Mortgage Glossary
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Sale-Leaseback
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.
Satisfaction of Mortgage
The document issued by the mortgagee when the mortgage loan is paid in full. Also called a "release of mortgage."
Second Mortgage
A mortgage that has a lien position subordinate to the first mortgage.
Secondary Market
The buying and selling of existing mortgages, usually as part of a "pool" of mortgages.
Secured Loan
A loan that is backed by collateral.
Security
The property that will be pledged as collateral for a loan.
Security Interest
An interest that a lender takes in the borrower's property to assure repayment of a debt.
Seller Carry-Back
An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.
Servicer
An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
Servicing
The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
Settlement/Settlement Costs
Closing costs such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate, which they must issue to the borrower within three days of receiving a home loan application.
Settlement Statement
A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow (impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. It is called a HUD-1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement".
Shared Appreciation Mortgage (SAM)
A mortgage in which a borrower receives a below market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.
Simple Interest
Interest that is computed only on the principle balance.
Simple Interest Mortgage
A mortgage on which interest is calculated daily based on the balance at the time of the last payment. The daily interest is thus the same during the period between payments.
Special Forbearance
A loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.
Standard Mortgage
A Fixed Rate Mortgage with a single rate and level payments that fully amortizes over its term.
Standard Payment Calculation
The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.
Subdivision
A housing development that is created by dividing a tract of land into individual lots for sale or lease.
Subordinate
To place in a rank of lesser importance or to make one claim secondary to another.
Subordinate Financing
Any mortgage or other lien that has a priority that is lower than that of the first mortgage.
Subprime Loans
Subprime loans are priced higher than prime loans. Loans to borrowers whose credit is less than perfect will almost always be subprime loans. There are also other circumstances that lead to subprime loans, including high outstanding debt, unproven income, etc.
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 rather than cash.
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