D.R. / Debt Ratio – The customer’s monthly obligations divided by their monthly gross income.
Deed – Legal document which conveys the title to a property.
Deed of Trust – A document used which pledges real property to secure a debt. In some cases a deed of trust can replace a mortgage.
Default – Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.
Delinquency – Failure to make payments on time. This can lead to foreclosure.
Department of Veterans – Affairs An independent agency of the federal government which guarantees long-term, low- or no-down payment mortgages to eligible veterans. (VA)
Derog Letter – A letter written by the borrower giving an explanation for any derogatory credit.
Derog – This is short for derogatory and refers to negative credit items.
Discharge – Following a completed bankruptcy proceeding, discharged debts are no longer owed or collectable. We will require copies of the discharge papers on any prior bankruptcy filings.
Discount Points – Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100,000 mortgage would cost $2,000).
Dismissal – If a bankruptcy is dropped without being completed, a Bankruptcy Dismissal document will be needed to proceed with the loan. Either the court or the debtor can prompt the dismissal.
Down Payment – Money paid to make up the difference between the purchase price and mortgage amount. Down payments usually are 10 percent to 20 percent of the sales price on Conventional loans, and no money down up to 5 percent on FHA and VA loans.
Due-On-Sale Clause – A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.
Earnest Money – Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.
Easements – An interest in property, owned by another that entitles the holder to a specific limited use or privilege, such as the right to cross or to build adjoining structures on the property.
Encroachment – A fixture of a piece of property which intrudes on another’s property.
Equal Credit Opportunity Act – Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs. (ECOA)
Equity – The difference between the fair market value and current indebtedness, also referred to as the owner’s interest.
Escrow Instructions – Instructions to the escrow agent giving the parameters and contingencies involved in the transaction and agreed upon by both parties.
Escrow Waiver – The Request for a borrower to pay their own taxes and insurance. Escrow wavers are rarely granted with less than a 25% equity position (<75 LTV). Escrow – Refers to a neutral third party who carries out the instructions of both the buyer and seller to handle all the paperwork of settlement or “closing.” Escrow may also refer to an account held by the lender into which the homebuyer pays money for tax or insurance payments.