D-E Terms

D

Debt – An amount owed to another. See installment loan and revolving liability.

Deed – The legal document conveying title to a property.

Deed-In-Lieu – A deed given by a borrower to the lender to satisfy a debt and avoid foreclosure. Also called a “voluntary conveyance.”

Deed Of Trust – The document used in some states instead of a mortgage; title is vested in a trustee to secure repayment of the loan.

Default – Failure to make loan payments on a timely basis or to comply with other requirements of a mortgage.

Delinquency – Failure to make mortgage payments when due.

Deposit – A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit.

Depreciation – A decline in the value of property because of physical or economic changes such as wear and tear; the opposite of appreciation.

Discount Points – Amounts paid to the lender at origination to lower the rate on the face of the note. See point.

Document Preparation – This fee covers the expenses associated with this process of preparing some of the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement.

Down Payment – The part of the purchase price of a property that the buyer pays in cash and does not finance with a home loan.

Draw Period – The time period in which the borrower may access and use a line of credit.

Due-On-Sale Provision – A provision in a mortgage home loan that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the loan.

Due-On-Transfer Provision – This terminology is usually used for second mortgages. See due-on-sale provision.

E

Earnest Money Deposit (Earnest Money) – A deposit made by the potential home buyer to show that he or she is serious about buying the house.

Easement A right of way giving to persons other than the owner to access to or over a property.

Effective Age – An appraiser’s estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.

Eminent Domain – The right of a government to take private property for public use upon payment of fair compensation to the owner. Eminent domain is the basis for condemnation proceedings.

Employer-Assisted Housing A special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.

Encroachment – An improvement that physically intrudes or trespasses on another’s property.

Encumbrance – Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, deeds, or restrictions.

Endorser – A person who signs a check or promissory note over to another party. Contrast with co-signer.

Equal Credit Opportunity Act (ECOA) – A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equity – The value of your home after the outstanding balance of any loans are subtracted. If you make a 5 percent down payment, you have 5 percent of the price of your home in equity. As you make payments toward principal over time, the equity in your home grows.

Escrow – Can serve two purposes. 1)As a special third-party account set up by the lender in which a portion of your monthly payment funds are held to pay for taxes and insurance and other items. 2)Escrow is most commonly known as a third party who carries out the instructions of both the buyer and seller to handle the paperwork at the settlement of a real estate purchase.

Escrow (or Impound) Account – The account in which a loan servicer holds the borrower’s escrow payments prior to paying property expenses, such as property taxes or homeowners insurance.

Escrow Analysis – The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

Escrow Collections – Funds collected by the loan servicer and set aside in an escrow account to pay borrower expenses such as property taxes, mortgage insurance, and hazard homeowners insurance.

Escrow Disbursements – The use of escrow funds to pay real estate taxes, homeowners insurance, mortgage insurance, and other property expenses as they become due.

Escrow Payment – The portion of a borrower’s monthly payment that is held by the loan servicer to pay for taxes, hazard homeowners insurance, mortgage insurance, lease payments, and other items as they become due. Known as “impounds” or “reserves” in some states.

Estate – The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

Eviction – A legal proceeding by a landlord to recover possession of real property from the tenant.

Examination Of Title – The report on the title of a property from the public records or an abstract of the title.

Exclusive Listing – A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner’s right to sell the property alone without the payment of a commission.