Title Insurance Dictionary-Glossary

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Call
An option to buy a specific security at a specified price within a designated time.

Call Provision
In a mortgage or deed of trust, it refers to the mortgagee's or beneficiary's ability to speed up payment of the obligation under certain conditions. In bonds, it refers to the right to redeem the bond before maturity.

Capital Gains
Profit earned from a sale of real estate.

Capitalization
A method used to estimate value of a property based on the rate of return on investment.

Caps (Interest)
Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Caps (Payment)
Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

Cashflow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.)

Caveat Emptor
Buyer beware. The buyer must inspect the property and satisfy himself it is adequate for his needs. The seller is under no obligation to disclose defects but may not actively conceal a known defect or lie if asked.

Certificate of Eligibility
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility)

Certificate of Occupancy
A certificate issued by a local governmental body stating that the building is in a condition to be occupied.

Certificate of Reasonable Value (CRV)
An appraisal issued by the Veterans Administration showing the property's current market value

Certificate of Sale
A certificate issued to the buyer of real property at a judicial sale.

Certificate of Satisfaction
A document signed by the Noteholder and recorded in the land records evidencing release of a DEED OF TRUST, MORTGAGE or other lien on the property.

Certificate of Title
A written opinion by an attorney setting forth the status of title to the property as shown on the public records. The certificate does not certify as to matters not of record and affords no protection unless the author was negligent. Compare, TITLE INSURANCE.

Certificate of Veteran Status
The document given to veterans or reservists who have served 90 days of continuous active duty (including training time) It may be obtained by sending DD 214 to the local VA office with form 26-8261a (request for certificate of veteran status. This document enables veterans to obtain lower down payments on certain FHA insured loans).

Certified Mortgage Banker (CMB)
A professional designation of the mortgage banking industry.

Chain of Title
The series of transactions from GRANTOR to GRANTEE as evidenced in the land records.

Chapter 11
Business re-organization, similar to a Chapter 13 personal bankruptcy.

Chapter 13
Wage Earner Plan (Voluntary) All payments delinquent at the time of filing a chapter 13 bankruptcy (Pre-Petition Payments) are scheduled for repayment over a period of time, often 60 months. All payments due after the date of filing must be paid on time to the mortgagee. Foreclosure is not permitted unless mortgagor defaults in payments due after the bankruptcy is filed (Post Petition Payments).

Chapter 7
Insolvency (Involuntary) Unsecured debts are extinguished. Secured creditors may continue to be paid, or they may force the trustee to sell the secured property to receive payment, or they may obtain permission to foreclose, depending on circumstances and equity.

Chattel
Personal property.

Class Action
A claim brought up on behalf of a group of people.

Clear Title
Title not encumbered or burdened with defects.

Closed-End Mortgage
A fixed amount mortgage where the debt cannot be increased. It is the opposite of an open-end mortgage.

Closing
The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement. closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing usually are about 3 percent to 6 percent of the mortgage amount.

Closing Costs
The fees and charges a buyer and seller must pay at the time of closing on a home sale. These can include, among other things, broker commissions, lender discount points, insurance premiums, and attorney's fees.

Cloud on Title
An evidence of encumbrances.

CMBS
Acronym for conventional mortgage-backed securities whose underlying pool of mortgages have no federal guarantees or insurance.

Coinsurance
When more than one insurance company shares the risk of a particular transaction or series of transactions. Lenders may require co-insurance on large commercial projects.

Collateral
Property pledged to secure a loan.

Commitment
A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgages from a lender with specific terms or conditions. An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.

Comparables
Properties used as comparisons to determine the value of a specified property.

Condemnation
Taking of private property for a public use through exercise of the power of EMINENT DOMAIN. The Constitution protects against taking without fair compensation.

Conditional Commitment
During HUD/FHA mortgage insurance processing, it indicates the satisfactory completion of technical processing involving the estimated costs 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.

Condominium
A system of individual FEE SIMPLE ownership of portions (units) in a multi-unit structure, combined with joint ownership of common areas. Each individual may sell or encumber his own unit. Compare, COOPERATIVE.

Conservator
Also called a Committee or Guardian, a person designated by the Court to protect and preserve the property of someone who is not able to manage their own affairs. Examples include the mentally incompetent, minors and incarcerated persons.

Construction Loan
A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses. These are generally done by lenders with offices local to the site of the construction. This enables the lender or their agent to monitor the progress of the construction.

Contested Foreclosure
When a mortgagor responds (answers) a Foreclosure Complaint disagreeing with some of the facts contained in the complaint. If the disagreement is not considered to be factual, the court may issue a Summary Judgement in favor of the mortgagee. If the answer disputes facts stated within the complaint, the court may order a hearing to determine the facts. If the mortgagor asserts new matters in the answer, this may be a Counter Complaint and may also result in Summary Judgement or a hearing.

Contract
A legally enforceable agreement between two parties.

Contract for Deed
Also known as a Land Contract or Land Installment Contract. A method of financing where title remains in the Seller's name until the Buyer has paid the full purchase price. A Contract for Deed will normally trigger the DUE ON SALE CLAUSE in a DEED OF TRUST or MORTGAGE but Veterans Administration regulations specifically allow Contracts for Deed without invoking the DUE ON SALE CLAUSE.

Contract Sale or Deed
A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

Conventional Loan
A mortgage not insured by FHA or guaranteed by the VA.

Convergences
The reduction or disappearance of the difference between the cash and futures prices as the delivery date in a futures contract approaches.

Convertible Mortgage
An adjustable rate mortgage where the mortgagor can convert the mortgage to a fixed rate mortgage during a predetermined time period.

Convertible Standby Commitment
FNMA mortgage purchase that may be converted to the same yield as offered in the most recent Free Market Auction.

Cooperative
A system of individual ownership of stock in a corporation that in turn, owns the structure. Each owner has an exclusive right to use his individual unit and must pay his portion of the debt encumbering the entire building. Compare, CONDOMINIUM.

Correspondent
An abbreviated term meaning mortgage loan correspondent. A mortgage banker who services mortgage loans as an agent for the owner of the mortgage or investor. Also applies to the mortgage banker in the role of originator of mortgage loan for an investor.

Cost Approach
A method used by an appraiser to estimate replacement cost of improvements less depreciation.

Cotenancy
Ownership in the same land by more than one person. See, TENANTS IN COMMON, JOINT TENANTS, TENANTS BY THE ENTIRETY.

Covenant
A written agreement or restriction on the use of land or promising certain acts. Homeowner Associations often enforce restrictive covenants governing architectural controls and maintenance responsibilities. However, land could be subject to restrictive covenants even if there is no homeowner's association.

Covenants, Conditions, and Restrictions
The basic rules establishing the rights and obligations of owners of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners.

Credit Life
Declining term life insurance taken out by a borrower as added security for repayment of a loan.

Credit Report
A report documenting the credit history and current status of a borrower's credit standing.

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