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C
Call option
A provision in the mortgage that gives the mortgagee the right to
call the mortgage due and payable at the end of a specified period for
whatever reason.
Cap
A provision of an adjustable-rate mortgage (ARM) that limits how much
the interest rate or mortgage payments may increase or decrease.
Capital
improvement
Any structure or component erected as a permanent improvement to real
property that adds to its value and useful life.
Cash-out
refinance
A refinance transaction in which the amount of money received from
the new loan exceeds the total of the money needed to repay the existing
first mortgage, closing costs, points, and the amount required to satisfy
any outstanding subordinate mortgage liens. In other words, a refinance
transaction in which the borrower receives additional cash that can be
used for any purpose.
Caveat Emptor
An expression used that means "Buyer Beware".
Certificate
of title
A statement provided by an abstract company, title company, or attorney
stating that the title to real estate is legally held by the current owner.
Chain
of title
The history of all of the documents that transfer title to a parcel
of real property, starting with the earliest existing document and ending
with the most recent.
Change
frequency
The frequency (in months) of payment and/or interest rate changes in an
adjustable-rate mortgage (ARM).
Clear
title
A title that is free of liens or legal questions as to ownership of
the property.
Closing
A meeting at which a sale of a property is finalized by the buyer
signing the mortgage documents and paying closing costs. Also called "settlement."
Closing cost item
A fee or amount that a home buyer must pay at closing for a single service,
tax, or product. Closing costs are made up of individual closing cost
items such as origination fees and attorney's fees. Many closing cost
items are included as numbered items on the HUD-1 statement.
Closing
costs
Expenses (over and above the price of the property) incurred by buyers
and sellers in transferring ownership of a property. Closing costs normally
include an origination fee, an attorney's fee, taxes, an amount placed
in escrow, and charges for obtaining title insurance and a survey. Closing
costs percentage will vary according to the area of the country.
Closing
statement
Also referred to as the HUD1. The final statement of costs incurred
to close on a loan
or to purchase a home.
Cloud
on title
Any conditions revealed by a title search that adversely affect the
title to real estate. Usually clouds on title cannot be removed except
by a quitclaim deed, release, or court action.
Collateral
An asset (such as a car or a home) that guarantees the repayment of a
loan. The borrower risks losing the asset if the loan is not repaid according
to the terms of the loan contract.
Collection
The efforts used to bring a delinquent mortgage current and to file the
necessary notices to proceed with foreclosure when necessary.
Co-maker
A person who signs a promissory note along with the borrower. A co-maker's
signature guarantees that the loan will be repaid, because the borrower
and the co-maker are equally responsible for the repayment. See endorser.
Commission
The fee charged by a broker or agent for negotiating a real estate or
loan transaction. A commission is generally a percentage of the price
of the property or loan.
Commitment
letter
A formal offer by a lender stating the terms under which it agrees to
lend money to a
home buyer. Also known as a "loan commitment."
Common
areas
Those portions of a building, land, and amenities owned (or managed) by
a planned unit development (PUD) or condominium project's homeowners'
association (or a cooperative project's cooperative corporation) that
are used by all of the unit owners, who share in the common expenses of
their operation and maintenance. Common areas include swimming pools,
tennis courts, and other recreational facilities, as well as common corridors
of buildings, parking areas, means of ingress and egress, etc.
Community
Home Improvement Mortgage Loan
An alternative financing option that allows low- and moderate-income
home buyers to obtain 95 percent financing for the purchase and improvement
of a home in need of modest repairs. The repair work can account for as
much as 30 percent of the appraised value.
Community property
In some western and southwestern states, a form of ownership under
which property acquired during a marriage is presumed to be owned jointly
unless acquired as separate property of either spouse.
Comparables
An abbreviation for "comparable properties"; used for comparative
purposes in the appraisal process. Comparables are properties like the
property under consideration; they have reasonably the same size, location
, and amenities and have recently been sold. Comparables help the appraiser
determine the approximate fair market value of the subject property.
Condominium
A real estate project in which each unit owner has title to a unit in
a building, an undivided interest in the common areas of the project,
and sometimes the exclusive use of certain limited common areas.
Condominium
conversion
Changing the ownership of an existing building (usually a rental project)
to the condominium form of ownership.
Construction
loan
A short-term, interim loan for financing the cost of construction.
The lender makes payments to the builder at periodic intervals as the
work progresses.
Consumer
reporting agency (or bureau)
An organization that prepares reports that are used by lenders to
determine a potential borrower's credit history. The agency obtains data
for these reports from a credit repository as well as from other sources.
Contingency
A condition that must be met before a contract is legally binding.
For example, home purchasers often include a contingency that specifies
that the contract is not binding until the purchaser obtains a satisfactory
home inspection report from a qualified home inspector.
Contract
An oral or written agreement to do or not to do a certain thing.
Conventional
mortgage
A mortgage that is not insured or guaranteed by the federal government.
Convertibility
clause
A provision in some adjustable-rate mortgages (ARMs) that allows the
borrower to change the ARM to a fixed-rate mortgage at specified timeframes
after loan origination.
Convertible
ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate
mortgage under specified conditions.
Cooperative
(co-op)
A type of multiple ownership in which the residents of a multiunit
housing complex own shares in the cooperative corporation that owns the
property, giving each resident the right to occupy a specific apartment
or unit.
Corporate
relocation
Arrangements under which an employer moves an employee to another area
as part of the employer's normal course of business or under which it
transfers a substantial part or all of its operations and employees to
another area because it is relocating its headquarters or expanding its
office capacity.
Cost
of funds index (COFI)
An index that is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans. It represents the weighted-average
cost of savings, borrowings, and advances of the 11th District members
of the Federal Home Loan Bank of San Francisco.
Covenant
A clause in a mortgage that obligates or restricts the borrower and that,
if violated, can result in foreclosure.
Credit
An agreement in which a borrower receives something of value in exchange
for a promise to repay the lender at a later date.
Credit
history
A record of an individual's open and fully repaid debts. A credit
history helps a lender to determine whether a potential borrower has a
history of repaying debts in a timely manner.
Credit
report
A report of an individual's credit history prepared by a credit bureau
and used by a lender in determining a loan applicant's creditworthiness.
See merged credit report.
Credit
repository
An organization that gathers, records, updates, and stores financial
and public records information about the payment records of individuals
who are being considered for credit.
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