Q, R, S Terms

Q

Qualifying Ratios – Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

Quit Claim Deed – A deed that transfers, without warranty of ownership, whatever interest or title a grantor may have at the time the conveyance is made.

R

Rate – This is the annual interest rate applied to the outstanding balance of the loans.

Rate Reduction Option – A fixed-rate mortgage that includes a provision that gives the borrower an option to reduce the interest rate (without refinancing) at a later date. It is similar to a prearranged refinancing agreement, except that it does not require re-qualifying.

Rate Lock – A commitment issued by a lender to a borrower guaranteeing a specified interest rate for a specified period of time. See lock-in.

Real Estate Agent – A person who is normally licensed by the state and who, for a commission or a fee, assists in negotiating a real estate transaction.

Real Estate Settlement Procedures Act (RESPA) – A consumer protection law that, among other things, requires advance disclosure of settlement costs to home buyers and sellers, prohibits certain types of referral and other fees, sets rules for escrow accounts, and requires notice to borrowers when servicing of a home loan is transferred.

Real Property – Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

REALTOR® – A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS®.

Recording – Filing a document in the public records, thereby giving constructive notice to the world of the existence of the document and its contents.

Reduced Documentation – A method used to determine income when qualifying a borrower(s) for a loan. Borrower(s) provide their income, however no verification documentation is typically required.

Rescission – The act of cancellation or annulment of a transaction or contract by the operation of a law. Borrowers usually have the option to cancel certain credit transactions, including a refinance or home equity transaction, within three business days after consummation (when the consumer becomes contractually obligated by, for example, signing the loan documents).

Recorder – The public official who keeps records of transactions that affect real property in the area. Sometimes known as a “Registrar of Deeds” or “County Clerk.”

Recording – The noting in a book of public record of the terms of a legal document affecting title to real property, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage.

Refinance Transaction – The process of paying off one loan with the proceeds from a new loan, typically using the same property as security for the new loan.

Rehabilitation Mortgage – A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.

Remaining Balance – The amount of principal that has not yet been repaid. See principal balance.

Remaining Term – The original amortization term minus the number of payments that have been applied.

Rent With Option To Buy – See lease-purchase mortgage loan.

Repayment Plan – An arrangement made to repay delinquent installments or advances. Lenders’ formal repayment plans are often called “relief provisions.”

Revolving Liability – A credit arrangement, such as a credit card or HELOC, that allows a customer to borrow against a predetermined line of credit when purchasing goods and services. The borrower makes payments on the amount that is actually borrowed plus any interest due.

Request For Notice of Default – A recorded document that obligates the holder of the first mortgage lien to notify subordinate lien holders in the event of default by the borrower.

Right Of First Refusal – A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Right Of Ingress or Egress – The right to enter or leave designated premises.

Right Of Survivorship – In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Rural Housing Service (RHS) – An agency within the Department of Agriculture. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.

S

Sale-Lease Back – A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

Second Home – A property occupied part-time by a person in addition to his or her primary residence.

Second Mortgage – A mortgage that has a lien position subordinate to the first mortgage.

Secondary Mortgage Market – An informal market where lenders and investors buy and sell existing mortgages. Government-sponsored entities and private investors buy mortgages from lenders who use the proceeds to make additional loans.

Secured Loan – A loan that is backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt.

Security – The property that will be pledged as collateral for a loan. If the borrower defaults, the lender can sell the collateral to satisfy the debt.

Security Interest – An interest a lender takes in the borrower’s property to assure repayment of a debt. If the borrower defaults, the lender can sell the collateral to satisfy the debt.

Seller Take-Back – An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing.

Servicer – An organization that collects principal and interest payments from borrowers and manages borrowers’ tax and insurance escrow accounts. A mortgage banker is often paid a fee to service mortgages that have been purchased by an investor in the secondary mortgage market.

Servicing – The collection of principal and interest payments from borrowers and management of borrowers’ tax and insurance escrow accounts.

Settlement – See closing.

Settlement Sheet – See HUD-1 settlement statement.

Single Family Residence – A residential structure designed to include one dwelling.

Special Deposit Account – An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed.

Stand Alone – A Home Equity loan originated without obtaining a Countrywide first mortgage at the same time.

Start Date – The date you want to use as the start date for the amortization, usually the date you closed on your loan or today’s date.

Start Month – The date you will begin adding an extra dollar amount to your regular monthly payments. Enter the payment number from 1 to 360 (e.g., if you will start paying extra principal at the start of year 5 of a 30 year loan, enter “49”.

Start Rate – See initial interest rate.

Subdivision – A housing development that is created by dividing a tract of land into individual lots for sale or lease.

Sub-Escrow – Are fees charged by the escrow company for allowing the borrower to be able to sign all the loan documents in the Escrow office instead of having to go to the lenders office.

Subordinate Financing – Any mortgage or other lien that has a priority that is lower than that of the first mortgage. The subordinate loan has a claim to payment in a foreclosure only after the first mortgage is paid.

Subprime – Subprime Lending is also called B&C lending. It refers to a category of loan programs that offer more lenient underwriting provisions and expanded credit guidelines. These provisions allow more flexibility in approving loans for borrowers who have less-than-perfect credit. Subprime loans are available at various interest rates and terms. They also offer capabilities for debt consolidation allowing borrowers to get a mortgage with enough extra cash to consolidate loans.

Subsidized Second Mortgage – An alternative financing option known as the Community Seconds� mortgage for low- and moderate-income households. An investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit corporation. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate). Part or all of the second mortgage debt may be forgiven depending on how long the buyer remains in the home.

Survey – A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Sweat Equity – Contribution to the construction or rehabilitation of a property in the form of labor or services performed personally by the owner.