The information in the following glossary is not a substitute for the guidance of a qualified attorney. Use of this glossary as final explanation of a given document is done at your own risk.
Closing Disclosure: itemizes all closing costs and is typically sent at least 3 days in advance.
In this document you can find:
Monthly principal and interest
Cost at closing
Total of payments
Total interest percentage
Compliance Agreement: an agreement to correct and sign any documents that need correction.
Can come in several forms:
Errors & Omissions Agreement
Document Correction Agreement
Some variations (Correction Agreement – Limited Power of Attorney) give an agent of the lender permission to fix the clerical errors on the borrower’s behalf. Which in turn speeds up the process of correcting the documents.
Deed of Trust: essentially an agreement between a lender and a borrower to give the property to a neutral third party who will serve as a trustee.
The trustee holds the property until the borrower pays off the debt. During the period of repayment, the borrower keeps the actual or equitable title to the property and maintains full responsibility for the premises, unless expressly stated otherwise in the Deed of Trust. The trustee, however, holds the legal title to the property.
Deeds of Trust are common in Missouri. These agreements are not the same as mortgages. In a traditional mortgage, everyone involved has an interest in the outcome. A Deed of Trust, by contrast, involves an impartial trustee.
Errors & Omissions (E&O) Agreement: an agreement to correct and sign any documents that need correction.
The borrower agrees to cooperate with the lender or lender’s agent in fixing clerical errors on the documents after the property closes. It can come in several forms:
Document Correction Agreement
Some variations (E&O Agreement – Limited Power of Attorney) give an agent of the lender permission to fix the clerical errors on the borrower’s behalf. Which in turn speeds up the process of correcting the documents.
Limited Power of Attorney: written authorization naming an agent to represent or act on another’s behalf in certain matters.
"Limited" means the Power of Attorney is restricted to perform only certain functions named in the document, such as the power to mortgage or sell real property .
Mortgage: a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments.
In a residential mortgage, a homebuyer pledges their house to the bank or other type of lender, which has a claim on the house should the homebuyer default on paying the mortgage. In the case of a foreclosure, the lender may evict the home's tenants and sell the house, using the income from the sale to clear the mortgage debt.
Note: a written promise to pay a sum of money at a stated interest rate during a specified term.
Contains the following provisions:
Terms of repayment
Monthly payment amount & due date
Late charges, terms & conditions
Occupancy Affidavit: borrower acknowledges no claims against the property. Also no delinquent taxes or zoning law violations.
The borrower acknowledges no additional liens, judgments, or encumbrances against the property. That no one else owns the property, there’s no contract for sale, and confirms marital status.
This declares they already occupy, or intend to occupy, the property upon the close of escrow. Also certifies that their financial condition has not materially changed since first applying for the loan (e.g. purchasing a new car).
Planned Unit Development Rider: outlines expectations of a borrower in regards to their homeowners' association or the like.
A PUD loan is more complex than a single-family home loan because, like a condo, the legal structure and financials of the PUD need to be approved. This rider can give community associations the right to notify a lender when an owner has stopped paying dues, subsequently giving the lender the opportunity to pay the assessment, adding that cost to the existing loan.
Signature / Name Affidavit: a document used to protect the lender and title company from possible fraud by verifying an exhaustive list of names that you are known under.
While doing checks on things like your financial history, a list is drawn up showing every name, correct or otherwise, that you were listed as. Sometimes your data is corrupted due to errors, not on your part, but by intermediaries of the organization to which you initially submitted that data. This may be something like a middle initial of 'P' turning up instead of 'B'. A misspelling of an uncommon name. Even an alternate spelling of a common name like 'Burke' as opposed to 'Burk'.
Truth In Lending Disclosure Statement: requires the lender to make disclosures on loans subject to the "Real Estate Settlement Procedures Act" within three (3) days after receipt of a written application.
In this document you'll find:
APR, which is the total cost of the loan, including loan fees, calculated into an annual rate. It will typically be higher than the interest rate for the loan.
Finance charge as a dollar amount the loan will cost the borrower
Total payments and their payment schedule
Prepayment penalties, if any
Assumption option, if allowed
Uniform Residential Loan Application: the final, typed version, of your loan application.
Sometimes called "the 1003", this document is the standardized loan application form for a residential mortgage loan required by Fannie Mae / Freddie Mac.