Glossary
debt
An amount owed to another.
deed
The legal document conveying title to a property.
deed-in-lieu
Short for "deed in lieu of foreclosure,"
this conveys title to the lender when the borrower
is in default and wants to avoid foreclosure. The
lender may or may not cease foreclosure activities
if a borrower asks to provide a deed-in-lieu. Regardless
of whether the lender accepts the deed-in-lieu, the
avoidance and non-repayment of debt will most likely
show on a credit history. What a deed-in-lieu may
prevent is having the documents preparatory to a foreclosure
being recorded and become a matter of public record.
deed
of trust
Some states, like California, do not record mortgages.
Instead, they record a deed of trust which is essentially
the same thing.
default
Failure to make the mortgage payment within a specified
period of time. For first mortgages or first trust
deeds, if a payment has still not been made within
30 days of the due date, the loan is considered to
be in default.
delinquency
Failure to make mortgage payments when mortgage payments
are due. For most mortgages, payments are due on the
first day of the month. Even though they may not charge
a "late fee" for a number of days, the payment
is still considered to be late and the loan delinquent.
When a loan payment is more than 30 days late, most
lenders report the late payment to one or more credit
bureaus.
deposit
A sum of money given in advance of a larger amount
being expected in the future. Often called in real
estate as an "earnest money deposit."
depreciation
A decline in the value of property; the opposite of
appreciation. Depreciation is also an accounting term
which shows the declining monetary value of an asset
and is used as an expense to reduce taxable income.
Since this is not a true expense where money is actually
paid, lenders will add back depreciation expense for
self-employed borrowers and count it as income.
discount
points
In the mortgage industry, this term is usually used
in only in reference to government loans, meaning
FHA and VA loans. Discount points refer to any "points"
paid in addition to the one percent loan origination
fee. A "point" is one percent of the loan
amount.
down
payment
The part of the purchase price of a property that
the buyer pays in cash and does not finance with a
mortgage.
©1996 By Leonard
Leonard & Associates, Inc. All rights reserved.
Duplication in whole or in part without permission
is prohibited.
