glossary quiz 2

acceleration clause

A loan condition that lets the lender demand the entire remaining balance immediately if the borrower breaches the contract.

adjustable rate mortgage (ARM)

A mortgage whose interest rate changes periodically based on borrowing costs in credit markets.

blockbusting

real estate agents exploit white homeowners' fears of Black residents moving into the neighborhood, persuade them to sell cheaply, and then resell the homes to Black buyers at inflated prices.

bond

long-term, interest-bearing debt issued by a corporation or government that requires the issuer to pay interest and/or repay the principal later.

bond-rating agency

company that evaluates the creditworthiness of bonds and their issuers, affecting the interest rate the issuer pays.

condemnation

A public authority's declaration that property is assigned to public use, or that a structure is unsafe or unfit for occupancy.

contract-for-deed

A real estate deal in which the buyer makes payments directly to the seller but doesn't receive the title until the full price is paid.

Department of Housing and Urban Development (HUD)

A federal government department created in 1965 to support healthy housing markets and affordable housing.

flipping

Buying real estate cheaply and reselling it quickly for a substantial profit, often using inflated appraisals and minimally documented mortgages.

gentrification

Investment, commercial development, and an influx of wealthier people into poorer neighborhoods, often displacing existing residents.

G.I. Bill

law that provided WWII veterans with benefits, including low-interest home loans with zero down payment.

home equity loan

a second mortgage that lets you borrow a set amount of cash using the paid-off value of your house as collateral.

housing cooperative (co-op)

A collective form of housing ownership in which members buy shares in a corporation and receive the right to occupy one of its housing units.

interest-only loan

An adjustable-rate mortgage that lets the borrower pay only interest for the first few years.

mortgage-backed securities (MBS)

Financial securities created by bundling mortgages together and selling the resulting investment to investors.

mortgage insurance

Insurance that protects mortgage lenders against losses if borrowers default; typically required when the down payment is below 20%.

NIMBY

“Not In My Back Yard”: opposition to placing an undesirable land use, such as low-income housing, in one's own community, often over concerns about property values

predatory lending

Lending with loan terms that set borrowers up for default, often through excessive interest, hidden fees, prepayment penalties, or balloon payments.

refinancing

Replacing an existing mortgage with a new mortgage, usually to change the loan's terms.

rent-backed securities

securities that bundle expected rental payments, using mortgages on the underlying properties as collateral.

Savings-and-Loans (S&Ls)

Local financial institutions that traditionally accepted deposits from individuals and small businesses and lent that money to local homebuyers.

securitization

The process of transforming an illiquid asset into a tradable financial security.

security

A tradable financial asset, such as a bond, stock, or derivative.

special assessment

A charge on selected properties to pay for a specific public improvement, such as sidewalks, paving, or water lines.

steering

Realtors intentionally guide homebuyers or renters toward neighborhoods that match existing demographic residential patterns.

subprime mortgage

A mortgage with higher interest rates and fees than a conventional prime loan, ostensibly because the borrower has a low credit score and is considered riskier.

tax base (property)

total assessed value of all taxable property within a taxing district, such as a city, county, or school district.

tax increment financing (TIF)

A method of financing redevelopment in undervalued areas by issuing bonds based on expected increases in property values and tax revenue; the additional tax revenue pays off the bonds.

underwater mortgage

A mortgage in which the outstanding loan balance exceeds the home's market value.

urban renewal

Government programs intended to attract private investment to struggling urban areas, often through “slum clearance”