MORTGAGE GLOSSARY
SETTLEMENT PROCEDURES ACT A law that requires lenders to give advance notice or disclose all of their expected closing costs associated with the mortgage that is being requested. It is a consumer protection law. (aka - RESPA)
RECISSION The act of canceling a mortgage transaction. This option is always present when the mortgage transaction is a refinance. (aka - Three Day Right of Recission, Cancellation Clause)
RECORDING This is when a document is noted in public records of the county registrar. The mortgage is recorded once the loan is funded.
SECONDARY MORTGAGE MARKET The buying and selling of first mortgages or deeds of trusts by bank, insurance companies, governmental agencies and other lenders. (aka - Secondary Market)
TITLE The legal document evidencing a person's right to or ownership of a property.
TITLE INSURANCE Insurance that protects the buyer against any future claims of ownership of a property. There is also a title insurance policy that protects the lender from the same issue. (aka - Owner's title policy, Lender's title policy, ALTA)
TITLE SEARCH The process of checking public records to ensure that the seller is the legal owner and can transfer the property and that there are no liens or claims against the property. If there are, the title company discloses them and before ownership is transferred those claims have to be settled in order for title insurance to be issued.
TRUTH-IN-LENDING This is a federal law that requires lenders to completely disclose, in writing, all of the closing costs of the mortgage, including the Annual Percentage Rate. This is a consumer protection law.
UNDERWRITING This is the part of the loan application process where all of the information regarding the mortgage request is reviewed and a decision is made whether or not the mortgage request meets the lenders guidelines. (aka - moment of truth)
VA MORTGAGE This is a mortgage product that is insured or guaranteed by the Veterans Administration, which is an agency of the government. Only borrowers who qualify for veterans benefits can apply for this type of loan.
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