Glossary

Deed of Trust: A legal document in

cepts your offer, unless one of the sales

contract contingencies is not fulfilled.

which the borrower transfers the title to

a third party (trustee) to hold as security

Easement: A right to the use of, or ac-

for the lender. When the loan is paid in

cess to, land owned by another.

full, the trustee transfers title back to

the borrower. If the borrower defaults on

Employer-Assisted Housing: A program

the loan the trustee will sell the property

in which companies assist their employ-

and pay the lender the mortgage debt.

ees in purchasing homes by providing

Default: Failure to fulfill a legal obliga-

assistance with the down payment, clos-

ing costs, or monthly payments.

tion. A default includes failure to pay on

a financial obligation, but also may be a

Encroachment: The intrusion onto

failure to perform some action or ser-

another's property without right or per-

vice that is non-monetary. For example,

mission.

when leasing a car, the lessee is usually

required to properly maintain the car.

Encumbrance: Any claim on a property,

Delinquency: Failure to make a pay-

such as a lien, mortgage or easement.

ment when it is due. The condition of a

Equal Credit Opportunity Act (ECOA):

loan when a scheduled payment has not

A federal law that requires lenders to

been received by the due date, but gen-

make credit equally available without

erally used to refer to a loan for which

regard to the applicant's race, color, reli-

payment is 30 or more days past due.

gion, national origin, age, sex, or marital

Depreciation: A decline in the value of

status; the fact that all or part of the ap-

plicant's income is derived from a public

a house due to changing market condi-

assistance program; or the fact that the

tions or lack of upkeep on a home.

applicant has in good faith exercised any

Discount Point: A fee paid by the bor-

right under the Consumer Credit Protec-

tion Act. It also requires various notices

rower at closing to reduce the interest

to consumers.

rate. A point equals one percent of the

loan amount.

Equity: The value in your home above

Down Payment: A portion of the price

the total amount of the liens against

your home. If you owe $100,000 on your

of a home, usually between 3-20%, not

house but it is worth $130,000, you

borrowed and paid up-front in cash.

have $30,000 of equity.

Some loans are offerend with zero down-

payment.

Escrow: An item of value, money, or

Due-on-Sale Clause: A provision in a

documents deposited with a third party

to be delivered upon the fulfillment of

mortgage that allows the lender to de-

a condition. For example, the deposit

mand repayment in full of the outstand-

by a borrower with the lender of funds

ing balance if the property securing the

to pay taxes and insurance premiums

mortgage is sold.

when they become due, or the deposit of

funds or documents with an attorney or

E

escrow agent to be disbursed upon the

closing of a sale of real estate.

Earnest Money Deposit: The deposit to

Escrow Account: An account that a

show that you're committed to buying

mortgage servicer establishes on behalf

the home. The deposit usually will not

of a borrower to pay taxes, insurance

be refunded to you after the seller ac-