Mortgage and Real-Estate Vocabulary Review

Vocabulary flashcards covering key mortgage and real-estate settlement terms discussed in the lecture.

Special Information Booklet

A RESPA‐required brochure (for most purchase loans) that explains mortgage basics and the real-estate settlement process to consumers.

Closed-End Subordinate Lien Mortgage Loan

A second mortgage that is fully amortizing (closed-end) and sits behind the first lien, meaning it is paid only after the primary mortgage in case of default.

Reverse Mortgage

A loan—typically for homeowners 62+—that lets borrowers convert home equity into monthly payments or a line of credit; the balance grows and is repaid when the home is sold or the borrower moves out or dies.

HUD-1 Settlement Statement

Legacy form (still used for some transactions) itemizing all closing costs; functionally the same as today’s Closing Disclosure for federally related mortgage loans.

Closing Disclosure (CD)

A five-page statement given at or before closing that lists all final loan terms and itemized costs for the buyer or seller.

Initial Escrow Account Statement

Document provided at closing that itemizes projected property taxes, insurance premiums, and other charges to be paid from the borrower’s escrow account during the first 12 months.

Escrow (Mortgage Escrow)

An account held by the servicer that collects a portion of each monthly payment to cover taxes, insurance, and other property charges; serves as a financial “cushion.”

Force-Placed Insurance

Hazard or flood insurance purchased by a lender/servicer when a borrower fails to maintain required coverage; cost is charged to the borrower.

Loss Mitigation

Any workout option (loan modification, repayment plan, etc.) pursued jointly by borrower and servicer to avoid foreclosure when the borrower is delinquent.

Foreclosure

Legal process by which a lender seizes and sells a property after the borrower is 120+ days delinquent and loss-mitigation efforts have failed.

Kickback

An illegal payment or “something of value” given for referring settlement-service business in violation of RESPA.

Things of Value

Money, discounts, services, or any benefit exchanged that can make a kickback illegal under RESPA.

Agreement or Understanding (Kickback Element)

An explicit or implicit arrangement between parties to exchange a thing of value for referrals—one of the required elements of an illegal kickback.

Referral (Settlement Services)

The act of directing a consumer to a particular provider; receiving or giving anything of value for a referral violates RESPA.

Equity

The difference between a property’s market value and the outstanding mortgage balance; can be tapped through loans such as cash-out refis or reverse mortgages.