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HUD
Home Buying Glossary - C
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Call
-
To require payment of loaned money
on demand.
Cap
-
A limit placed on payments, interest rates and/or the
balance of a loan.
Caps can limit increases by either a dollar amount or a
percentage.
Capital
Appreciation - See Appreciation.
Capital
Assets - Physical assets such as land, building and
equipment, usually for a business or trade. Capital
assets other than land may be depreciated.
Capital
Gain - The profit gain from the increase in value of an
asset that is above the original purchase price or adjusted
cost basis.
Capitalization
- A means of estimating the value of real estate by applying a
desired rate of return to the property's expected annual net
operating income. The net income is divided by the
capitalization rate.
Capitalization
Rate - The rate that includes both a return on an
investment as well as the return on the amount invested.
Capitalized
Value Method of Depreciation - A method of computing
depreciation by determining loss in rental value attributable
to a depreciated item and applying a gross rent multiplier to
that figure.
Capital
Loss - Loss from a sale of a capital asset or other real
property.
Carryback
- A loan where the seller of a property acts as the lender and
holds or carries back a portion of the equity to be repaid by
the buyer as a note.
Case
Number - The number assigned to a property to be financed
by an FHA loan.
Cash
Flow - The net dollar amount of revenues from a business
or investment (such as rental property). This is
generally calculated as the total revenue collected minus
expenses. A negative cash flow occurs when expenses
exceed the income generated.
Cash
Out Refinance
- See Equity Refinance.
Caveat
Emptor - Latin phrase meaning "Let the buyer
beware". Though once was a common phrase in real
estate, seller disclosure laws have out-dated this
phrase.
CC&Rs
- See Restrictive Covenants.
Certificate
of Eligibility - A document used by the VA to certify a
veteran's eligibility for a VA loan.
Certificate
of Occupancy - Written authorization given by a local
municipality that allows a newly completed or substantially
completed structure to be occupied.
Certificate
of Reasonable Value - A document issued by the VA
establishing the maximum value and loan amount for a property
to be financed by a VA guaranteed mortgage.
Certificate
of Sale - A document issued to a buyer as evidence of the
home's acquisition at a judicial sale. The certificate
may be subject to redemption rights (if any exist).
Certificate
of Title
-
A document which assures the buyer that the person
selling the property is indeed the legal owner of the property
and that no one else has any legal claim to the property.
This certificate does not protect against loss if a
hidden claim emerges after purchase of a property - only a
title insurance policy can do that.
Certified
Check - A bank guaranteed check.
Chain
of Title - The lineage of ownership for a particular
property.
Chattel
- An article of personal property that is not revealed in the
mortgage contract and that does not add to the property’s
value.
Chattel
Mortgage - An obsolete name for a mortgage or security
interest in personal property.
Chattel
Real - All estates in real property less than fee estates,
such as a lease.
Check
- A 24-by-24 mile area formed by guide meridians and parallels
under government survey that correct for the curvature of the
earth.
Closing
(Loan Closing)
-
The process that brings a loan into legal existence,
including the signing of all loan documents, their delivery to
the appropriate parties, and the disbursing of at least some
of the loan funds.
Closing
Costs
-
Costs, in addition to the price of the property itself,
that are due at closing.
These costs normally include, but are not limited to,
origination fees, discount points (see Points),
attorney’s fees, costs for title insurance, surveys,
recording documents, and repayments of real estate taxes and
insurance premiums held by the lender. Sometimes the seller
will help the borrower pay some of these costs.
Closing
Statement
-
A statement of the funds received and spent at the
closing of a real estate sale.
The closing statement is furnished by the real estate
closing agent to the buyer and seller separately.
The standardized federal form, HUD-1, is used in most
residential transactions.
Cloud
on Title
- An outstanding claim/lien or restriction on the property
that, if valid, affects the owner’s clear ownership rights
to the property.
A cloud can be removed from the title by a court
action, a release or a deed.
CMO
- See Collateral Mortgage Obligation.
Co-borrower
- A party who signs the mortgage note along with the borrower
and who shares the title to, and the obligation to pay for ,
the property with the borrower.
Also called Co-mortgagor-mortgagor.
Co-insurance
- A requirement that a property carry a minimum coverage
(usually 80% of replacement cost) in order to collect 100% of
the loss. If a person carries only a percentage of the
amount required, then that person only gets that percentage of
the loss suffered.
COFI
- See Cost of Funds Index.
Collateral
- Property pledged as security for a debt.
For example, real estate securing a mortgage.
Collateral can be repossessed if the loan is not
repaid.
Collateral
Assignment - The transfer of interest in personal property
for security reasons.
Collaterally
Secured - A loan secured by other loans.
Collateral
Mortgage Obligation
-
A multi-class, mortgage-backed security collateralized
by loans that are typically residential or multi-family loans.
Color
of Title - Because of a defect, having only the appearance
of title instead of true title (e.g. a title under a forged
deed).
Commercial
Acre - In land development terms, the net portion of an
acre remaining after deducting areas devoted to streets,
sidewalks, etc.; less than 43,560 square feet.
Commercial
Loan - A term used to reference a mortgage placed on an
income producing property (excluding one to four unit
residential properties).
Commission
-
An agent’s compensation (fee) for negotiating a real
estate or loan transaction, often expressed as a percentage of
the sales price or mortgage amount.
Commitment
-
An agreement, often in writing, between a lender and
borrower to loan money at a future date subject to compliance
with stated conditions.
(See Conditional, Firm, Standby and Take-Out
Commitment.)
Commitment
Fee
-
A sum of money paid by the seller of mortgages to the
investor in return for the investor’s commitment to purchase
a package of loans at some future date.
This can be a non-refundable fee or it can be in the
form of a refundable fee to be repaid to the seller upon
fulfillment of the commitment.
Also defined as any fee paid by a borrower to a lender for the
lender's promise to lend money at a specified date in the
future.
Common
Area - Areas in a condominium, cooperative, apartment
complex, etc. shared by all residents (such as a pool area,
parking lot, laundry room, etc.).
Common
Facilities - See Common Area.
Community
Property - Property acquired after marriage by either the
husband or wife unless acquired in such manner as to be
legally considered as separate property of either
spouse.
Co-mortgagor
-
See Co-borrower
Comp
- See Comparable.
Compaction
- Compressing of soil so that it will support a structure.
Comparable
-
A property that is similar in physical composition,
location and value to a property being appraised.
Comparative
Unit Method - An appraisal method to determine replacement
costs. In general the method is based on current price
per square foot or cubic foot of similar construction.
Compensating
Balance - Requirement of a lender that the borrower keep a
specified balance on deposit with the lender.
Competitive
Market Analysis - An appraisal prepared by a real estate
agent using recent comparable sales to indicate the likely
sales price of a property.
Complete
Escrow - An escrow for which everything necessary to be
done has been accomplished.
Completion
Bond - A bond posted by a contractor as a guarantee that
he/she will satisfactorily complete a project and it will be
free of any liens.
Compliance
Inspection Report
-
A report prepared by a compliance inspector for a
mortgage lender.
the report states if construction or repair work on a
property meets the terms and conditions of a previous
inspection.
Compound
Interest - Interest paid on the original principal and on
the accrued and unpaid interest that has accumulated.
Concentric
Circle Growth - City growth in rings from the city center.
Condemnation
-
1) The process by which private property is taken for
public use without consent of the owner, but upon the award or
payment of compensation (eminent domain).
2) The process of declaring property unfit for use.
Conditional
(Loan)
Commitment
-
Indicates the satisfactory completion of technical
processing for department of Housing and Urban Development
(HUD) or Federal Housing Administration (FHA) mortgage
insurance.
The commitment involves the estimated cost of the
project, the as is value of the site, the detailed estimate of
the operating expenses and taxes, the supportable costs, the
financial and credit capacity of the sponsors, financial
requirements and mortgage amounts.
Conditional
Sales Contract
-
A contract for the sale of a property in which transfer
of title to the buyer is contingent on fulfillment of certain
conditions/contingencies.
Conditional
Use Permit - Special permission for a use not otherwise
allowable under the zoning but considered under special
criteria in the zoning.
Condition
Precedent - A condition that must happen prior to the
vesting of title in another. Until the condition occurs,
title remains with the grantor.
Condition
Subsequent - A transfer of title with the requirement that
a specified condition be met. If the condition is
breached, then the grantor must declare a forfeiture and
retake the property within a reasonable period of time.
Condominium
-
A form of ownership of real property.
The purchaser receives title to a particular unit and a
proportional interest in certain common areas.
A condominium generally defines each unit as a
separately owned space limited to the interior surfaces of the
perimeter walls, floors and ceilings.
Title to the common areas is in terms of percentages
and refers to the entire project less the separately owned
units.
Conduit
-
A mortgage market intermediary that consistently buys
mortgage loans from retail originators on a flow or bulk
basis.
A conduit will repackage these loans, typically into
security form, and then sell the security to raise cash for
additional purchases.
Consideration
- Anything of value. An agreement for sale (purchase
contract) generally requires the buyer to offer consideration
in exchange for real property.
Constant
Renewal
- An insurance renewal where the premium amount is based on
the original amount of the loan - not on the outstanding
balance.
Construction
Loan
- A short-term interim loan for financing the cost of
construction of real property.
Payments are made to the builder at periodic intervals
as the construction progresses.
Construction
Loan Agreement
-
A written agreement between a lender and/or a borrower
and a builder in which the specific terms and conditions of
construction and/or the construction loan, including the
schedule of payments, are spelled out.
Construction
Loan Draw
-
The periodic/partial disbursement of the construction
loan, based on the schedule of payments in the loan agreement.
Constructive
Eviction - An act of a property owner that interferes with
the tenant's quiet possession, thus allowing the tenant to
consider the lease at an end and to be free from further
obligations.
Consummation
- The completion of a thing.
To finish by completing what was intended.
Consummation of a loan means that the loan has been
closed or made.
Contingency
- A provision in a contract that must be satisfied before the
contract can be executed. A buyer's contingency to sell
his/her current home before purchasing a home is an example of
a contingency.
Contingent
Remainder - A remainder interest in property that will
vest only if some specified contingency is met, such as the
holder outliving a life tenant.
Contiguous
- That which is bordering, touching or adjacent to.
Contour
Lines - Topographical lines on a map that follow
elevations.
Contract
- See Sales Contract.
Contract
to Purchase - See Sales Contract.
Contractor
-
A person or company who agrees to furnish materials
and/or labor to do work for an agreed-upon price.
Conventional
Loan
-
A mortgage loan not insured by the Federal Housing
Administration (FHA) or guaranteed by the Veterans
Administration (VA) Or Farmers Home Administration (FmHA).
No governmental agency approval is required of the
lender, borrower or property.
It is called conventional because it conforms to
accepted standards, modified within legal bounds by mutual
consent of the borrower and the lender.
Also called conventional residential mortgage.
Conversion
- Taking property entrusted to you and converting it to your
own use; a form of larceny.
Convertible
Mortgage - An adjustable rate mortgage where the borrower
can convert the loan into a fixed-rate mortgage during a
predetermined period of time. Usually there is a fee
associated with the conversion.
Convey
-
The act of transferring title to real property from one
party to another.
Conveyance
-
In real property law, a transfer of legal title to
land.
Co-op
- See Cooperative.
Cooperative
-
A form of multiple ownership of real estate in which a
corporation or business trust entity holds title to a property
and grants the occupancy rights to particular apartments or
units to shareholders by means of proprietary leases or
similar arrangements.
Corner
Influence - An increase in value of a commercial property
because of the additional traffic and exposure of being
located on two streets.
Corporate
Bond
-
An interest-bearing certificate of indebtedness.
Correction
Lines - Surveyor corrections to compensate for the
curvature of the earth.
Correspondent
-
See Mortgage Loan Correspondent.
Co-signer
- A party who signs the mortgage note along with the borrower,
but who does not own or have any interest in the title to the
property.
Cost
Approach
-
In an appraisal, a method of establishing the market
value of a property by considering how much the subject
property would cost if it were to be built today plus land
value and less accrued depreciation..
Cost
Basis - See Basis.
Cost
of Funds Index - An index that is used to determine
interest rate changes for some ARMs. It represents the
weighted average cost of savings, borrowings, and advances of
members of the 11th District of the Federal Home Loan Bank of
San Francisco.
Counteroffer
- A new offer made by the buyer or seller with new terms,
conditions or sales price in reply to a previous offer.
The counteroffer supersedes all prior offers.
County
Recorder - See Recorder.
Coupon
Rate
-
The annual interest rate shown on the face of a
mortgage note.
Covenant
-
Generally, any written agreement. Most commonly in real
estate, items set forth in a deed by the grantor or implied by
the law.
Covenants,
Conditions and Restrictions - See Restrictive
Covenants.
Crawl
Space - The space between the ground and the floor on
houses not built on a slab or with a basement.
Creditor
-
A person to whom a debt is owed by another person who
is the debtor.
Credit
Report
-
A document completed by a credit-reporting agency
providing information about the buyer’s credit cards,
previous mortgage history, bank loans and public records
dealing with financial matters.
Cripple
- Vertical piece of 2" x 4" framing above or below
an opening (window or door).
Cubage
- The number of cubic feet in a structure.
Cul-de-sac
- A dead-end street having a rounded end. It is
desirable for housing because there is no through
traffic.
Cumulative
Zoning - Zoning that allows the designated category of use
as well as less-restrictive uses.
Curable
Depreciation - Depreciation that can be economically
corrected.
Cushion
-
A small excess amount of funds which many lenders may
require be kept in an escrow account.
Custom
Home Builder - A home builder who builds home for
individuals according to his/her specifications.
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