1 Glossary

Rescission: The cancellation or annul-

Second Mortgage: A mortgage that has

ment of a transaction or contract by

a lien position subordinate to the first

operation of law or by mutual consent.

mortgage.

Borrowers have a right to cancel certain

Secondary Mortgage Market: The mar-

mortgage refinance and home equity

transactions within three business days

ket in which mortgage loan and mort-

after closing, or for up to three years in

gage-backed securities are bought and

certain instances.

sold.

Revolving Debt: Credit that is extended

Secured Loan: A loan that is backed by

by a creditor under a plan in which

property such as a house, car, jewelry,

(1) the creditor contemplates repeated

etc.

transactions; (2) the creditor may im-

Security: The property that will be given

pose a finance charge from time to time

on an outstanding unpaid balance; and

or pledged as collateral for a loan.

(3) the amount of credit that may be ex-

Securities: Financial forms that shows

tended to the consumer during the term

of the plan is generally made available to

the holder owns a share or shares of a

the extent that any outstanding balance

company (stocks) or has loaned money

is repaid.

to a company or government organiza-

tion (bonds).

Right of First Refusal: A provision in

Seller Take-Back: An agreement in

an agreement that requires the owner

of a property to give another party the

which the seller of a property provides

first opportunity to purchase or lease

financing to the buyer for the home pur-

the property before he or she offers it for

chase. See also "Owner Financing."

sale or lease to others.

Servicer: A firm that performs servicing

Rural Housing Service (RHS): An

functions, including collecting mortgage

agency within the U.S. Department of

payments, paying the borrower's taxes

Agriculture (USDA), which operates a

and insurance and generally managing

range of programs to help rural commu-

borrower escrow accounts.

nities and individuals by providing loan

Servicing: The tasks a lender performs

and grants for housing and community

facilities. The agency also works with

to protect the mortgage investment,

private lenders to guarantee loans for

including the collection of mortgage

the purchase or construction of single-

payments, escrow administration, and

family housing.

delinquency management.

Settlement: The process of complet-

S

ing a loan transaction at which time the

mortgage documents are signed and

then recorded, funds are disbursed, and

Securities: A financial form that shows

the property is transferred to the buyer

the holder owns a share or shares of a

(if applicable). Also called closing or es-

company (stock) or has loaned money to

crow in different jurisdictions. See also

a company or government organization

"Closing"

(bond).

Settlement Statement: A document

Sale-Leaseback: A transaction in which

that lists all closing costs on a consumer

the buyer leases the property back to

mortgage transaction.

the seller for a specified period of time.