call option
Similar to the acceleration clause.
Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are
usually limited to a certain amount. Those limitations may apply to how much the loan may
adjust over a six month period, an annual period, and over the life of the loan, and are
referred to as “caps.” Some ARMs, although they may have a life cap, allow the
interest rate to fluctuate freely, but require a certain minimum payment which can change
once a year. There is a limit on how much that payment can change each year, and that
limit is also referred to as a cap. 
cash-out refinance
When a borrower refinances his mortgage at a higher amount than the current loan balance
with the intention of pulling out money for personal use, it is referred to as a
“cash out refinance.”
of deposit
A time deposit held in a bank which pays a certain amount of interest to the depositor.
of deposit index
One of the indexes used for determining interest rate changes on some adjustable rate
mortgages. It is an average of what banks are paying on certificates of deposit.
of Eligibility
A document issued by the Veterans Administration that certifies a veteran’s
eligibility for a VA loan.
Certificate of Reasonable Value (CRV)
Once the appraisal has been performed on a property being bought with a VA loan, the
Veterans Administration issues a CRV.
chain of title
An analysis of the transfers of title to a piece of property over the years.
clear title
A title that is free of liens or legal questions as to ownership of the property.
This has different meanings in different states. In some states a real estate transaction
is not consider “closed” until the documents record at the local recorders
office. In others, the “closing” is a meeting where all of the documents are
signed and money changes hands.
closing costs
Closing costs are separated into what are called “non-recurring closing costs”
and “pre-paid items.” Non-recurring closing costs are any items which are paid
just once as a result of buying the property or obtaining a loan. “Pre-paids”
are items which recur over time, such as property taxes and homeowners insurance. A lender
makes an attempt to estimate the amount of non-recurring closing costs and prepaid items
on the Good Faith Estimate which they must issue to the borrower within three days of
receiving a home loan application.
closing statement
See Settlement Statement. 
cloud on title
Any conditions revealed by a title search that adversely affect the title to real estate.
Usually clouds on title cannot be removed except by deed, release, or court action.
IAn additional individual who is both obligated on the loan and is on title to the
In a home loan, the property is the collateral. The borrower risks losing the property if
the loan is not repaid according to the terms of the mortgage or deed of trust.
When a borrower falls behind, the lender contacts them in an effort to bring the loan
current. The loan goes to “collection.” As part of the collection effort, the
lender must mail and record certain documents in case they are eventually required to
foreclose on the property.
Most salespeople earn commissions for the work that they do and there are many sales
professionals involved in each transaction, including Realtors, loan officers, title
representatives, attorneys, escrow representative, and representatives for pest companies,
home warranty companies, home inspection companies, insurance agents, and more. The
commissions are paid out of the charges paid by the seller or buyer in the purchase
transaction. Realtors generally earn the largest commissions, followed by lenders, then
the others.
common area
In some areas they are called Homeowners Association Fees. They are charges paid to the
Homeowners Association by the owners of the individual units in a condominium or planned
unit development (PUD) and are generally used to maintain the property and common areas.
common areas
Those portions of a building, land, and amenities owned (or managed) by a planned unit
development (PUD) or condominium project’s homeowners’ association (or a cooperative
project’s cooperative corporation) that are used by all of the unit owners, who share in
the common expenses of their operation and maintenance. Common areas include swimming
pools, tennis courts, and other recreational facilities, as well as common corridors of
buildings, parking areas, means of ingress and egress, etc.
common law
An unwritten body of law based on general custom in England and used to an extent in some
In some states, especially the southwest, property acquired by a married couple during
their marriage is considered to be owned jointly, except under special circumstances. This
is an outgrowth of the Spanish and Mexican heritage of the area.
comparable sales
Recent sales of similar properties in nearby areas and used to help determine the market
value of a property. Also referred to as “comps.”
A type of ownership in real property where all of the owners own the property, common
areas and buildings together, with the exception of the interior of the unit to which they
have title. Often mistakenly referred to as a type of construction or development, it
actually refers to the type of ownership.
Changing the ownership of an existing building (usually a rental project) to the
condominium form of ownership.
condominium hotel
A condominium project that has rental or registration desks, short-term occupancy, food
and telephone services, and daily cleaning services and that is operated as a commercial
hotel even though the units are individually owned. These are often found in resort areas
like Hawaii.
construction loan
A short-term, interim loan for financing the cost of construction. The lender makes
payments to the builder at periodic intervals as the work progresses.
A condition that must be met before a contract is legally binding. For example, home
purchasers often include a contingency that specifies that the contract is not binding
until the purchaser obtains a satisfactory home inspection report from a qualified home
An oral or written agreement to do or not to do a certain thing.
Refers to home loans other than government loans (VA and FHA).
convertible ARM
IAn adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate
mortgage within a specific time.
A type of multiple ownership in which the residents of a multiunit housing complex own
shares in the cooperative corporation that owns the property, giving each resident the
right to occupy a specific apartment or unit.
cost of
funds index (COFI)
One of the indexes that is used to determine interest rate changes for certain
adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings,
and advances of the financial institutions such as banks and savings & loans, in the
11th District of the Federal Home Loan Bank.
An agreement in which a borrower receives something of value in exchange for a promise to
repay the lender at a later date.
credit history
A record of an individual’s repayment of debt. Credit histories are reviewed my mortgage
lenders as one of the underwriting criteria in determining credit risk.
A person to whom money is owed.
credit report
A report of an individual’s credit history prepared by a credit bureau and used by a
lender in determining a loan applicant’s creditworthiness.
credit repository
An organization that gathers, records, updates, and stores financial and public records
information about the payment records of individuals who are being considered for credit.