Mortgage Glossary

Taxes and Insurance

Funds collected as part of the borrower's monthly payment and held in escrow for the payment of the borrower's state and local property taxes and insurance premiums.

Termite Inspection

An inspection to determine whether a property has termite infestation or termite damage. In many parts of the country, a home must be inspected for termites before it can be sold.

Third-Party Origination

A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package a mortgage loan.

• See also "Mortgage Broker"

Title

A legal document evidencing a person's right to or ownership of a property.

Title Insurance

Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against losses arising from defects in the title not listed in the title report or abstract.

Title Search

A check of the public records to ensure that the seller is the legal owner of the property and to identify any liens or claims against the property.

Trade Equity

Real estate or assets given to the seller as part of the down payment for the property.

Transfer Tax

State or local tax payable when title to property passes from one owner to another.

Treasury Index

An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions by the U.S. Treasury of Treasury bills and securities.

Truth-in-Lending

A federal law intended to promote the informed use of consumer credit by requiring disclosure about its terms and costs. Creditors are required to disclose the cost of credit as a dollar amount (the finance charge) and as an annual percentage rate (APR).

Two- to Four- Family Property

A residential property that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed; a loan secured by such a property is considered to be a single-family mortgage.