided to produce monthly income. A program parameter, not a mathematical fact; it determines the answer more than the assets do.
Document custodian
the neutral third party that physically holds the original note and certifies to the agency that the collateral file matches the data the lender delivered.
Document management
the classification, indexing, versioning, retention, and access control of the imaged loan file. Retention periods are set by regulation and differ by rule.
Documentation window
the period covered by the bank statements actually in the file; the boundary between deposits that will be questioned and deposits nobody will look at.
Documented (vs. verified)
documented means the lender holds and has read the pay statement, Form W-2, or account statement; verified means an independent third party has confirmed it. A pre-approval rests on documentation, not verification.
Dodd-Frank Act
the 2010 statute creating the CFPB and the modern origination rulebook, including Ability-to-Repay, the LO Compensation rule, appraiser independence, and risk retention.
Donor
the person or entity providing gift funds. Acceptable donors vary by program; a party with an interest in the sale is generally never an acceptable donor.
Down payment assistance (DPA)
funds provided by a governmental entity, an instrumentality of government, a nonprofit, or an employer to help a borrower meet the cash requirements of a purchase, delivered as a subordinate lien or as a grant.
Draw
an advance against future commissions, recovered from later earnings. A recoverable draw is not base pay and is not separately countable, since the commission it advances is already captured in the average.
Draw schedule
the allocation of a construction budget across completion milestones, each draw disbursed against verified work in place rather than work planned.
Drip campaign
a pre-scheduled automated sequence of messages sent to a segment of a database over time; effective for education, market notes, and anniversary contact, and no substitute for a call a human being decided to make.
Dry funding
funding after the lender reviews the executed closing package, so disbursement occurs some time — sometimes days — after signing.
DSCR loan
a loan on an investment property qualified on the property's own cash flow rather than on the borrower's personal income, and frequently structured as business-purpose credit.
Dual compensation prohibition
the rule that a loan originator receiving compensation directly from the consumer may not also be compensated by any other person in connection with that transaction, subject to an exception permitting a loan originator organization to compensate its own individual originators.
Dwell time
the average number of days a funded loan remains on a warehouse line before the investor purchases it; the variable that converts a line's size into an annual funding capacity.
Dwelling coverage (Coverage A)
the policy limit applying to the structure itself; a lender generally requires the lesser of the unpaid principal balance or 100% of insurable replacement cost, the latter only on a replacement cost policy.
E
E-consent
the borrower's consent under the federal ESIGN Act to receive required disclosures electronically, valid only if given in a manner reasonably demonstrating the borrower can access the documents in the form in which they will be delivered.
E-signature
a sound, symbol, or process attached to or logically associated with a record and executed with intent to sign; given legal effect by the federal E-SIGN Act and by state adoptions of the Uniform Electronic Transactions Act.
Early payment default (EPD)
a borrower's failure to make one of the first payments on a newly originated and sold loan; triggers investor review and can support a repurchase demand.
Early payoff (EPO)
a purchase-agreement provision requiring the seller to refund some or all of the premium received if a loan pays off within a short window after sale.
Early payoff (EPO) provision
a term in a wholesale broker or correspondent agreement requiring the originator to refund its compensation if the loan pays off within a period specified in the agreement after closing.
Earnest money
the deposit a buyer delivers at contract, held by a neutral party and credited to the buyer at closing. It is both a credit against cash to close and an asset that must be sourced.
Earnest money deposit
a sum delivered by the buyer on execution of the purchase agreement, held by a neutral third party, credited to the buyer at closing, and forfeitable on buyer default.
Easement
the right of someone other than the owner to use a defined portion of a property for a defined purpose; appurtenant when it benefits an adjoining parcel, in gross when it benefits a person or entity.
eClosing
a closing conducted with electronic documents, ranging from hybrid (most documents e-signed, the note and security instrument wet-signed) to fully electronic. Chapter 23 owns the mechanics.
Effective date (of an appraisal)
the date as of which the opinion of value is stated, normally the inspection date; distinct from the report date, and the date against which an appraisal's age is measured.
Eligibility
the categorical question of whether a loan is of a kind a given investor will purchase at all: occupancy, property type, project eligibility, loan purpose, product, loan amount against the applicable limit, borrower legal status, and similar. Close to binary; compensating factors do not apply.
Eligibility Matrix
Fannie Mae's compact published grid of maximum loan-to-value, combined loan-to-value, and related limits by transaction type, occupancy, property type, and underwriting method; the practical answer to "is this structure allowed?"
Employment gap
a period within the documented employment history in which the borrower was not employed. A gap beyond roughly thirty days commonly requires a written letter of explanation, and an extended gap can affect income stability until the borrower has been back at work for a period.
Encroachment
a physical intrusion of an improvement across a boundary line or into an easement.
Encumbrance
any claim, right, or interest held by someone other than the owner that affects title or the use of the property; every lien is an encumbrance, but not every encumbrance is a lien.
eNote
an electronic promissory note executed as a transferable record, in a standardized tamper-evident format, with the controller of the authoritative copy identified in an industry registry.
Entitlement
the dollar amount of guaranty the Department of Veterans Affairs will place behind an eligible borrower's loan; charged when used and restorable, not permanently consumed.
Equal Credit Opportunity Act (ECOA)
the federal statute prohibiting discrimination in any aspect of a credit transaction on nine specified prohibited bases; implemented by Regulation B.
Escalation
asking a person with greater authority to review an underwriting decision or condition.
Escalation clause
a contract provision committing a buyer to raise their offered price above a competing offer, up to a stated ceiling; a contract device, not a lending device, and one whose top rung a loan officer should price before an offer is written.
Escalation path
the predetermined sequence of people contacted, in order, when a file stops moving, with a trigger date attached to each step at the moment the original request is made.
Escape clause (amendatory clause)
the contract provision required on VA transactions permitting a veteran to withdraw and recover their deposit if the reasonable value established by the NOV comes in below the contract price.
Escrow (as a process)
the arrangement by which a neutral third party holds funds and documents and releases them only on the conditions the parties have specified; distinct from the escrow or impound account that collects taxes and insurance with the monthly payment.
Escrow account (impound account)
an account maintained by the servicer, funded monthly with the mortgage payment, from which property taxes and insurance premiums are paid on the borrower's behalf.
Escrow analysis
the servicer's periodic re-projection of the escrow account, producing a surplus, shortage, or deficiency and a revised monthly escrow payment.
Escrow cushion
the reserve a servicer may hold above the account's projected need, capped under RESPA at one-sixth of estimated annual disbursements — two months of the escrow payment. Servicers may take less and some states cap it lower.
Escrow deposit
funds collected at closing to establish the account from which the servicer will pay property taxes and insurance; not a fee.
Escrow officer
the individual at a title or escrow company who administers a transaction's escrow and conducts the closing; distinct from the escrow (impound) account the servicer maintains after closing.
Escrow shortage
the amount by which the account's projected balance falls below what the coming year requires; generally collected in a lump sum or spread over the following twelve months.
Exception
a documented, approved departure from a guideline or overlay for a specific file, granted by someone with delegated credit authority and recorded with the reasoning.
Expectation setting
the practice of stating in advance, in specific terms, what will happen in a transaction, when it will happen, and what it will feel like, so the borrower experiences the process as predicted rather than as chaotic. Distinct from reassurance.
Expense factor
the percentage of business deposits a bank statement program treats as business expense rather than income to the owner. Sourced from a fixed program value, a third-party-prepared expense statement, or an industry schedule. An investor parameter rather than a measurement of the business; there is no standard value.
Explainability
the ability to state, for a specific decision on a specific application, the factors that drove it; a precondition for a lawful adverse action notice and therefore for using a model in a credit decision.
Extended coverage
title coverage issued with the standard exceptions deleted, typically supported by an acceptable survey and an owner's affidavit and indemnity.
Extenuating circumstances
a defined exception standard: a nonrecurring event beyond the borrower's control that caused a sudden, significant, and prolonged reduction in income or a catastrophic increase in obligations. Documented with third-party evidence; commonly shortens a waiting period.
F
Fair Housing Act
Title VIII of the Civil Rights Act of 1968, prohibiting discrimination in the sale, rental, financing, and appraisal of housing on seven prohibited bases.
Fallout
locked loans that never fund. Costly to the lender because the hedge placed against the lock must be unwound without a loan behind it, and costly asymmetrically, because fallout clusters in improving markets — precisely when that unwind loses the most money.
Fallout rate
the complement of pull-through: the share of locked loans that never fund. Costs the lender money because the pipeline hedge was sized on an expected pull-through, and covering a shortfall is most expensive precisely when fallout is highest, in a falling-rate market.
False statement to a federally insured institution
the federal offense most commonly charged in mortgage fraud: knowingly making a false statement or report for the purpose of influencing the action of a federally insured institution on a loan application.
Fannie Mae (Federal National Mortgage Association)
a government-sponsored enterprise, shareholder-owned under a federal charter, that purchases conventional loans from approved sellers, pools and securitizes them, guarantees timely payment of principal and interest to investors, and publishes the Selling Guide. Operates Desktop Underwriter. In conservatorship under FHFA since September 2008; its securities do not carry the full faith and credit of the United States.
Feasibility vs. convenience
the test applied to a down-payment difference between programs: feasibility means the borrower cannot close without the lower requirement, so the program providing it is the transaction; convenience means they can close either way, which demotes the difference from a gate to one number in a comparison.
Federal Home Loan Bank (FHLB) System
the regional bank system created in 1932 to lend to member thrifts, giving local lenders liquidity beyond their own deposits.
FHA 203(k)
HUD's rehabilitation mortgage insurance program. The standard form covers structural work and room additions and requires a HUD-approved 203(k) Consultant; the limited form covers non-structural work up to a dollar cap HUD sets and revises.
FHA appraisal
an appraisal that develops an opinion of value and additionally certifies the property's compliance with HUD's minimum property requirements; ordered against the FHA case number and transferable with it if the borrower changes lenders.
FHA case number
the unique identifier HUD assigns to a specific borrower and property, to which the appraisal, the applicable version of policy, and the insurance all attach; its assignment date commonly determines which mortgagee letters govern the loan.
FHA loan
a loan insured by the Federal Housing Administration, with a minimum down payment of 3.5% at qualifying credit scores and more tolerant credit standards than conventional lending.
FHA streamline refinance
a reduced-documentation refinance of an existing FHA-insured mortgage into a new FHA-insured mortgage, available in credit-qualifying and non-credit-qualifying forms, requiring a net tangible benefit and permitting only nominal cash to the borrower.
FICO score
the family of credit scoring models built by the Fair Isaac Corporation, whose base scores run 300 to 850; mortgage lending has long used older "classic" versions delivered through the three bureaus, which typically read lower than the newer versions consumers see in free apps.
File velocity
the rate at which a file moves through the stages of origination, measured in days per stage rather than days in total, so that a slow file's slowness can be located rather than merely observed.
Finance charge
the total dollar cost of credit, including interest and those closing costs that Regulation Z treats as finance charges.
Financial assessment
the lender's required evaluation of a HECM applicant's credit history, property-charge payment history, and residual income, to determine willingness and capacity to meet property charges.
Financial responsibility
the licensing standard applied to an applicant's credit and financial record; a judgment about pattern and about whether obligations are being addressed, not a minimum credit score.
Financing contingency
a provision making the buyer's obligation to close contingent on obtaining a mortgage loan on specified terms by a specified date; on many forms it must be exercised by written notice before the deadline or it is waived.
Findings report
the document an AUS produces: the recommendation, the loan data used, the underwriting analysis, the risk and eligibility assessments, the verification messages, and observations. Freddie Mac's equivalent is the Feedback Certificate.
FIRREA
the 1989 statute that restructured thrift regulation, created the Resolution Trust Corporation, and established federal appraiser licensing and standards.
First payment date
the due date of the first regular mortgage payment, generally the first day of the second month following closing, because mortgage interest is paid in arrears.
First-time homebuyer
most commonly, a borrower who has had no ownership interest in a principal residence during the three-year period ending on the date of purchase; not "never owned." Definitions vary by program, and several categories of prior owner — a single parent or displaced homemaker who owned only with a spouse, for example — are frequently included by exception.
Fixed-rate mortgage
a loan whose interest rate cannot change for the full term.
Float
to decline to lock, leaving the loan's rate and price subject to market movement until a lock is taken.
Float-down
an option written into a lock permitting the borrower to capture some or all of a market improvement, typically once, above a stated trigger threshold, inside a stated window, and sometimes capped or shared. It is a second option layered on the lock and is paid for either by an explicit fee or by a worse initial price.
Flood determination
the search of FEMA's flood maps establishing whether the improvements securing a loan lie within a Special Flood Hazard Area; required on federally related mortgages and usually tracked for the life of the loan.
Flood insurance
coverage on the improvements against flood loss, available through the National Flood Insurance Program and from qualifying private carriers.
Foreign national loan
a mortgage to a borrower who is neither a U.S. citizen nor a U.S. resident, typically on a second home or investment property, documented with foreign credit references or an international credit report, assets seasoned in a U.S. account, and materially larger down payments.
Forgivable second
a subordinate lien with no monthly payment that is forgiven on a stated schedule provided the borrower satisfies conditions, essentially always including continued owner occupancy; the unforgiven balance is recaptured on an early sale, refinance, or transfer. Because it has no payment, it does not affect the qualifying ratios; because it is a lien, it does affect CLTV.
Form 1004D (Appraisal Update and/or Completion Report)
the short form used either to state whether a property has declined in value since the original effective date, or to certify that required repairs, alterations, or construction have been completed. It does not re-value the property.
Form 1065
the partnership information return, which produces a Schedule K-1 for each partner.
Form 1120
the C-corporation return. Its retained earnings are the corporation's money, not the shareholder's qualifying income.
Form 1120-S
the S-corporation return, which produces a Schedule K-1 for each shareholder.
Form 4506-C
the IRS form by which a borrower authorizes a lender to obtain transcripts of their tax filings through the Income Verification Express Service (IVES).
Fraud for housing
misrepresentation by a borrower who intends to occupy the property and repay the loan; typically one or two parties, rarely an industry insider, caught by routine verification inside a single file, and frequently on a loan that performs for years. Still a federal crime.
Fraud for profit
a coordinated scheme to extract money from a mortgage transaction rather than to obtain a home; involves multiple parties and nearly always an industry insider, and is caught by pattern analysis across files, quality control sampling, and early-payment-default review.
Fraud review memo
a short, factual, conclusion-free record of the events in a file a reviewer would look at twice, and the documented disposition of each. The written form of the fraud analysis every file receives whether or not anyone records it.
Freddie Mac (Federal Home Loan Mortgage Corporation)
the parallel government-sponsored enterprise, publishing the Single-Family Seller/Servicer Guide and operating Loan Product Advisor. Also shareholder-owned under a federal charter and in conservatorship under FHFA since September 2008.
Fully indexed rate
index plus margin: the rate an ARM would charge if it adjusted today, and the rate at which a borrower must be qualified.
Funding
the lender's disbursement of loan proceeds. A separate event from signing, and in some states on a different day, depending on whether the market follows wet-funding or dry-funding practice.
Funding fee
the VA's one-time, financeable charge in place of mortgage insurance; waived for certain borrowers, including veterans receiving compensation for a service-connected disability.
Funding fee exemption
a statutory waiver of the VA funding fee for defined categories, including veterans receiving service-connected disability compensation, veterans entitled to such compensation but for retirement or active-duty pay, and certain surviving spouses; stated on the COE.
G
General QM (price-based test)
the principal QM category; the CFPB removed its 43% debt-to-income ceiling and replaced it with a test keyed to the loan's APR relative to the average prime offer rate, while retaining the requirement to consider and verify income, assets, debts, and debt-to-income ratio or residual income.
Gift funds
money provided to a borrower for the transaction with no expectation of repayment in any form. If repayment is expected, it is a loan, not a gift.
Gift letter
the signed document stating the gift amount, the donor's identity and contact information, the relationship to the borrower, the subject property, and the express statement that no repayment is expected. Required content varies by program.
Gift of equity
the difference between a property's appraised value and the price at which a family member agrees to sell it, documented as a gift from seller to buyer and credited at settlement as the buyer's down payment. Because loan-to-value uses the lesser of price or value, a gift of equity produces its benefit only when the contract is written at value and the gift is credited, not when the price is simply discounted.
Ginnie Mae (Government National Mortgage Association)
a wholly owned government corporation within HUD that does not buy loans and does not issue securities. It guarantees the timely payment of principal and interest on mortgage-backed securities issued by approved private issuers and backed by loans insured or guaranteed by a federal program (FHA, VA, USDA Rural Development, HUD §184). Its guarantee carries the full faith and credit of the United States.
Government loan
an FHA, VA, or USDA loan; insured or guaranteed by a federal agency and securitized through Ginnie Mae.
Government-sponsored enterprise (GSE)
a shareholder-owned corporation operating under a federal charter; Fannie Mae and Freddie Mac are the housing GSEs.
Gross monthly income
qualifying income before taxes and deductions; the denominator of both qualifying ratios.
Gross-up
the upward adjustment applied to verified non-taxable income so that it can be compared fairly against taxable income in a qualifying ratio. The percentage varies by program, has changed, and must be confirmed on every file rather than recalled.
Guarantee fee
USDA's one-time upfront charge, a percentage of the loan amount, which may be financed.
Guarantee fee (g-fee)
what a government-sponsored enterprise charges for guaranteeing timely payment of principal and interest to investors: an ongoing fee in basis points per year on the outstanding balance, plus upfront loan-level price adjustments that vary with the risk characteristics of the loan. Embedded in the rate; never disclosed to the borrower as a fee.
Guarantee fee (USDA)
USDA's upfront, financeable charge on a guaranteed loan.
Guideline overlay
a lender's own requirement, stricter than the agency guideline, layered on top of it. Legal, common, not published publicly, and the binding constraint on a large share of declined files.
H
Haircut
the portion of a funded loan a lender must supply from its own capital because the warehouse advance rate is less than 100%; returned only when the investor purchases the loan.
Handoff
the transfer of a file's day-to-day execution from one party to another, most commonly loan officer to processor. A sound handoff leaves exactly one owner of the next action; the loan officer retains the calendar and the borrower relationship in every case.
Hard pull
an access resulting from a credit application the consumer initiated. It is visible to other lenders and can affect the score, typically modestly and temporarily.
HCLTV
the combined loan-to-value computed using a home equity line of credit's full credit line rather than its drawn balance.
Hedging
taking an offsetting market position, most commonly by selling securities forward against a locked pipeline, so that the pipeline and the hedge move in opposite directions and the lender is roughly indifferent to rate movement. Converts market risk into liquidity and model risk.
HELOC (home equity line of credit)
a revolving second lien with a draw period, often interest-only, followed by an amortizing repayment period, typically at a variable rate indexed to a published rate plus a margin; counted in HCLTV at the full line.
HERA (Housing and Economic Recovery Act of 2008)
the statute creating the FHFA and enacting the S.A.F.E. Act.
High-balance loan
a conforming loan above the baseline limit but within a high-cost area limit; carries its own price adjustments.
High-cost mortgage
a loan meeting any one of three tests under Regulation Z § 1026.32 — an APR spread over the average prime offer rate, a points-and-fees threshold, or a prepayment penalty beyond the permitted window — which triggers additional disclosure, mandatory homeownership counseling, prohibited loan terms, and enhanced assignee liability.
Higher-priced mortgage loan (HPML)
a closed-end consumer loan secured by a principal dwelling whose APR exceeds the average prime offer rate for a comparable transaction by the margin set in Regulation Z § 1026.35; triggers escrow and appraisal requirements but does not restrict loan terms.
HO-6
the condominium unit owner's "walls-in" policy, covering interior finishes and improvements, personal property, liability, loss of use, and loss assessment.
HOEPA (Home Ownership and Equity Protection Act)
the 1994 amendment to TILA creating the high-cost mortgage category, expanded in coverage by the Dodd-Frank Act.
Home Equity Conversion Mortgage (HECM)
the FHA-insured, HUD-administered reverse mortgage, which is the dominant reverse mortgage product in the United States.
Home equity extraction
converting accumulated home equity into cash through a cash-out refinance or a junior lien, exchanging an illiquid asset for liquidity, a monthly obligation, and the conversion of unsecured debt into debt secured by the residence.
Home Mortgage Disclosure Act (HMDA)
the statute requiring covered institutions to collect, report, and publicly disclose loan-level mortgage application and origination data; implemented by Regulation C.
Home Owners' Loan Corporation (HOLC)
a federal corporation created in 1933 that refinanced distressed mortgages into long-term amortizing loans and produced the residential security maps.
Homebuyer education
structured pre-purchase instruction on the buying and ownership process, typically delivered by a HUD-approved housing counseling agency or a program-approved provider, and required by most affordable lending products and nearly every assistance program. Distinct from one-on-one housing counseling, which some programs require separately.
Homeowners insurance / hazard insurance
the property and liability policy a lender requires on the improvements securing the loan; strictly, "hazard" refers to the property-damage portion of a homeowners package.
HomeStyle
Fannie Mae's conventional renovation mortgage, sized against the as-completed appraised value; Freddie Mac's counterpart is CHOICERenovation.
Household income limit
the published USDA ceiling, by county or area and household size, above which a household is ineligible for the guaranteed program.
Housing finance agency (HFA)
a state or locally chartered entity created to expand access to affordable housing finance, which designs programs, raises capital (historically through tax-exempt mortgage revenue bonds), sets eligibility rules, and delivers programs through a network of approved participating lenders rather than lending directly to consumers.
Housing ratio (front-end ratio)
PITI divided by gross monthly income.
HUD Handbook 4000.1
the Single Family Housing Policy Handbook: HUD's consolidated, publicly available rulebook for FHA lending, covering lender approval, origination through endorsement, servicing and loss mitigation, claims, and quality control.
Hybrid (bifurcated) appraisal
an appraisal in which a trained third-party property data collector performs the on-site data collection and photography and a licensed appraiser develops and signs the opinion of value.
Hybrid ARM
an adjustable-rate mortgage with an initial fixed period followed by periodic adjustments, such as a 2/28 or 3/27.
I
Identity of interest
an FHA transaction in which the buyer and seller have a family or business relationship, which generally restricts the maximum loan-to-value unless a defined exception applies.
Identity theft
use of another person's identifying information to apply for or obtain a mortgage.
Illegal property flipping
resale of a property within a short period at a sharply higher price supported by a fraudulent appraisal, often with a straw buyer. Distinct from lawful renovate-and-resell; the fraud is in the appraisal and the misrepresentation, not the resale.
In arrears
paid after the period it covers; mortgage interest is paid in arrears, which is why a mid-month closing produces a stub period of prepaid interest.
Income and employment fraud
misrepresentation of the existence, amount, source, or continuity of qualifying income or employment. The most common form of fraud for housing, because income is the denominator of the ratio that declines files.
Index
the published market rate an adjustable-rate mortgage tracks; most current ARMs use a SOFR-based index, having replaced LIBOR.
Initial disclosure package
the bundle of documents delivered at or shortly after application, assembled from several statutes at once: the Loan Estimate, the settlement-cost booklet, the servicing disclosure, the appraisal-copy notice, the homeownership counseling list, privacy and credit-score notices, the borrower authorization, and state-specific forms.
Initial escrow deposit
the amount collected at closing to seed the escrow account, computed from the disbursement calendar and the permitted cushion. It is the borrower's own money, not a fee.
Inquiry
a record that a party accessed the credit report, shown with the date and the requesting party.
Inspection contingency
a provision giving the buyer a defined period in which to inspect the property and, depending on the form, to terminate, request repairs, or request a credit.
Installment credit
an account with a fixed amount borrowed and a fixed number of scheduled payments, and therefore a remaining term — the figure Chapter 4's ten-month rule operates on.
Insurable title
title a title insurance company is willing to insure, possibly with exceptions; not the same thing as marketable title.
Intent to proceed
the consumer's affirmative communication, after receiving the Loan Estimate, that they wish to continue with the transaction; until it is given the creditor generally may not impose fees other than a bona fide and reasonable credit report fee, and silence may not be treated as intent.
Interest
the charge for the use of borrowed money, computed each month on the outstanding balance.
Interest reserve
an amount budgeted into a construction loan to fund the interest accruing during the construction phase, so the borrower is not paying it out of pocket while also paying for housing elsewhere.
Interest-only
a payment structure requiring payments of interest alone for an initial period, after which the loan recasts and fully amortizes over the remaining term. No principal is repaid during the interest-only period. An interest-only feature disqualifies a consumer mortgage from Qualified Mortgage status.
Interest-rate risk
the risk that a change in market rates makes an existing asset or liability unprofitable; the cause of the savings and loan crisis.
Interested-party contribution (IPC)
a contribution toward the buyer's costs from any party with a financial interest in the sale — seller, builder, developer, real estate agents or brokers, or their affiliates — subject to a cap that varies by occupancy, loan-to-value, and program, applied to the lesser of sales price or appraised value, and limited again by the borrower's actual costs.
Investment property
real estate held to produce rental income and not occupied by the borrower; carries the largest down payment, price adjustment, and reserve requirements, and is ineligible for FHA, VA, and USDA financing.
Investor
the ultimate supplier of mortgage capital, who buys securities backed by pools of mortgage loans.
Investor loan
a mortgage on a property acquired to produce income rather than to occupy.
IRRRL (Interest Rate Reduction Refinancing Loan)
the VA streamline refinance of an existing VA loan, generally requiring no appraisal, income documentation, or credit underwriting package under VA rules, certifying prior rather than current occupancy, and subject to statutory seasoning, net-tangible-benefit, and fee-recoupment guardrails.
ITIN loan
a mortgage made to a borrower who qualifies using an Individual Taxpayer Identification Number, issued by the IRS to people with a U.S. tax filing obligation who are not eligible for a Social Security number, in place of an SSN. Non-agency; Ability-to-Repay applies in full to owner-occupied files.
J
Judicial foreclosure
foreclosure conducted through a lawsuit, typical in mortgage states.
Jumbo loan
a loan exceeding the conforming limit for its area and unit count, sold to private investors or retained on a balance sheet.
K
K-1 (Schedule K-1)
the statement issued by a pass-through entity reporting an owner's share of income, deductions, credits, ownership percentage, and capital activity; the bridge between the business return and the personal return.
Know Before You Owe
the Consumer Financial Protection Bureau project, launched in 2011, that designed and consumer-tested the integrated mortgage disclosure forms.
L
Large deposit
a credit to an account that is large relative to the borrower's monthly qualifying income and is not identifiable as payroll, triggering an underwriting condition for its source. The threshold varies by agency, program, and lender and changes; verify the current standard.
Late CE
continuing education completed after the year to which it is attributed, required before renewal in addition to the current year's hours.
Layered assistance
more than one source of help stacked on a single transaction — an HFA first, a DPA second, a grant, a mortgage credit certificate, a family gift, seller concessions — each carrying its own eligibility rules, recapture provisions, and effect on the combined loan-to-value and the qualifying ratios.
Layered risk
the principle that risk factors on a file compound rather than add, so that several individually acceptable characteristics together present a materially different risk than any one of them alone.
Lead conversion
the share of prospects from a given source who reach a defined next stage; meaningful only when the stages are defined identically across periods and across sources.
Lead source
an identifiable origin of prospective borrowers, tracked so that cost per closed loan, conversion, ramp time, and durability can be measured separately for each.
Lender credit
an amount the lender applies toward the borrower's costs in exchange for an interest rate above par.
Lender margin
the spread a lender builds into its base price to cover the cost of manufacturing a loan and to earn a profit. A management decision, widened when capacity is tight and narrowed when volume is wanted; the main reason two lenders quote differently on the same morning.
Lender's policy (loan policy)
title insurance protecting the lender only, written for the loan amount and declining as the principal balance declines; terminates when the loan is paid off.
Lender-paid compensation (LPC)
compensation paid to the loan originator organization by the creditor, set in advance for a compensation period, uniform across that creditor's loans, and priced into the interest rate rather than shown as a charge to the consumer.
Letter of explanation (LOX / LOE)
a signed, dated borrower statement explaining a specific fact in the file; evidence that remains in the loan file for the life of the loan and is read again by quality control, investor review, and any early-default audit.
Licensed mortgage loan originator
an originator employed by a non-depository lender or mortgage broker, who must complete pre-licensing education, pass the SAFE MLO test, complete annual continuing education, and be bonded; holds a state-issued license.
Licensing across states
holding mortgage loan originator licences in more than one state. The SAFE MLO test with uniform state content is portable, so additional states do not normally require re-testing; applications, fees, surety bonds, state-specific education, and annual renewals recur per state, every year. Licensing generally follows the property, and some states also regulate based on where the borrower is located when solicited.
Lien
a legal claim against a specific piece of property that can be enforced by compelling its sale.
Lien priority
the order in which claims against a property are satisfied from a forced sale; generally first in time, first in right by recording date and time, subject to statutory exceptions and to contractual subordination.
Lien theory / title theory
competing state-law frameworks for who holds title during the loan: in a lien-theory state the borrower holds title and the lender holds only a lien; in a title-theory state the lender or trustee holds legal title until the debt is satisfied.
Life Expectancy Set-Aside (LESA)
a carve-out of HECM principal limit, required or permitted after the financial assessment, reserved to pay property taxes and insurance; may be fully or partially funded.
Life-of-loan exclusion
a category of representation — notably misrepresentation, misstatement, and omission — that is never relieved by a loan's payment performance and remains enforceable for as long as the loan exists.
Liquid assets
cash and cash-equivalents held in accounts the borrower can draw on immediately: checking, savings, money market, and cash balances in a brokerage account. The only asset category requiring no conversion step before closing.
Listing agent
the real estate licensee representing the seller; not the loan officer's client, and the person who evaluates whether the buyer's financing is credible.
Loan application register (LAR)
the annual reporting file, one record per covered application or originated loan, carrying dozens of data points including pricing, ratios, demographics, and the originator's NMLS identifier.
Loan comparison
a side-by-side presentation of two or more complete, fundable structures for the same borrower and property, on identical assumptions, quantified in the same units, with the load-bearing assumption stated.
Loan Estimate (LE)
the standardized disclosure of estimated loan terms, projected payments, and closing costs that a creditor must deliver or place in the mail no later than the third business day after receiving an application.
Loan officer / mortgage loan originator (MLO)
a person who takes a residential mortgage loan application, or offers or negotiates terms of a residential mortgage loan, for compensation or gain.
Loan origination system (LOS)
the software of record for a mortgage file: application data, documents, conditions, disclosures, dates, and audit trail.
Loan originator compensation rule (LO Comp)
the Regulation Z provisions at 12 CFR 1026.36 governing how loan originators may be paid: no compensation based on a term of a transaction or a proxy for one, no dual compensation, and an anti-steering prohibition with a safe harbor.
Loan partner
an unlicensed support role handling document collection, status communication, file follow-up, and scheduling. Almost always the correct first hire: cheapest, highest leverage, returns revenue-producing hours immediately, and requires no surplus of leads.
Loan Product Advisor (LPA)
Freddie Mac's automated underwriting system, formerly Loan Prospector. Returns Accept or Caution, and produces a Feedback Certificate.
Loan structure
the specific combination of six decisions that turns a purchase price and a household into one particular note: program, down payment, term, rate and point position, mortgage insurance structure, and concessions or buydowns.
Loan-level price adjustment (LLPA)
a published price adjustment charged for a specific risk characteristic of a specific loan — credit score, LTV, occupancy, property type, purpose, product, subordinate financing — expressed in points of price, applied at delivery, cumulative, and not negotiable at the loan officer's level.
Loan-to-value (LTV)
the loan amount divided by the value of the property, using the lesser of the purchase price or the appraised value on a purchase transaction.
Lock desk
the secondary-marketing function that prices the day's rate sheet, confirms locks, hedges the resulting pipeline position, sets cutoff times, and approves or refuses extensions, relocks, and exceptions.
Lock expiration
the date, and usually the time, on which the lender's rate commitment ends. Measured from the lock date rather than from the closing date, and it does not extend itself.
Lock extension
additional days added to an existing lock at the same rate and price, for a fee, usually priced per day or in blocks and usually more expensive with each successive extension.
Lock period
the number of days a rate lock stands; commonly 15, 30, 45, or 60, with longer periods costing more because a longer option is more valuable to the party holding it.
Lock period adjustment
the price adjustment for the length of the rate lock, reflecting both the cost of carrying a hedge to a later settlement and the greater chance that a longer-locked loan never funds.
Lock policy
a lender's written rules governing when a loan may be locked, for what periods, what extensions and relocks cost, what happens at expiration, whether float-downs exist, what the daily cutoff is, and who may approve an exception.
Lock-in effect
the reluctance of households holding mortgages at rates far below the market to sell, which constrains the supply of existing homes and therefore constrains purchase origination as well as refinance origination.
LPMI (lender-paid mortgage insurance)
a structure in which the lender pays the mortgage insurance premium in exchange for a permanently higher note rate; there is no monthly premium and no cancellation.
Lunch-and-learn
a scheduled education session for real estate agents or other referral partners whose objective is to transfer information that measurably changes what the partner does on their next transaction, rather than to deliver a sales presentation.
M
Mandatory obligations
the items that must be paid from HECM proceeds at closing, principally the payoff of any existing mortgage, financed closing costs, the initial mortgage insurance premium, and any required set-aside.
Manual underwriting
evaluation of a file by an underwriter directly against the guide's manual underwriting requirements, without an automated recommendation; a different and generally stricter standard in which compensating factors must be explicitly identified and documented.
MAP Rule / Regulation N
12 CFR Part 1014, the Mortgage Acts and Practices Advertising Rule, prohibiting material misrepresentations, express or implied, in any commercial communication regarding any term of a mortgage credit product, with a 24-month recordkeeping requirement.
Margin
the fixed number of percentage points added to the index to set an ARM's rate; established at origination and never changed.
Market movement
a change in secondary-market pricing between the moment a rate sheet was published and the present moment; the reason every rate quote has a shelf life.
Marketable title
title free from reasonable doubt, such that a well-informed buyer would accept it and a court would compel acceptance; a contract standard.
Marketing services agreement (MSA)
a written contract under which one settlement service provider pays another for defined marketing services; lawful only where the services are specified, actually performed and evidenced, priced at fair market value, and independent of the volume or value of referrals.
Master policy
a condominium association's insurance covering the building and common elements, commonly written on a bare-walls, single-entity, or all-in basis.
Maturity event
a circumstance making a HECM due and payable: death of the last surviving borrower, sale or conveyance of the property, the property ceasing to be the borrower's principal residence (including an absence exceeding twelve consecutive months), failure to maintain the property, or failure to pay property charges.
Maximum claim amount (MCA)
the lesser of the appraised value, HUD's national HECM lending limit, or the sales price on a HECM for Purchase; multiplied by the principal limit factor to produce the principal limit.
Meals and entertainment exclusion
the nondeductible portion of business meals: money that left the business and was never deducted, so it is subtracted on the cash-flow worksheet. Reported as a nondeductible-expense item on partnership and S-corporation returns; generally not visible on a Schedule C.
Mechanic's lien
a statutory lien in favor of a contractor, subcontractor, laborer, or materials supplier who improved a specific parcel and was not paid; it attaches to the property rather than to the person who ordered the work, and in many states relates back in priority to the commencement of work.
Mentorship
structured development of a newer originator, distinct from supervision. Supervision is a compliance and quality obligation; mentorship is a deliberate transfer of judgment, and it is a real job that a producing originator has usually never done before.
Milestone
a defined, dated event in the loan origination system that a file has either reached or not (application taken, submitted, approved with conditions, clear to close, docs out, funded). The vocabulary of every pipeline report and turn-time calculation.
Milestone communication
proactive notification of the borrower and the referring partner at each defined stage of a file, sent before either of them asks.
Mini-correspondent
a small originator, frequently a converted mortgage brokerage, that closes loans in its own name using a warehouse line and sells them immediately, often to the party financing that line; legitimate where the risk transfer is real and scrutinized where it is not.
Minimum decision credit score
FHA's term for the representative credit score used to determine borrower eligibility and the applicable minimum required investment tier.
Minimum property requirements (MPR)
HUD's health, safety, security, and durability standards for an FHA-insured property; a failure produces an appraisal completed "subject to" repair, which must be cured and certified before closing.
Minimum Property Requirements (MPRs)
the VA's standards requiring that a property be safe, structurally sound, and sanitary; unmet requirements appear as conditions on the Notice of Value.
Minimum required investment (MRI)
FHA's term for the borrower's required contribution to the transaction, computed as a percentage of the adjusted value rather than of the loan amount.
MIP (mortgage insurance premium)
FHA's mortgage insurance, consisting of an upfront premium and an annual premium whose duration depends on the loan-to-value at origination.
MIP duration
how long annual MIP is collected, determined by the loan-to-value at origination and set once at closing: for terms greater than fifteen years, eleven years at 90% loan-to-value or less, and the life of the loan above 90%. The category is never revisited.
Model risk
the risk of adverse consequences from decisions based on incorrect or misused model output, including the risk that a model reproduces the effects of past discrimination learned from historical data.
Mortgage
in strict usage, the security instrument that pledges real property as collateral for a debt; in ordinary usage, the note and security instrument together.
Mortgage broker
an intermediary who takes applications and places them with wholesale lenders that underwrite and fund in their own name.
Mortgage credit certificate (MCC)
a certificate issued by a state or local housing finance agency under federal mortgage revenue bond authority that converts a stated percentage of the borrower's annual mortgage interest into a direct federal income tax credit. Not a loan, not a lien, and not down payment assistance; the interest claimed as a credit is not also deductible.
Mortgage fraud
a material misrepresentation, misstatement, or omission relied on by a lender to fund, purchase, or insure a loan it would not have made, or would not have made on those terms, had it known the truth. Three elements: material, relied on, and omission counts.
Mortgage insurance
coverage protecting the lender against loss, paid for by the borrower, that permits lending above 80% loan-to-value.
Mortgage servicing right (MSR)
the contractual right to service a loan and receive the servicing fee, together with its obligations. Valued on expected future cash flows and quoted either as a multiple of the annual servicing fee or in basis points of unpaid balance. Worth more when rates rise and prepayments slow, and less when rates fall and borrowers refinance.
Mortgage-backed security (MBS)
a security whose payments are supported by the principal and interest collected on a pool of mortgage loans.
Mortgagee
the lender, who receives the mortgage.
Mortgagee clause
the policy provision naming the lender as an interested party entitled to notice of cancellation and to loss proceeds as its interest appears; must carry the lender's exact legal name, address, and loan number.
Mortgagee letter
a numbered HUD policy communication issued to FHA-approved lenders that announces or amends policy, typically effective for FHA case numbers assigned on or after a stated date; it supersedes the handbook until the handbook is updated.
Mortgagor
the borrower, who grants the mortgage.
Mutual Mortgage Insurance Fund (MMI Fund)
the insurance fund into which FHA borrower premiums are deposited and from which FHA lender claims are paid; its capital position, subject to a statutory minimum ratio, drives premium and policy changes.
N
Negative amortization
an increase in the loan balance that occurs when a payment is less than the interest accrued.
Net position test
the correct refinance comparison: for a chosen horizon, sum every dollar paid out (principal, interest, mortgage insurance, and costs paid at the table) plus the loan balance still owed at the end of that horizon, under each choice; the lower total wins.
Net rental income
gross rents adjusted for a vacancy and maintenance factor (commonly 25%) less the rental property's own housing expense. A negative result is not zero income; it is a monthly liability.
Net tangible benefit
the defined, measurable improvement an FHA refinance must produce for the borrower — a specified reduction in the combined interest rate and annual MIP, a change from an adjustable to a fixed rate, or a term reduction — before FHA will insure the new loan.
Next irreversible date
the next date on which something on a file becomes irreversible or irreversibly more expensive: a lock expiring, a contingency lapsing, a document going stale, a regulatory waiting period that has not started. The ranking key for triage, and not the same thing as the closing date.
Niche
a defined borrower population, property type, or transaction structure served deliberately and repeatedly, deep enough that files of that kind take less time and are shopped on price less than they would be by a generalist; established over quarters, not weeks.
Niche specialization
concentrating on a borrower type, product, or community where scarcity is priced and referrals concentrate. A protection through a rate cycle, because a specialist's borrowers chose them for a reason other than the rate.
NMLS (Nationwide Multistate Licensing System and Registry)
the national system of record for mortgage loan originators and companies, including licensing, registration, and the public Consumer Access database.
NMLS Consumer Access
the free public database through which anyone can search an originator's unique identifier, licenses, employment history, and regulatory actions.
NMLS unique identifier
the permanent number assigned to each originator and company, which follows the individual rather than the employer and must appear on advertising and specified loan documents.
Non-bank lender (independent mortgage bank, IMB)
a lender that takes no deposits, funds originations through warehouse lines, and must sell what it originates to keep operating; its loan originators are state licensed.
Non-conforming loan
any loan that does not meet agency purchase requirements, whether because of size or another characteristic.
Non-judicial foreclosure
foreclosure conducted by a trustee under a power of sale, following statutory notice, without a lawsuit; typical in deed-of-trust states.
Non-occupant co-borrower (FHA)
a borrower who takes liability on the note without occupying the property; FHA combines their income and debts with the occupying borrower's but restricts the maximum loan-to-value where the co-borrower is not a family member.
Non-QM
a closed-end consumer mortgage secured by a dwelling that does not meet the Qualified Mortgage definition under Regulation Z. The lender forgoes the QM safe harbor or rebuttable presumption; the Ability-to-Repay requirement continues to apply in full. Non-QM is a legal classification of the loan, not a level of documentation.
Non-QM loan
a loan falling outside the Qualified Mortgage definition, typically using alternative income documentation; the Ability-to-Repay requirement still applies.
Non-recourse
a feature under which the lender's recovery is limited to the property, so that neither the borrower nor the borrower's estate ever owes more than the home is worth at repayment.
Non-traditional credit
documented payment history from sources that do not furnish to the credit bureaus — rent, utilities, insurance, tuition, childcare — used to establish willingness to repay when the credit report cannot. Program requirements differ and change.
Non-traditional mortgage lending
in the licensing context, mortgage products other than the 30-year fixed-rate loan, including adjustable-rate, interest-only, and balloon structures.
Nonrecurring income
income that arrived once and will not repeat, such as a legal settlement, an insurance recovery, or an asset sale; subtracted from qualifying income. Its mirror, a nonrecurring loss, is added back.
Note (promissory note)
the borrower's written promise to repay, stating amount, interest rate, payment, term, and default terms. It is the evidence of the debt and is not recorded.
Notice of incompleteness
the alternative to a denial when an application is missing information the applicant can supply: a written notice specifying what is needed, setting a reasonable deadline, and stating the consequence of not responding.
Notice of Value (NOV)
the operative VA document stating a property's reasonable value and any conditions and requirements that must be satisfied before the loan may close; issued by the VA or by a lender holding appraisal-review authority.
O
Occupancy
whether a property will be a primary residence, second home, or investment property; a major driver of eligibility and pricing independent of the borrower.
Occupancy fraud
representing a property as a primary residence or second home when the borrower intends another use, most often rental, in order to obtain a lower down payment, better pricing, or mortgage insurance availability. Intent is measured at the time of the representation; later changes in circumstance are not retroactive dishonesty.
Open house
a scheduled period during which a listing is shown to the public without appointment; for a loan officer, principally four hours of partner development with an occasional walk-in lead attached.
Option ARM
a loan offering a choice of monthly payments including one below the interest due; prohibited from Qualified Mortgage status because of its negative amortization.
Origination
the process of creating a mortgage loan, from application through funding.
Origination charge
the lender's compensation for making the loan, distinct from discount points.
Overtime
premium pay for hours worked beyond the standard schedule; variable income, commonly requiring a two-year history and averaged over 24 months.
Owner's policy
title insurance protecting the buyer, written for the purchase price, not declining, generally lasting as long as the insured or their heirs hold an interest.
P
Par
a price of exactly 100.000: the loan is worth exactly the loan amount, so no discount point is paid and no rebate is generated. The par rate is the note rate whose final price is 100.000; on the Linden Street file, 6.750%.
Par rate
the interest rate at which neither discount points are paid nor a lender credit is given.
Participating lender
a lender that has executed the master agreement and delivery contract required to originate and deliver a particular housing finance agency's programs; a loan officer whose employer is not a participating lender cannot offer that agency's programs at all.
Partnership
a business with two or more owners that files Form 1065 and passes income through to its partners; generally pays no federal income tax itself.
Pass-through rate
the rate at which interest actually passes through to holders of a pass-through security: the borrower's note rate minus the servicing fee minus the guarantee fee. Always below the note rate. (Ch.2 gave the pass-through structure; Ch.28 gives the arithmetic.)
Pass-through security
a mortgage-backed security in which payments from a pool of loans flow through to investors holding shares of the pool.
Past-client retention
the share of closed borrowers who return or refer rather than starting over with a stranger; the mechanism by which a book of business compounds.
Payment shock
the increase from a borrower's current housing cost to the proposed one, expressed as a multiple or a percentage.
Payment-protection period
the 60 days beginning on the effective date of a servicing transfer, during which a payment sent on time to the prior servicer may not be treated as late.
Per-diem interest
one day's interest on the loan amount: loan amount × annual rate ÷ 365.
Per-file cost
the total cost attributable to originating one loan, including originator compensation, processing, underwriting, closing, technology, compliance, occupancy, and allocated corporate overhead.
Per-file time budget
available working hours in a period divided by the number of files in the pipeline; the honest measure of how much attention each file can actually receive, and the quantity that unplanned inbound consumes.
Permanent buydown
discount points paid at closing to reduce the note rate for the entire life of the loan; the rate on the note itself is lower.
Personal brand
the working reputation attached to a loan officer rather than to their employer: what a stranger concludes about their competence and reliability from the public record of their name.
Piggyback second
a simultaneous second lien used to cover part of the down payment, historically used to avoid mortgage insurance.
Pipeline
the set of loan files a loan officer or a lender currently has in process, from first contact through funding; also used loosely for future business not yet in process.
Pipeline board
a single view of every open file carrying the six fields that can detect a dying file: file, stage, days in stage, business days quiet, next irreversible date, and blocking party. An empty blocking-party cell means the file is unowned, not that it is safe.
Pipeline management
the discipline of running many loan files simultaneously at a defined service level: detecting which files are stalled, deciding which one gets worked next, and ensuring none is dropped. Distinct from the origination process itself, which describes what happens to one file.
PITI
principal, interest, taxes, and insurance; in practice the full monthly housing payment, including mortgage insurance and any homeowners association dues.
PITIA
principal, interest, taxes, insurance, and association dues; the denominator of a debt service coverage ratio. Distinguished from PITI by the inclusion of HOA or condominium assessments.
Pivot
the deliberate reweighting of a loan officer's time, marketing, and partner development between the purchase and refinance channels; executable in a quarter only where both channels already exist.
PMI (private mortgage insurance)
conventional mortgage insurance; cancellable at 80% of original value on request and terminating automatically at 78% under the Homeowners Protection Act.
Point-of-sale (POS)
the borrower-facing front end of origination: online application, document upload, status view, secure messaging, and e-signature launch. Collects what the borrower says; structurally cannot ask a follow-up question.
Points and fees
a defined term in Regulation Z § 1026.32(b)(1), broader than what a borrower calls "points," used in both the HOEPA high-cost trigger and the Qualified Mortgage cap; measured against a "total loan amount" that begins with the amount financed rather than the note amount.
Pool
the specific group of loans backing one security, identified by a pool number and a CUSIP and described to investors by weighted-average statistics rather than by individual loans.
Portfolio loan
a loan the originating lender retains rather than selling, underwritten entirely to the lender's own rules.
Post-close audit (post-closing quality control)
the lender's required re-verification of a sample of closed loans — income, assets, credit, collateral, disclosures, documents, and occupancy — using random statistical and targeted sampling.
Practice payment
the difference between a borrower's current housing expense and the proposed housing payment, moved into savings each month before closing; it tests whether the number is livable and simultaneously accumulates reserves.
Pre-approval
a written statement that, based on verified information — a credit report at minimum, and in a serious shop verified income and assets as well — a specified borrower qualifies for a specified loan amount and program, subject to a property and to conditions.
Pre-approval letter
a written statement, on lender letterhead, of the purchasing power the lender's documentation supports, relied upon by sellers and listing agents; every fact in it should be traceable to a document in the file.
Pre-closing credit refresh
a re-pull or limited credit report obtained shortly before funding to confirm that the liabilities underwritten are still the liabilities that exist. Also delivered as a gap report covering only changes since the original pull.
Pre-licensing education (PE)
the 20 hours of NMLS-approved instruction required before licensure: 3 hours federal law, 3 hours ethics, 2 hours non-traditional mortgage lending, 12 hours electives.
Pre-qualification
an estimate of what a borrower can likely borrow, based on information the borrower has stated and the loan officer has not verified.
Pre-qualification letter
a written statement of purchasing power resting on unverified borrower statements; honest only if it discloses what the lender did not do.
Premium pricing
choosing a note rate whose final price exceeds 100.000 so the loan generates a rebate, typically applied as a lender credit toward the borrower's closing costs. The borrower pays for it in the monthly payment for the life of the loan.
Prepaid finance charge
a finance charge paid at or before closing, deducted from the loan amount to produce the amount financed.
Prepaid interest
interest collected at closing covering the period from funding through the end of that month, because mortgage interest is paid in arrears.
Prepaid interest (interim or odd-days interest)
interest collected at closing covering the days from funding through the end of the closing month, computed on a per-diem basis.
Prepayment penalty (non-QM)
a charge imposed when a loan is paid off, or paid down beyond a stated amount, within a defined period after closing. Regulation Z permits one on a covered transaction only if the loan is a fixed-rate qualified mortgage that is not higher-priced, subject to limits, so a consumer non-QM loan generally cannot carry one; penalties are common on business-purpose investor loans, which are outside Regulation Z. State law varies.
Pricing engine / product and pricing engine (PPE)
the software that determines product eligibility, retrieves base prices, applies every adjustment and the branch margin, and returns a sorted grid of rate/price combinations. A lookup-and-rules system: only as reliable as the loan characteristics entered into it.
Primary market
the market in which mortgage loans are originated between borrower and lender.
Principal
the amount borrowed, and thereafter the outstanding balance of the loan.
Principal limit factor (PLF)
the HUD-published decimal, indexed to the youngest borrower's age and the expected interest rate, that sets what fraction of the maximum claim amount a HECM borrower may access; it rises with age and falls as the expected rate rises.
Prior to document (PTD)
a condition that must be cleared before closing documents may be drawn; PTD conditions are what gate the clear to close.
Prior to funding (PTF)
a condition that must be satisfied after documents are drawn but before the lender disburses; typically a dated item that must be current as of the note date, and therefore one that cannot be cleared early.
Prior-to-doc (PTD)
a condition that must be satisfied before closing documents are drawn; includes anything that could change a number on the Closing Disclosure or change the credit decision. Sometimes labeled prior-to-closing (PTC).
Prior-to-funding (PTF)
a condition that must be satisfied before funds are released but may be satisfied after documents are drawn; typically items whose value is that they are current as of the note date.
Private-label securitization
securitization outside the agency channel, backed by loans the agencies would not purchase.
Processing
the assembly of a complete, internally consistent, submittable loan file: ordering third-party reports, collecting borrower documentation, verifying that the pieces agree with each other, and submitting to underwriting. Carries no approval authority.
Processor
the person who assembles and verifies a loan file and submits it to underwriting; has no approval authority.
Production
a loan officer's closed output, measured two ways that are not interchangeable: units (the number of loans closed) and volume (their total dollar amount). Approximated by units × average loan amount × basis points, and the source of every income target in origination.
Production goal
the number of closings required to reach a stated compensation target at a given average loan amount and basis-point rate; the output of an income model rather than its input.
Profit and loss statement (P&L)
an interim statement of revenue and expenses for the current year, used to show whether a declining or unproven income trend has stabilized.
Profit-and-loss-only (P&L-only)
a program qualifying from a profit and loss statement for a recent period prepared by a third party — a CPA, enrolled agent, or licensed tax preparer — generally corroborated by a limited number of bank statements.
Program fit
whether a program's eligibility rules, cost structure, and mortgage insurance cancellation terms match a specific borrower's cash, credit, property, and horizon; a statement about a borrower rather than about a product.
Prohibited basis
a characteristic a creditor may not consider in a credit transaction; the lists differ between ECOA (nine bases) and the Fair Housing Act (seven), with five shared.
Property charges
the recurring obligations a HECM borrower must continue to pay: property taxes, hazard and flood insurance, homeowners or condominium association assessments, and ground rents.
Property type
the physical and legal category of the property — detached, condominium, planned unit development, two-to-four unit, or manufactured — which affects eligibility independently of the borrower.
Proprietary reverse mortgage
a privately offered reverse mortgage, sometimes called jumbo reverse, that is not FHA-insured and not governed by HUD's HECM rules.
Prospect / lead
a person who has expressed interest in financing and about whom nothing has been verified; not yet a file, and carrying no loan number, disclosures, or obligations.
Proxy (LO Comp)
a factor that is not itself a term of a transaction but is treated as one because it both consistently varies with a term over a significant number of transactions and can be added, dropped, or changed by the loan originator. Both prongs are required.
Public record
court-derived information on a credit report. Bankruptcies remain reportable; most civil judgments and tax liens were removed from consumer credit reports beginning in 2017 and now surface through the title search instead.
Pull-through
the share of applications that reach funding; varies widely by market, channel, and how a given shop defines "application," which makes cross-company comparison close to meaningless. (Working definition introduced here for the funnel arithmetic; Chapter 39 manages a pipeline against it.)
Pull-through rate
the share of loans that reach funding out of a stated earlier population, most usefully out of loans locked. Meaningless unless its denominator is stated, since shops measure over applications, locks, and submissions and get very different numbers from the same pipeline.
Purchase agreement
the written contract between a buyer and a seller for the sale of real property, stating the parties, the property, the price, the deposit, the contingencies, and the closing date; the lender is not a party to it and never signs it.
Purchase market
origination of loans that finance the acquisition of real property; demand is driven by household formation, relocation, inventory, and affordability, and it changes gradually.
Purchasing power
the maximum loan amount, and therefore the maximum purchase price, that a borrower's documented income and documented debts will support under a program's ratio limits at a given rate. The answer to "do they qualify," which is a different question from "can they afford it."
Q
Qualified Mortgage (QM)
a category of covered loans meeting product-feature restrictions and a points-and-fees cap that carries a presumption of compliance with the Ability-to-Repay rule.
Qualifying income
the monthly income an underwriter will actually use in the qualifying ratios: earnings that are stable, reasonably expected to continue, and documentable by third-party records. Produced by the lender, not reported by the borrower.
R
Rapid rescore
a lender-ordered service in which documented evidence of a corrected or updated account condition is submitted to the credit reporting agency for expedited reporting to the bureaus, producing fresh scores in days rather than a full cycle. It is not a dispute, it guarantees no outcome, and standard practice is that the consumer is not charged for it.
Rate lock
a lender's binding commitment to deliver a specific interest rate at a specific price on a specific loan for a specific period, provided the loan closes within that period and the facts that priced it do not change. It binds the lender only; it is not a loan approval and does not obligate the borrower.
Rate sheet
the document a lender publishes each business day listing, by product and note rate, the price at which it will buy a loan, together with the adjustment tables that must be applied to it before it means anything. Stamped with an effective time; republished when the market moves.
Rate spread
the difference between a loan's annual percentage rate and the average prime offer rate for a comparable transaction as of the date the rate was set; a reported HMDA field and the primary screen for pricing disparities.
Rate-and-term refinance
a refinance that changes the interest rate, the term, or both, paying off the existing lien and the closing costs of the new transaction with only incidental cash to the borrower; called a limited cash-out refinance by Fannie Mae and a no cash-out refinance by Freddie Mac.
Re-run
a subsequent AUS submission on the same casefile. Changes the recommendation only if the inputs change, since the system is deterministic on a given engine version; a version release or a new credit report can also move the answer.
Re-verification
confirming close to the note date that facts documented earlier in the file are still true.
Reasonably expected market area (REMA)
the market a lender is measured against in a redlining analysis, derived from where it actually marketed, took applications, and lent rather than from the service area it declares.
Rebate
the surplus generated by a price above par; the source of a lender credit. Capped in practice by the sheet's maximum price and by the borrower's actual closing costs.
Recapture
repayment of assistance triggered by an event before the end of a program's compliance period, typically a sale, a refinance, a transfer of title, or loss of owner occupancy; also, separately, the federal recapture tax that can apply to mortgage revenue bond-financed programs when a borrower sells within a period of years, at a gain, with income above a program threshold.
Recast
re-amortization of a loan over its remaining term at the current balance and rate, producing a new and often much larger payment.
Reconsideration of value (ROV)
a formal, documented request submitted through the lender's designated channel asking an appraiser to reconsider an opinion of value on the basis of a factual error, additional closed comparable sales, or an error in analysis. Never a request for a particular number.
Recording
filing the deed and the security instrument in the land records of the county where the property sits, giving constructive notice to the world and establishing lien priority.
Red flag
a fact or pattern in a file inconsistent with the story the file is telling, requiring independent verification before it is relied on. A prompt to go get a fact, never a conclusion about a person; most red flags have innocent explanations.
Redlining
as a live enforcement theory, an allegation that a lender avoided serving majority-minority neighborhoods within the market it actually served, established through peer comparison, geographic analysis of applications and originations, and the lender's marketing, branch, and staffing record.
Redlining (historical)
designating neighborhoods as unsuitable for lending on grounds including the race of their residents, and withholding credit accordingly.
Refer
the risk result (DU and TOTAL) meaning the model will not endorse the file on its own. Not a denial: it routes the file to manual underwriting, restructuring, another agency's system, or another program.
Referral
under Regulation X § 1024.14(f), any oral or written action directed to a person that has the effect of affirmatively influencing the selection of a settlement service provider; also includes situations where a person paying for a service is required to use a particular provider.
Referral partner
a person whose own business puts them in front of prospective borrowers and who directs those borrowers to a specific loan officer by name; most often a real estate agent, but also builders, financial planners, CPAs, and attorneys.
Referral rate
a measured ratio. For a single partner: their transactions you originated divided by their financed transactions. For a book: closings sourced from past clients and partners divided by total closings. Always computed from your own data and never imported as an industry benchmark.
Refinance market
origination of loans that replace existing mortgage debt on property the borrower already owns; demand is driven by the spread between borrowers' existing note rates and today's achievable rate, and it changes in steps rather than slopes.
Registered mortgage loan originator
an originator employed by a depository institution or its federally regulated subsidiary, who registers in NMLS and receives a unique identifier but is not required to complete pre-licensing education, pass the SAFE MLO test, or complete continuing education.
Regulation B
the implementing regulation for ECOA, governing inquiries, evaluation standards, notification, record retention, and special purpose credit programs.
Regulation C
HMDA's implementing regulation: coverage, required data points, and reporting and disclosure procedures.
Regulation X
12 CFR Part 1024, the regulation implementing RESPA.
Regulation Z
12 CFR Part 1026, the regulation implementing TILA.
Rehabilitation escrow account
the account holding renovation funds after closing, from which draws are released against inspections; the borrower pays on the full loan amount while the money sits in escrow.
Relock
a new lock taken after a prior lock has expired, priced off the current rate sheet and subject to worst-case pricing and to any cooling-off period in the lender's lock policy.
Remote online notarization (RON)
notarization performed over a live audiovisual connection with identity proofing and a retained recording, governed by state law; requires the lender, the title underwriter, the investor, and the county recorder each to permit it.
Renewal risk
the risk that a lender declines to refinance a maturing balloon, leaving a current borrower unable to pay the principal due.
Renovation loan
a mortgage that finances the acquisition or refinance of a property together with the cost of improving it, in one loan, underwritten against the after-improved value.
Repayable second
an amortizing subordinate lien with a monthly payment at a stated rate and term. On an FHA loan the payment is part of the total mortgage payment, so it counts in the front-end ratio as well as the back-end ratio.
Repayment income
USDA's qualifying measure, counting only the borrowers' stable documented income, used for the ratios and the underwriting decision.
Replacement cost
a valuation basis paying the cost to rebuild with materials of like kind and quality, as distinct from actual cash value, which subtracts depreciation.
Representation and warranty
the lender's contractual promise to the investor, made at delivery, that the loan conforms to the applicable guidelines. Breach can trigger a repurchase demand.
Representative score
the single credit score used to qualify and price a loan. For each borrower it is the middle of three scores, the lower of two, or the duplicated score where two of three are identical; for the loan it is the lowest of the borrowers' scores. Never an average. Agency treatment of multiple-borrower selection has varied by program and over time — verify current requirements.
Reprice
a lender's intraday reissue of the rate sheet in response to market movement. It can move in either direction, and it voids the prior sheet for anything not already locked.
Repurchase
an investor's demand that the selling lender buy a loan back, generally at par plus accrued interest, when a representation or warranty made at sale proves untrue in a way that matters.
Repurchase demand
an investor's demand that the seller buy a loan back at par following a breach of a representation and warranty; the mechanics and the related early-payment-default provisions belong to.
Required use
under Regulation X § 1024.2, a situation in which a consumer must use a particular provider as a condition of, or in order to receive a discount, rebate, or other economic incentive in, a transaction; permitted only for an attorney, a credit reporting agency, or an appraiser chosen to represent the lender's interest.
Reserves
verified liquid assets remaining after closing, expressed in months of PITI. A compensating factor in underwriting and the cushion that lets a file survive a surprise.
Residential mortgage transaction
a loan to finance the acquisition or initial construction of the consumer's principal dwelling; excluded from the right of rescission.
Residential security map
the HOLC's neighborhood risk gradings (A through D, green through red), whose criteria included the racial and ethnic composition of residents.
Residual income
the dollar amount remaining monthly after income taxes, the proposed PITI, all other obligations, and a square-footage-based maintenance-and-utilities allowance; compared to a VA-published minimum that varies by geographic region, household size, and loan size. A requirement, not a compensating factor.
RESPA (Real Estate Settlement Procedures Act)
the 1974 federal statute governing settlement services on federally related mortgage loans; requires advance disclosure of settlement costs and prohibits kickbacks and unearned fees. Implemented by Regulation X and administered by the CFPB since 2011.
RESPA-safe marketing
the general practice of designing promotional activity so that its cost is explainable as payment for goods actually furnished or services actually performed at their reasonable market value, and never as payment for business.
Restoration of entitlement
the process of returning charged entitlement to a veteran: on payoff and sale of the property, once on payoff with the property retained, or by a qualified veteran-transferee's substitution of entitlement on an assumption.
Restrictive covenant
a private contractual provision limiting to whom property could be sold; racially restrictive covenants were held judicially unenforceable in 1948.
Retail lender
a lender whose own employees originate, underwrite, fund, and close loans in the lender's own name.
Retail lending
origination in which the creditor's own employees take the application, and the creditor underwrites, funds, and closes the loan in its own name before selling it.
Retainage
a percentage of each construction draw held back until final completion, the certificate of occupancy, and final unconditional lien waivers.
Retirement account vesting
the portion of a retirement account the employee actually owns. Employee contributions generally vest immediately; employer contributions often vest on a schedule. Unvested amounts are not the borrower's assets.
Reverse mortgage
a mortgage on which the borrower makes no monthly payment; interest and premiums accrue onto a rising balance that is repaid in a single event at the end, normally from sale of the home.
Review generation
the systematic practice of requesting public, third-party reviews from clients at the point of maximum goodwill, using a specific prompt, without offering anything of value in exchange and without writing or editing the review.
Revolving credit
an account with an assigned credit limit the borrower may draw against repeatedly, with a minimum payment that floats with the balance and no scheduled payoff date; it never falls out of the debt ratio on its own.
Right of rescission
the consumer's right under TILA and Regulation Z to cancel certain transactions secured by a principal dwelling until midnight of the third business day after the later of consummation, delivery of the material disclosures, or delivery of the notice of the right to rescind. It does not apply to a loan made to acquire or construct the principal dwelling.
Risk retention
a requirement that securitizers keep an economic interest in the credit risk of what they sell.
Rural eligibility
USDA's address-level property location test, determined by USDA's published eligibility map rather than by appearance, ZIP code, or intuition; designations are periodically re-evaluated.
S
S-corporation
a corporation that has elected pass-through treatment, files Form 1120-S, and normally pays an owner-employee both W-2 wages (reasonable compensation) and a K-1 share of profit.
S.A.F.E. Act
the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, enacted as Title V of the Housing and Economic Recovery Act; established national minimum standards for mortgage loan originator licensing and registration.
Safe harbor / rebuttable presumption
a Qualified Mortgage that is not a higher-priced covered transaction receives a conclusive presumption of Ability-to-Repay compliance; one that is higher-priced receives only a rebuttable presumption, which a consumer may overcome by showing insufficient residual income at consummation to meet living expenses.
SAFE MLO test
the national mortgage loan originator licensing examination, commonly taken as the national component with uniform state content: 120 questions of which 115 are scored, 190 minutes, 75% to pass.
Sales comparison approach
the valuation method that derives an opinion of value from the adjusted sale prices of comparable properties that recently sold; the controlling approach on most residential purchase appraisals.
Sales manager
a manager who develops originators without owning the profit and loss. Distinguished from a branch manager by the absence of P&L responsibility, and usually compensated on override rather than on branch profitability.
Sales proceeds
the net cash a borrower receives from the sale of a property they own, verified by the final settlement statement from that closing and not by any estimate preceding it.
Schedule A
the commitment schedule stating the search (commitment) date, the policies and amounts to be issued, the estate or interest, the current vesting, and the legal description.
Schedule B-I (Requirements)
the schedule listing the items that must be satisfied before a title policy will issue.
Schedule B-II (Exceptions)
the schedule listing matters the policy will not insure against, comprising standard exceptions and exceptions specific to the parcel.
Schedule C
Profit or Loss From Business, the schedule of the personal return where a sole proprietor reports gross receipts, cost of goods sold, expenses, business use of home, and net profit or loss.
Seasoning
the length of time funds have been held in an account. Funds predating the documentation window are unexamined rather than proven; seasoning is a boundary of inquiry, not a certificate of legitimacy.
Second home
a one-unit property the borrower occupies part of the year, suitable for year-round occupancy and under the borrower's exclusive control, not subject to a rental or management agreement; rental income may not be used to qualify.
Secondary market
the market in which originated loans are sold, pooled, and securitized.
Section 203(b)
FHA's basic single-family mortgage insurance program for owner-occupied one-to-four unit properties, and the program meant by "an FHA loan" in ordinary use.
Section 8 (kickbacks and unearned fees)
RESPA's core prohibition. Section 8(a) bars giving or accepting a thing of value pursuant to an agreement or understanding for the referral of settlement service business; 8(b) bars splitting a charge other than for services actually performed; 8(c) describes permitted payments, including payment for goods actually furnished or services actually performed.
Section 9 (title steering)
RESPA's prohibition on a seller requiring, directly or indirectly, as a condition of selling the property, that the buyer purchase title insurance from a particular company; the remedy is three times all charges made for the title insurance, running to the buyer.
Securitization
pooling loans and issuing securities backed by the pool's cash flows.
Security instrument
the recorded document that creates a lien on real property to secure a note; takes the form of a mortgage or a deed of trust depending on state law.
Self-employed borrower
a borrower whose qualifying income derives from a business they own, generally at an ownership threshold of 25% or more; documented from filed tax returns rather than from an employer's promise to pay.
Seller concession (seller-paid closing costs)
money the seller agrees to contribute toward the buyer's closing costs, prepaid items, or financing charges; one species of interested-party contribution.
Seller/Servicer Guide
Freddie Mac's equivalent published rulebook, amended by Bulletins; organized differently from the Selling Guide and reaching a different answer on a meaningful number of specific questions.
Selling Guide
Fannie Mae's published, free, continuously updated statement of the requirements a mortgage loan must meet for Fannie Mae to purchase it; amended by Selling Guide Announcements with stated effective dates.
Serial refinancing
the pattern of repeated refinances on a single borrower whose cumulative effect is compounding financed costs, repeated amortization resets, a repeatedly restarted mortgage insurance termination schedule, and progressive loss of equity — none of which is visible in a payment comparison.
Servicer
the entity that collects payments, administers the escrow account, and handles delinquency after closing; frequently not the original lender.
Servicing released
the originating lender sells the right to service the loan, typically for a servicing released premium; the borrower will pay a different company.
Servicing retained
the originating lender keeps the right to service the loan and collects the servicing fee; the borrower keeps paying the same company, and the lender books a mortgage servicing right.
Servicing transfer
the sale or assignment of the right to service a loan, requiring notice from both the transferring and the receiving servicer and carrying a 60-day payment-protection period.
Settlement (closing)
the meeting or process at which the loan documents are signed, funds are collected and disbursed, and title is conveyed from seller to buyer.
Shift differential
a premium paid for working nights, weekends, or holidays; variable income averaged like overtime, and separately countable only where the employer breaks it out as its own line item.
Shortfall rule
the arithmetic of a low appraisal: additional cash required equals the maximum loan-to-value multiplied by the difference between contract price and appraised value, because each dollar of lost value costs only LTV cents of borrowing capacity.
Silent second
an undisclosed subordinate lien, most often a seller carryback or private note funding part of the down payment, concealed from the first-lien lender. Falsifies both the borrower's actual equity investment and the combined loan-to-value ratio. Distinct from disclosed, approved subordinate financing such as down-payment assistance — the difference is disclosure, not structure.
Single-close (one-time close)
a construction-to-permanent structure with one closing at the start; the loan converts to permanent financing by modification at completion, with no second closing and no re-qualification.
Single-item analysis
an escrow computation that treats each escrowed item as its own account, each carrying its own cushion.
Single-premium mortgage insurance
mortgage insurance paid in one amount at closing or financed, generally neither refundable nor cancellable.
Social media compliance
the application of advertising, licensing, privacy, record-retention, and fair-lending requirements to social platforms, including the requirement that the NMLS unique identifier appear on material that solicits mortgage business regardless of whether the account is characterized as personal.
Soft pull
an access that does not result from a consumer-initiated credit application — the consumer checking their own report, an existing creditor reviewing an account, a prescreened offer. It does not affect the score and is not furnished to other lenders for credit decisions.
Sole proprietorship
an unincorporated business owned by one person, with no separate federal return; business activity is reported on Schedule C of the owner's Form 1040.
Sourcing
documenting where a specific sum of money came from, with third-party evidence of both where it left and where it arrived. Distinct from seasoning.
Special Flood Hazard Area (SFHA)
the mapped area, carrying a designation beginning with A or V, within which federal law requires flood insurance on a regulated lender's loan secured by improved real property in a participating community.
Special purpose credit program (SPCP)
a program authorized by ECOA and Regulation B under which a creditor may extend credit to, and consider otherwise-prohibited information about, a class who would otherwise be denied credit or receive it on less favorable terms; a for-profit program requires a written plan.
Sphere of influence (SOI)
the set of people who already know a loan officer well enough to take their call and vouch for them; the highest-converting and least renewable lead source, and a stock rather than a flow.
Sponsorship
an employer's attestation in NMLS that an originator works for and is supervised by them; a license is dormant and authorizes no origination activity until sponsorship is active.
Stable monthly income
income with a demonstrated history and a reasonable expectation of continuance, expressed as a monthly figure; the stability side of qualifying income.
State regulator
the state agency, commonly a department of banking or financial institutions, that issues MLO licenses and enforces state mortgage law.
Stated income
a documentation type in which the borrower states income without verification; effectively eliminated by the Ability-to-Repay rule.
Steering
directing an applicant toward or away from a loan product, term, or channel for a reason other than the applicant's interest; a fair-lending violation where it correlates with a prohibited basis.
Stip sheet
the working document listing a conditional approval's conditions; the operating artifact of the second half of a loan file.
Straw buyer
a person who applies for a mortgage and takes title in their own name for another party's benefit, typically for a fee, with the true beneficiary, funding source, or intended occupant undisclosed to the lender. Charged alongside scheme organizers in documented prosecutions.
Streamline refinance
a program-specific, reduced-documentation refinance available within certain government programs, in which some combination of appraisal, income, and credit documentation is waived because the investor already carries the risk on the existing loan; carries mandatory net tangible benefit tests precisely because the underwriting is reduced.
Structuring
deliberately breaking currency transactions into smaller amounts to evade federal currency-transaction reporting requirements; a federal crime under 31 U.S.C. § 5324 regardless of whether the underlying funds are lawful. A loan officer must never suggest or assist it.
Subject-to repairs
a reconciliation in which the appraiser's opinion of value assumes that specified repairs, alterations, or construction are completed; the loan cannot close until completion is certified.
Subordination
in a private-label securitization, the allocation of credit losses from the most junior tranche upward, so that senior tranches are protected only until the subordinate tranches are exhausted. The substitute for an agency guarantee.
Subprime
lending to borrowers whose credit profile falls below prime standards, at correspondingly higher cost.
Succession
the transfer of a book of business, a database, and referral relationships to another originator or a team. The exit question every origination business eventually answers, and the reason partnership terms must be written before they matter.
Successive years rule
the requirement that a licensed originator generally may not satisfy continuing education by taking the same approved course in consecutive years.
Surety bond
a bond in an amount set by the state, providing a source of recovery for consumers harmed by an originator's conduct; some states substitute a recovery fund.
Survey
a measured drawing prepared by a licensed surveyor showing boundaries, improvements, and recorded easements as they sit on the ground; supports deletion of the standard survey exception.
Suspense
the state of a file that underwriting cannot decision as submitted; neither an approval nor a denial, and therefore not an adverse action.
Suspicious Activity Report (SAR)
a confidential report filed by a financial institution with the Financial Crimes Enforcement Network describing a transaction suspected to involve fraud or other illegal activity. Filed by the institution rather than by the individual originator; disclosure to the subject is prohibited; good-faith reporting carries a federal safe harbor.
Synthetic identity fraud
an identity assembled rather than stolen whole: real identifying elements combined with fabricated ones and built up over time until the resulting credit file looks ordinary. Hard to detect because there is no victim to complain.
T
Table funding
a settlement at which a loan closes in one party's name while being funded by a contemporaneous advance of loan funds from another party, to whom the loan is simultaneously assigned; under Regulation X it is treated as a loan origination rather than a secondary-market transaction.
Tax transcript
an IRS-produced summary of what a taxpayer filed. A tax return transcript shows line items from the return as filed; a wage and income transcript shows the information returns (W-2s, 1099s, and similar) filed about the taxpayer, and is the one that corroborates a W-2 directly.
Team model
an origination business in which a senior originator supervises one or more junior originators and shares operations, taking a share of the juniors' production. Higher total volume, lower margin per file, and a genuinely different job from originating — one many excellent originators discover they dislike.
Teaser rate
an initial rate on an adjustable-rate loan set below the fully indexed rate.
Temporary buydown
an escrow account funded at closing by the seller, builder, or another party and drawn down monthly to subsidize part of the borrower's payment for a stated period, while the note rate remains unchanged; the borrower is qualified at the note rate.
Ten percent cumulative tolerance
the bucket in which the aggregate of the charges may exceed the aggregate disclosed by up to ten percent: recording fees, and charges for shoppable services where the borrower selected a provider on the creditor's written list. Only the amount above the ceiling is refunded.
Ten-month rule
the convention permitting exclusion of an installment debt with a small number of payments remaining, commonly ten or fewer, subject to program specifics.
Term of a transaction
under Regulation Z, any right or obligation of the parties to a credit transaction: interest rate, discount points, origination fee, prepayment terms, escrow, maturity. Compensation may not be based on one.
Terms of withdrawal
the retirement plan document establishing whether, and on what conditions, a borrower may access plan funds while still employed.
The gap
the interval between disbursement and the appearance of the newly recorded instruments in the land records, during which the record does not yet reflect the transaction.
Thin file
a credit report with too few tradelines or too little history to support a conventional credit assessment, sometimes too little to generate a score at all. No score is not the same thing as bad credit.
Thing of value
anything given or received with value, defined expansively in Regulation X § 1024.14(d) to include money, discounts, free or below-market services, office space, staff, trips, special banking terms, opportunities to participate in profitable ventures, and forgiven expenses. RESPA contains no de minimis exception.
Third-party originator (TPO)
from a lender's perspective, any originator that delivers it loans without being its employee: mortgage brokers and correspondent lenders alike. Large lenders run a TPO division containing both a wholesale desk and a correspondent desk.
Thirty-year fixed-rate mortgage
the dominant American home loan: a fixed rate and full amortization over 360 monthly payments.
Three-business-day rule
two distinct rules sharing a number: the Loan Estimate must be delivered or mailed within three business days of application (general definition), and the Closing Disclosure must be received at least three business days before consummation (precise definition).
Tidewater
the VA process by which an appraiser, before finalizing a report whose value appears likely to come in below the contract price, notifies the designated point of contact and allows a short window (commonly two business days) to submit additional market data. Not a negotiation and not an appeal.
TILA (Truth in Lending Act)
the 1968 federal statute requiring standardized disclosure of the cost of consumer credit so that offers can be compared, and, since 1994 and 2010, imposing substantive limits on certain mortgage loans. Implemented by Regulation Z.
Title
the bundle of legal rights to own, use, possess, and dispose of a specific parcel of real property; not a document.
Title commitment
the title company's written offer to issue a title policy on stated terms, organized in three schedules; not a policy, not a guarantee of good title, and in most states not a legal opinion of title.
Title insurance
a one-time-premium indemnity policy covering defects existing as of the policy date, together with a duty to defend the insured's title; retrospective, not prospective.
Title search
the examination of public records to determine the current condition of title; bounded by what was recorded, correctly indexed, and found.
To-Be-Announced (TBA) market
the forward market in agency mortgage-backed securities, in which a trade specifies only the agency or program, maturity, coupon, price, par amount, and settlement date; the specific pools to be delivered are identified later under a notification rule. It allows a lender to sell a security before the loans that will fill it have been originated, which is what makes a forward rate lock possible.
Tolerance (variance)
the amount by which a charge at closing may exceed the amount disclosed on the Loan Estimate before the creditor has failed the good-faith standard.
Tolerance cure
the creditor's refund of the excess to the consumer together with a corrected Closing Disclosure reflecting the refund, both delivered no later than 60 calendar days after consummation.
Top producer
an originator in the highest tier of production for their market. A description of output, not of practice quality, and not portable across markets with different average loan sizes.
Total cost of credit
the sum of everything a borrower pays to obtain and carry a loan over the period they actually hold it: points and origination charges, all interest, all mortgage insurance, and any financed one-time charge. Distinct from the note rate, from the monthly payment, and from APR — APR is a standardized yearly rate over the full term, while total cost of credit is a dollar total over a stated horizon. The down payment is excluded, because it is equity rather than cost.
Total Interest Percentage (TIP)
total interest paid over the life of the loan expressed as a percentage of the loan amount; a Closing Disclosure figure.
Total of Payments
the sum of all payments the borrower will make over the life of the loan; a Closing Disclosure figure.
TOTAL Scorecard
Technology Open To Approved Lenders: FHA's risk scorecard, run through an approved automated underwriting system rather than standalone. Returns Accept or Refer for FHA-insured loans; a Refer routes the file to manual underwriting under HUD Handbook 4000.1.
Touchpoint cadence
the schedule that milestone communication follows, including a floor: a maximum interval (five business days in this book's model) after which a file receives a written update even when nothing has happened.
Tradeline
one account as it appears on a credit report, carrying the creditor, account number, ECOA responsibility code, date opened, terms, high credit, credit limit, balance, monthly payment, amount past due, status, and a 24-month payment history grid.
Trailing documents
documents that reach the lender or custodian after closing, principally the recorded security instrument and the final title policy.
Transferable record
an electronic record that would be a promissory note if it were on paper, for which a single authoritative copy exists; rights are held through control of that copy rather than physical possession.
Tri-merge credit report
a merged residential mortgage credit report produced by a credit reporting agency that pulls all three nationwide bureaus simultaneously, reconciles duplicate accounts into one line each, formats the result to mortgage lending standards, and returns each bureau's score alongside the merged data.
Triage
deciding the order in which files are worked, ranking by time-to-irreversibility rather than by expressed urgency, and breaking ties toward files whose next action belongs to someone outside the originator's building.
TRID (TILA-RESPA Integrated Disclosure rule)
the rule combining the Truth in Lending Act and RESPA mortgage disclosures into the Loan Estimate and the Closing Disclosure; effective October 3, 2015.
TRID clock
the practitioner's name for the set of disclosure timing obligations that begin on receipt of an application, chief among them the three-business-day Loan Estimate deadline.
Triggering terms
under Regulation Z § 1026.24, advertising terms — the amount or percentage of a down payment, the number of payments or period of repayment, the amount of any payment, or the amount of any finance charge — that require the advertisement to add the down payment, the terms of repayment, and the annual percentage rate.
Turn time
the elapsed time between two defined milestones on a loan file, measured the same way every time. There is no single turn time; the one referral partners actually use is contract-to-close.
Two-close
a construction structure using a short-term interim construction loan followed by a separate permanent refinance, requiring a second closing and a second qualification a year later.
U
UFMIP (upfront mortgage insurance premium)
FHA's one-time premium, commonly 1.75% of the base loan amount and typically financed into the loan.
Underwriter
the person who evaluates a file against applicable guidelines and lender overlays and issues the decision.
Underwriting
the evaluation of a complete loan file against applicable guidelines and lender overlays, resulting in a decision: approved with conditions, suspended, or denied. The only stage with authority to say yes or no.
Underwritten pre-approval
a pre-approval reviewed by a human underwriter before a property has been identified, leaving essentially the property, the appraisal, and title as remaining conditions; sometimes called a "TBD approval."
Undisclosed debt monitoring
a service that watches borrowers' credit files between application and closing and alerts the lender to new inquiries, tradelines, or public records, typically within about a day.
Unearned fee
a charge for which no services, or only nominal services, are performed, or for which duplicative fees are charged; prohibited by RESPA Section 8(b) whether or not any referral occurred.
Unequal effort
the form most individual-level disparate treatment actually takes in origination: differential information, restructuring, persistence, or advocacy across similar applicants.
Uniform Residential Appraisal Report (Form 1004)
the standard report form for a one-unit residential property appraised with an interior and exterior inspection; Freddie Mac Form 70 is the same document under a different number.
Uniform Residential Loan Application (URLA / Form 1003)
the standardized residential mortgage application used across the industry; Fannie Mae Form 1003 and Freddie Mac Form 65, structured in components (Borrower Information, Additional Borrower, Lender Loan Information, and addenda) with nine numbered sections in the borrower-signed component.
Uniform state content (UST)
the portion of the national test covering state licensing law concepts common across participating states, which makes a single test result portable between them.
Units and volume
the count of loans closed and their total dollar amount. Two originators can produce identical volume with very different unit counts, and a compensation plan can reward each of them differently: a plan paying pure basis points is indifferent, a flat-dollar-per-file plan favors units, and a plan with per-file costs favors size.
Unlimited tolerance
the bucket with no numeric test: services obtained from a provider not on the creditor's written list, prepaid interest, property insurance premiums, escrow deposits, and services the creditor does not require. The estimate must still have been made in good faith.
Upfront mortgage insurance premium (UFMIP)
FHA's one-time mortgage insurance charge, assessed as a percentage of the base loan amount at closing and commonly financed into the loan; it is excluded from the loan-to-value used for program eligibility.
USDA guaranteed loan
a zero-down mortgage made by an approved private lender with a USDA Rural Development guarantee behind it, under the Section 502 guaranteed program; distinct from the Section 502 direct loan, which USDA makes itself.
USDA loan
a loan guaranteed by USDA Rural Development for properties in eligible areas, for households under an income limit, requiring no down payment.
V
VA appraisal
an appraisal requested through the VA's system and assigned to a VA-approved fee appraiser on a rotational basis, evaluating both value and the VA's minimum property requirements; the lender does not select the appraiser.
VA funding fee
a one-time charge paid to the VA on most VA loans, varying by transaction type, down payment tier, and first versus subsequent use of entitlement; may be financed, and financing it may push the loan above the purchase price.
VA loan
a loan partially guaranteed by the Department of Veterans Affairs for eligible veterans, service members, and surviving spouses; requires no down payment and carries no monthly mortgage insurance.
Valuation gap
the documented disparity in appraised values associated with the demographics of a property's neighborhood or occupants; magnitudes vary substantially by study methodology.
Value acceptance (appraisal waiver)
an offer from the automated underwriting system to accept the contract price as the value for loan-to-value purposes without an appraisal; an offer that must be exercised, that says nothing about condition, and that removes the appraisal contingency's trigger.
Value proposition
a written, one-page statement of who you serve, the problem you solve, the commitments you make, the evidence supporting them, and who you are not for; falsifiable by design, since a promise that cannot be broken cannot be relied upon.
Variable income
compensation whose amount is not fixed by the employment arrangement, including overtime, bonus, shift differential, incentive pay, tips, and commission. Requires a documented history and is converted to a monthly figure by averaging.
Verbal verification of employment (VVOE)
a documented telephone confirmation of continued employment made near the note date, using an employer phone number sourced independently of the borrower, and logged with the person contacted, their title, the date, and the caller.
Verification messages
the numbered items in a findings report specifying the documentation required to support the recommendation; effectively the file's document list, generated from the data the loan officer entered. A floor, not a ceiling — overlays and the underwriter add to them.
Verification of Deposit (VOD)
a form sent by the lender directly to a depository institution asking it to certify account type, account number, date opened, current balance, and average balance over the preceding two months. Its distinctive field is the average balance.
Verification of Employment (VOE)
a lender's third-party confirmation of a borrower's employment and compensation. A written VOE (industry standard Fannie Mae Form 1005) confirms dates of employment, position, current pay, the prior two years' earnings broken out by base, overtime, bonus, and commission, and the employer's view of continued employment. A verbal VOE is a documented confirmation, obtained shortly before closing, that the borrower is still employed.
Volume tier
a compensation structure paying a higher basis-point rate at higher production. Marginal tiers pay each band of volume at its own rate; retroactive tiers reprice all volume at the highest band reached, creating a month-end cliff.
W
W-2 originator / 1099 originator
an originator classified as an employee versus as an independent contractor. The classification changes taxes, benefits, expense treatment, and how the originator's own income is underwritten; it does not change coverage under the loan originator compensation rule, and state licensing law may restrict it.
Waiting period
the interval a creditor must allow to elapse before consummation: seven business days after Loan Estimate delivery, and three business days after Closing Disclosure receipt.
Waiting period (credit event)
a required interval between a significant derogatory credit event — bankruptcy, foreclosure, deed-in-lieu, preforeclosure or short sale, mortgage charge-off — and the new loan; measured from a specific documented date to, commonly, the note or disbursement date rather than the application date.
Warehouse line of credit
short-term borrowing a lender uses to fund loans at closing, repaid when the loan is sold into the secondary market.
Weekly pipeline review
a fixed, recurring appointment at which every open file is examined in sequence, the pipeline board is reconciled against the loan origination system, and a specific next action with an owner and a date is set for each flagged file. Exhaustive by design; held whether or not there is time for it.
Wet funding
funding and disbursement at or about the time of signing, so the borrower generally leaves the closing with keys.
Whole loan sale
the sale of a closed loan itself, for cash, at a price expressed as a percentage of the unpaid principal balance, as distinct from delivering it into a security. Usually servicing released.
Wholesale lender
a lender that funds loans submitted by third-party originators such as mortgage brokers.
Wholesale lending
lending to consumers through originators who are not the lender's employees; the wholesale lender publishes guidelines and pricing to third-party originators, underwrites what they submit, and funds and closes in its own name. It does not advertise to borrowers.
Willful blindness
deliberately avoiding confirmation of a fact one is aware is highly likely to be true; in broad terms it may be treated as knowledge, and it is the originator's most common route to liability. Also called deliberate ignorance or conscious avoidance.
Wire fraud
inducing a party to transmit funds to an account controlled by a criminal using falsified payment instructions; in residential real estate, most often targeting a homebuyer's closing funds days before closing.
Worst-case pricing
the convention, applied by most lender lock policies on a relock, of delivering the worse of the original locked price and current market pricing. It is asymmetric by design: it removes any benefit a borrower would otherwise gain by allowing a lock to expire in an improving market.
Written list of service providers
the list a creditor must give a consumer it permits to shop; whether the consumer selected a provider from it determines whether a shoppable charge sits in the ten-percent bucket or has unlimited tolerance.
Y
Year-to-date (YTD)
cumulative earnings from January 1 through the current pay period, as shown on a paystub. Annualized by pay periods elapsed (not by calendar months) and used to confirm that current-year income supports the qualifying figure.
Yield spread
the relationship between note rate and price: a loan carrying a higher rate is worth more to an investor and therefore prices higher. Surplus paid to a broker out of this spread was historically called yield spread premium; the Loan Originator Compensation rule changed who may receive it.
Yield spread premium (YSP)
the pre-2011 payment a wholesale lender made to an originator for placing a borrower at a rate above par; prohibited as originator compensation since April 2011, though the above-par price improvement itself still exists and now belongs to the consumer or the creditor.
Z
Zero tolerance
the bucket in which the disclosed amount is the maximum: the creditor's own charges including origination and points, charges for services the borrower could not shop for, and transfer taxes. The entire increase is refunded.