Mortgage Glossary
# A B C D E F G H I J K L M N O P Q R S T U V W X Y ZS
A financing arrangement in which the developer sells a property to an investor and then buys it back under a long-term sales contract.
Sale-Leaseback
An arrangement in which a seller deeds property to a buyer for cash or other consideration, and the buyer simultaneously leases the property back to the seller, usually on a long-term basis.
SAM (Shared Appreciation Mortgage) Simple Interest
A mortgage that gives the lender a portion of any future increase in the value of the mortgaged property when sold in return for a lower rate of interest to the borrower.
Satisfaction of Mortgage
The recordable instrument given by the lender that evidences payment in full of the mortgage debt. Also known as a release deed.
Seasoned Mortgage
A mortgage that has been in effect at least one year and on which principal and interest payments are being made on time.
Second Mortgage (Junior Mortgage)
A mortgage that is subordinate to claims of a prior lien or mortgage. Borrowers sometimes use secondary mortgages to obtain additional funds needed for downpayments or closing costs. Lenders tend to discourage junior financing because the borrower has little or no equity in the home.
Secondary Market
The market for securities previously issued and sold.
Secondary Mortgage Market
A market through which existing mortgage loans are bought and sold to other lenders, to government or private agencies, or to investors. Mortgage loans are originated to home buyers in the primary market and sold to investors in the secondary market.
Secured Loan
A loan for which the borrower pledges collateral that will be forfeited to the lender if the borrower fails to repay the loan.
Secured Party (Mortgagee)
The person or organization holding a security interest or lien against collateral. Also known as the mortgagee, the conditional seller, or the pledgee.
Security
(a) The collateral that is given, deposited, or pledged to guarantee an obligation or the payment of a debt. For example, the property on which a mortgage is issued is the security for the mortgage loan. (b) A financial instrument that provides evidence of a debt, or of rights to share in earnings or the distribution of property. Stocks and bonds are securities. (c) Measures taken to protect property against theft or vandalism.
Security Agreement
A document or section of a note that contains a description of the loan collateral. It establishes the lender's rights to the collateral in the event of default on the loan.
Self-Liquidating
The status of an asset that over a period of time returns the total amount of its cost. For example, a fully amortized mortgage is a lender's self-liquidating asset.
Seller Carry-Back
An agreement for the owner of a property to provide financing, often with an assumable mortgage.
Seller-Servicer
An organization approved by the Federal Home Loan Mortgage Corporation (Freddie Mac) that sells mortgages into the secondary market and services mortgages by collecting and forwarding monthly payments, maintaining records and performing any other functions needed to keep the mortgage loans current.
Senior Mortgage
A first mortgage.
Serial Notes
Mortgage-backed Securities comprised of consecutively numbered equal units of $25,000. The units are retired in sequential numeric order. The maturity date indicated on each unit is the date by which the unit would be retired if no prepayments of principal were made on the mortgages in the pool.
Servicer
An organization that collects interest payments and principal from borrowers; also manages escrow accounts. Often services investors' mortgages from the secondary mortgage markets.
Servicing
Collection and aggregation of principal, interest and escrow payments on mortgage loans and mortgage securities, as well as certain operational procedures such as accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquency loan follow-up, and loan analysis. The party providing servicing, the servicer, receives a servicing fee.
Servicing Fee
The amount withheld from monthly interest payments made on a mortgage which is retained by the mortgage servicer.
Settlement (Closing)
The time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.
Settlement Costs
Customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.
Settlement Date
The date agreed upon by the parties to a transaction for the delivery of securities and payment of funds. This may vary from other bonds.
Settling
(a) The process of balancing in-coming drafts that are accepted, as well as returned checks that an institution receives and making payment for the drafts within the check-collection system. (b) The process of delivering and paying for items previously purchased. (c) An agreement reached between two or more parties in contention. (d) A property arrangement to satisfy a dispute, as between a husband and wife. (e) The winding up and final distribution of an estate.
Settlor (Grantor, Trustor)
An individual who establishes a trust by giving property to a trustee for the benefit of another.
Shared Appreciation Mortgage (SAM) Simple Interest
A mortgage that gives the lender a portion of any future increase in the value of the mortgaged property when sold in return for a lower rate of interest to the borrower.
Shared Equity Loan
A loan in which the lender shares in the equity of the mortgaged property in return for a lower interest rate to the borrower.
Sheriff's Deed
A deed given by court order to convey title to property that has been sold to satisfy a judgment of delinquent taxes.
Single-Issuer Pool
A mortgage-backed securities pool issued under the Ginnie Mae I or II programs, which consists of only one loan package and which has only one issuer.
Site Value
The worth of raw land, without improvements.
Skip-Payment Clause
A provision of some mortgage contracts that allows the borrower to skip monthly payments up to the amount of payments that have previously been paid ahead of schedule.
SMMEA
Secondary Mortgage Market Enhancement Act of 1984.
SMMEA securities
Securities that are both ultimately secured by a first-lien mortgage loan and rated in one of the top two rating categories by at least one nationally recognized statistical rating organization. The complete definition may be found in Section 3(a)(41) of the Securities Exchange Act of 1934, as amended. Institutional investors should check state laws regarding investments in SMMEA securities.
Special Forbearance
A loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.
Standard Program (Baseline Program)
Another name for the standard program, under which the U.S. Federal Home Loan Mortgage Corporation purchases mortgages for cash.
Stop Date
The date on which a balloon payment is due, for a term loan.
Subdivision
A housing development that is divided into individual lots, which are then put up for sale or lease.
Subordinate
To place in a rank of lesser importance or to make one claim secondary to another.
Subordinate Financing
A mortgage or lien with a lower priority than that of a first mortgage.
Survey
A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.
Swap
(a) A technique of the Federal Home Loan Mortgage Corporation by which original lenders exchange the mortgages they have made for Freddie Mac Participation Certificates (PCs), which provide the lender with ownership interests in the same mortgages. Freddie Mac refers to the transaction as the Guarantor Program, because the corporation adds its own guarantees to the safety of the mortgage investment. (b) A financial transaction in which two counterparties agree to exchange streams of payments over a period of time according to a predetermined rule. For example, the counterparties may swap interest payments, with each paying the other's interest on the same amount of principal. Usually a fixed rate interest obligation is swapped for a floating rate interest obligation, so that both parties can match the form of interest they owe on their debts with the form of interest income they expect to receive on their assets -- fixed with fixed, or floating with floating. Or, the counterparties may swap payments in one denomination of currency for payments in another country's currency. Both interest rate swaps and currency swaps are designed to lessen market exposure of paying off debt in an environment of potentially changing interest rates.
Sweat Equity
Using labor to build or improve a property as part of the down payment.
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