Glossary of commonly used terms and phrases

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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.
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Cancellation Clause - The details in a lease, or other contract, under which each party may terminate the agreement.
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Cap - A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate may increase or decrease.
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Cap Rate - A rate of return used to derive the capital value of an income stream. Value = Annual Income / Cap Rate.
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Capital Expenditure - The cost of an improvement made to extend the useful life of a property or to add to its value.
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Capital Improvement - Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.
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Capital Improvements Escrow - A trust account established to hold funds allocated for the completion of rehabilitation, repairs or incomplete items of construction as required by an escrow agreement.
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Capitalization Process - A process by which anticipated future income is converted into one lump sum value.
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Carryback Financing - A transaction where the seller of the property takes a promissory note for some, or all, of the equity in their house, upon its selling. The promissory note specifies the terms under which the buyer of the property is expected to pay the amount owed to the seller over time. Carrybacks can be secondary financing, after a separate first mortgage obtained elsewhere, or the carryback might be for the whole amount as well. Also referred to as "seller financing."
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Carrying Charges - The costs incurred to maintain a property when it is non-productive or in interim use.
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Cash Flow - Money available for debt service, less tenant improvement reserves and leasing improvement reserves when applicable.
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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 liens. In-hand cash that is received from any given refinance or mortgage.
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Certificate of Deposit - A document written by a bank or other financial institution that is evidence of a deposit, with the issuer’s promise to return the deposit plus earnings at a specified interest rate within a specified time period.
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Certificate of Eligibility - A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.
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Certificate of Reasonable Value (CRV) - A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
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Certificate of Sale - An official document that entitles the buyer to receive a deed, pending court confirmation.
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Certificate of Title - A certificate issued by a title company or a written opinion rendered by an attorney that the seller has good marketable and insurable title to the property, which he is offering for sale. A certificate of title offers no protection against any hidden defects in the title, which an examination of the records could not reveal. The issuer of a certificate of title is liable only for damages due to negligence. The protection offered a homeowner under a certificate of title is not as great as that offered in a title insurance policy.
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Certificate of Veteran Status - A document that enables veterans who have served 90 days of continuous active duty to obtain lower down payments on certian FHA insured loans. It may be obtained by sending DD 214 to the local VA office with form 26-8261: Request for Certificate of Veteran Status.
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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.
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Change Frequency - The monthly frequency of payments and/or interest rate changes in an adjustable rate mortgage (ARM).
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Chapter 11 - A type of bankruptcy that allows the debtor to maintain operating control of the business while restructuring and reorganizing debts, and creating an acceptable debt-payment plan. Also known as "debtor in possession."
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Chapter 13 - A type of bankruptcy plan where the debtor repays the creditor on a scheduled three-to-five year period. Also called "wageearner plan."
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Chapter 7 - A type of bankruptcy filing which allows the debtor's assets to be distributed among the creditors. Also called a "liquidation."
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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.'
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Closing Costs - Costs associated with the purchase of a home that must be paid at the sale closing. These could include mortgage fees, title insurance, appraisal, inspection fees, and points.
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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 quit claim deed, release, or court action.
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Co-Borrower - An additional borrower on a loan. A co-borrower's obligation on a loan is the same as the borrower's.
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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.
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Coinsurance - A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.
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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.
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Collection - The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.
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Combination Loan - With this type of loan, you receive a first mortgage for a percentage of the loan amount, and a second mortgage at the same time for the remainder of the balance. If avoiding PMI (mortgage insurance), consider combination loans.
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Combined Loan-to-Value (CLTV) - The relationship between the unpaid principal balances of all the mortgages on a property (usually first and second) and the property's appraised value (or sales price, if it is lower).
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Commercial Loan - Financing given on a commercial property. Financed amount is determined by the particular property, based off previous reported income histories and projected rental income and leaves a reserve of 25% (see Debt Service Coverage).
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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 sales price of the property or loan.
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Commitment - 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.'
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Common Area Assessments - Levies against individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.
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Common Areas - Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD), a 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.
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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.
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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.
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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.
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Compound Interest - Interest paid on the original principal balance and on the accrued and unpaid interest.
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Condemnation - The taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government's power of eminent domain. Condemnation may also be a determination by a governmental agency that a particular building is unsafe or unfit for use.
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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.
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Condominium Conversion- Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
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Condominium Hotel - A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services, and that is operated as a commercial hotel even though the units are individually owned.
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Conforming Loan - The current conforming loan limit is $359,650 and below. Conforming loan limits change annually.
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Construction Loan - A short-term loan for funding the cost of construction. The lender advances funds to the builder as the work progresses.
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Construction to Permanent - A type of loan to pay off an existing construction loan, lot loan, and any additional construction costs. Must be completed and inspected before loan closes and funds to pay off, but it has to be approved prior to completion
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Consumer Credit Counseling - This is a non-profit organization that helps citizens lower their debt payments, and consolidate payments under this orgranization. They are also know as CCCS (consumer credit counseling services).
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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.
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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.
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Contract - An agreement between two or more parties, especially one that is written and enforceable by law.
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Conventional Mortgage - Any mortgage that is not insured or guaranteed by the federal government.
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Conversion Clause - A condition in an adjustable rate mortgage (ARM) that allows the loan to be converted to a fixed-rate mortgage at some point during the term.
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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 time frames after loan closing.
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Convertible Arm - An adjustable rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.
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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.
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Corporate Relocation Arrangements - When an employer pays all or part of the costs to relocate an employee to another location of the company.
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Correspondent - brokers or bankers and sells them to a wholesale lender through a prior commitment. The lender who originates the loan then receives a service fee from the correspondent lender.
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Cosigner - An individual, other than the borrower, who signs a mortgage loan obligation and, thereby, assumes equal liability.
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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.
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Coupon Rate - The actual interest rate on a debt, bond, note, or other fixed income security. The coupon rate on a mortgage is the contract rate stated in the mortgage note.
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Covenant - A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
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Credit -
1. A measurement of a person's ability to pay bills on time. Several companies track individuals' credit histories by detailing late or missed payments on loans, credit cards, and other debts.
2.An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
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Credit Enhancement - A process to reduce credit risk, and provide the lender with reassurance that they will be compensated if the borrower defaults, by requiring collateral, insurance, or other agreements.
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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.
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Credit Life Insurance - A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.
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Credit Report - A report of an individual's credit history prepared by a credit bureau and used by lenders to determine a potential borrower's creditworthiness. Independent sources compile the report, which lists the borrower's debts, liabilities, and assets.
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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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Creditor - An entity, such as a mortgage company or bank, that loans money for repayment and interest.
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Cure - A loan that is removed from a delinquency status with no loss to the insurer.
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Current Assets - Assets that could be converted into cash within a year, such as cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other such assets.
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