A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z Item Definition Adjustable Rate Mortgage (ARM) A mortgage loan that allows the lender to adjust the return on the financing periodically in accordance with a specified index.  Also called Variable Rate Mortgage. Amortization Repayment of a mortgage debt with periodic payments of both principal and interest, calculated to pay off the obligation at the end of a fixed period of time. Appraisal An opinion or estimate of value. Appraiser A person qualified by education, training and experience to estimate the value of property.  According to the law, an appraiser should be independent from the lender and the borrower. Asset-Backed Securities Bonds backed by a pool of financial assets that cannot easily be traded in their existing form.  By pooling together a large portfolio of these illiquid assets they can be converted into instruments that may be offered and sold more freely in the capital markets.  A mortgage backed security is a special form of an asset backed security.  An ASB is usually backed by any asset other than a mortgage, such as accounts receivables or credit card debt. Balloon loan A mortgage where the balance is due in a lump sum at a specified date, usually by the end of the term. Bankruptcy Court proceedings to relieve the debts of an individual or business unable to pay its creditors. Basis  point   A phrase used to describe differences in bond yields, with one basis point representing one-hundredth of a percentage point.  For example, if bond X yields 11.50% and bond Y yields 11.75%, the difference is 25 basis points. Best  execution   Obtaining the best set of cash flows from a loan or group of loans over the time a company owns it. Blanket mortgage   A mortgage that covers more than one parcel of real estate owned by the mortgager. Bond Long-term debt obligations in the form of a tradable security. Borrower’s risk Risk associated to the characteristics of the borrower (income, credit, assets, job stability, etc.) usually demonstrated by credit history and previous housing payments. Broker Firms or individuals who match borrowers and lenders, or bring lenders and investors together to sell existing loans.  Brokers generally originate and sell mortgages, unlike mortgage bankers who perform all the tasks of origination through funding.  Brokers work for a commission and typically are thinly capitalized. Cadastre Map showing results of a survey.  The cadastre support land registration, parcel identification, planning, taxation, utilities and services. Capacity Ability to pay back. Capital Market Authority (CMA) A general authority in accordance with the Ministry of Investment.  Its main  responsibilities are to: Organize and develop the capital market, Organize and supervise the training activities for those who work in the capital market, Disclose and disseminate information concerning the capital market Supervise the capital market, Enforce the capital market law and its regulations. Cash reserves The amount of savings (counted as number of months of mortgage payment instalments) the borrower will have after purchasing the home. Character Personality and integrity of the borrower. Closer The individual, who concludes the transaction, ensures that documents are properly created and executed and interacts with the title and escrow companies. Closing The process whereby documents are signed, ownership is transferred and money changes hands. Additionally, a review is performed to ensure that all conditions are met. Collateral Property pledged as security for debt. Collector The loan servicer who collects payments and gives it to the lender. Commercial lending The process of financing a property to be used for commercial purposes for income generation. Commercial property A location is considered commercial if it is open to the public or is a place of work. Conduit An entity which issues Mortgage-Backed Securities backed by mortgages originated by other lenders. Contributory risks Other factors that can sway the decision made based on primary risks. Correspondent A specialized type pf mortgage banker whose function is limited to the origination of mortgage loan which are sold to other mortgage bankers or investment bankers under a specified commitment. Corresponding lending A specialized lender limited to origination and processing of loans which are sold to other mortgage finance companies or investment bankers. Credit Money borrowed that is to be repaid at a later date. Credit bureau An indication of client credit worthiness based on previous and present experience and credit history. Credit enhancer  An entity that agrees to add comfort to the security issue by enhancing its credit status.  It does this by providing a guarantee such as a bank letter of guarantee or an insurance policy from an insurance company. Credit rating agency An independent agency responsible for tracking and dispensing information about borrowers’ credit risk, or to provide rating to a pool of mortgages. Custodian An entity that holds for safekeeping mortgages and related documents backing Mortgage-Based Security.  Usually a commercial bank. Debt Coverage Ratio (DCR) A ratio of effective annual net income to annual principal and interest payments.  Also called Debt Service Ratio. Deed A document written evidence of a legal transaction, signed, sealed and delivered to testify to the agreement of the parties concerned. Deed of trust A type of security instrument in which the borrower conveys title to real property to a third party (trustee) to be held in trust as security for the lender, with the provision that: -The trustee shall re-convey the title upon the payment of the debt. - Or, the trustee will sell the property and pay the debt in the event of a default by the borrower Deed-in-lieu A deed given by a borrower/mortgagor to a lender/mortgagee to satisfy a debt and avoid foreclosure. Default Failing to pay a mortgage or other loan in accordance with the specified terms. Default Rate   Percentage of loans that go more than 30 days unpaid. Delinquency Failure of a borrower to make payments on time as specified in the loan agreement. Developers Builders of new construction projects. Also called real estate developers. Disbursing The process of crediting the seller’s bank account. Disclosure Announcing something as evident. Down-payment difference between the sale price of real estate and mortgage amount.” Escrow administration A temporary deposit with a third party of assets by agreement between two parties to a contract.  The money is released when the conditions of the contract have been met. Ethics The principles of right and wrong that are accepted by an individual or a social group. Fair lending   The lending principle to always explain to the borrower the path of what needs to be done in order to gain approval, namely: Pay your bills on time Save money Buy a smaller house Keep your income Financial  intermediaries Institutions that provide the Market function of matching borrowers and lenders or traders, including: Mortgage finance companies Commercial banks Credit unions Other lending institutions Life insurance companies Mutual funds Fixed rate An arrangement whereby the interest rate and payment remain the same for the life of the loan. Foreclosure Legal process reserved by a lender to terminate the borrower's interest in a property after a loan has been defaulted.  When the process is completed, the lender may sell the property and keep the proceeds to satisfy its mortgage and any legal costs. Any excess proceeds will be returned to the borrower. Fraud Deception made for personal gain. Gross income The total income earned by an individual that wants a mortgage, without deducting taxes or medical benefits. Guarantee and Subsidy Fund (GSF) The entity responsible for financing home ownership for low-income citizens by providing upfront down-payment subsidies (up to 15% from value of the property or LE10 thousands).  GSF also performs a guarantee function whereby it can honor the payment of 3 consecutive defaulted installments every 5 years throughout the lifetime of the loan.   Hedging A marketing strategy that reduces or transfers risk of loss from changes in the market interest rate. Identity theft The act of impersonating another person, by using their personal information, such as birth date, ID number, address, name, and bank account information. Index A published interest rate such as the prime rate. Insurance To make regular payments to an insurance company, which pays an agreed-upon sum to the insured in the event of property loss or damage or borrower death or disability. Interest rate The price paid by a borrower for the use of money for a specified period of time. Interest rate determinants The factors that determine the current interest rate, which include supply of funds, demand for funds, inflation, and risk (default, prepayment, liquidity). Investor An individual who puts money into securities, mortgages, or real estate. Leverage The use of borrowed money to increase the return on investment. For leverage to be positive, the rate of return on the investment must be higher than the cost of the money borrowed. Lien Legal hold or claim of a creditor on the property of another as security for a debt. Liens may be against real or personal property. Liquidity The ability to quickly convert assets or investments to cash. Loan  Administration A function which includes the receipt of payments, customer service, escrow administration, investor accounting, collections and foreclosures or servicing. Loan Administrator The person responsible for tracking a loan. Loss Mitigation Proactively engaging borrowers to avoid losing the prosperity of unit  through foreclosure, such as by creating a repayment schedule or modifying the terms of their loan. Loan-to-Value Ratio (LTV) The ratio of the amount of the loan to the appraised value or sales price. Margin The spread between the index and the interest rate.  Generally the profit the lender makes on a loan. Mortgage Fraud Intentionally providing inaccurate information or otherwise deceiving or tricking in order to gain an advantage. Net Income Total income less defined expenses such as taxes and non-mortgage payments. Net Operating Income The amount remaining after total operating expenses (excluding interest payments) are deducted from gross income. Non-Prime Lending Lending to borrowers with less than A credit. Ourfi Contracts A private sales purchase agreement, also know as a Preliminary Contract (A’qd Ibteda’y) Payment cap The limitation on increases or decreases in the payment amount of an adjustable rate mortgage or fixed rate hybrid. Point One percent of the mortgage loan amount.  If you were charged one point on a LE100, 000 loan you would pay LE1, 000. Pooling The process of grouping mortgage loans by one or more similar characteristics. Prepayment penalties Charge imposed for repaying a loan not as scheduled. Present Value (PV) The current value of cash received at a definite point n the future. Price The amount of money needed to purchase something. Primary  risks Chief risks that include equity investment and credit history. Prime lending Lending to borrowers with an A credit rating. Property  risk Risk associated with the characteristics, condition and marketability of the property. Property flipping   Multiple selling, reselling of property at increasing higher prices to fraudulently inflate the “market value”. Always involves faulty or fraudulent appraisals. Purchase money mortgage A mortgage a purchaser of real property gives a seller as all or part of the consideration in the sales transactions. Quality Control/Assurance Inspection, analysis and action required to ensure quality of output. The examination of output data to ensure that it has been properly processed and meets established accuracy standards. Real Estate Owned (REO) Property a lender acquires as the result of foreclosure. Red  flag A visual sign or indication of a defect. Something that warns a reasonably observant person of a potential problem, thus requiring further investigation Register a property The process of listing land and buildings in the registration system. Residential lending Lending on a property where people live. Residential property A location where people live. Risk management  The lender consider these actions in order to keep the borrower loan current, and continue occupying the property. Secondary market The market where lenders and investors buy and sell existing mortgages or MBS, thereby providing greater availability of funds for additional mortgage lending. Securitization An issue of a secured debt instrument (a bond) that is secured. Securitized  bond A security, supported by almost any kind of asset, which has a predictable payment stream. Securitized bond A security, supported by almost any kind of asset, which has a predictable payment stream. Securitized portfolio A portfolio of financial assets, usually loans and accounts receivables secured by pledge or mortgage on physical assets. The securitization portfolio is used to secure a bond issue “Securitization Bonds”. For the purpose of issuing such bonds, the securitization portfolio is assigned (transferred) from the originator to a special-purpose-vehicle, who will issue the bonds, to ensure bankruptcy remoteness. Bondholders are secured by the securitization portfolio and get paid out of its proceeds regardless of the possibility of insolvency or bankruptcy of the originator. Shipping The preparation and delivery of documents for loans sold to investors in the sale or securitization of mortgage loans. Straw buyer An individual who purchases property for someone else, so as to conceal the identity of the real purchaser. Teaser rate A starting rate which is below the fully indexed accrual rate on an adjustable rate mortgage. Term loan A loan in which, for a specified period of time, only interest paid, after which the principal is due. Thrift Institutions geared towards saving, such as savings banks or savings and loan associations. Title A document which changes the ownership of land in deeds-based systems. Title insurance Insurance that protects the holders of a little deed from problems with or challenges to legal ownership. Treasury bonds Debt obligations of the Government Treasury that have long-term maturities. Trustee A trusted body that in some cases is involved to overlook the whole process, manage the portfolio/collateral, report to investors periodically & take legal actions in cases of default. Underwriting Analyze risk according to the borrower’s ability to repay (as determined by income and assets), willingness to repay (as determined by credit history) and collateral (as determined by an appraisal). Underwriting involves: The evaluation of property as outlined in the appraisal report The borrower’s ability and willingness to repay the loan. Verification The process of confirming the accuracy of data. Warehouse lending Loans that are funded and awaiting sale or delivery to an investor. Wholesale lending A mortgage finance company that buys loans from a broker or another mortgage finance company and does not have direct contact with the borrower. Wraparound loan A refinancing technique involving the creation of a second mortgage which includes the balance due on any existing mortgages, plus the amount of the new secondary loan. Yield The ratio of investment income to the total amount invested over a period of time.