Mortgage Terminology

Debt

An amount owed to another.

Debt Service Constant

A factor that, when multiplied by the original loan amount, yields the annual debt service payment (principal plus interest) required to amortize a loan.

Debt-to-income Ratio

Relationship of a borrower's monthly payment obligation on long-term debts divided by gross monthly income, expressed as a percentage. Also called the "bottom ratio."

Decree of Foreclosure and Sale

In a judicial foreclosure, the court decree of judgment that establishes the amount of the mortgage debt and orders the property sold to satisfy the debt.

Deed

The legal document that transfers the ownership of real property from one party to another.

Deed-in-lieu

The transfer of title from a delinquent borrower to a lender to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."

Deed of Trust

A legal document that conveys title to real estate to a neutral third party (a "trustee") who holds the title until the borrower has repaid the debt. In some states, this document is used instead of a mortgage.

Deed Restriction

A condition placed in a deed limiting or restricting the use of the real property.

Default

Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.

Deficiency Judgment

A court order to pay the balance owed on a loan if the proceeds from the sale of the security are insufficient to pay off the loan.

Delinquency

Failure to make mortgage payments when mortgage payments are due.

Department of Veterans Affairs (VA)

An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

Deposit

A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See also Earnest Money Deposit

Depreciation

A decline in the value of property. The opposite of "Appreciation."

Detached Single-Family Home

The most traditional type of single-family home. It stands separate from any other housing structure and serves as a place of residence for the occupants.

Direct Endorsement (DE)

A HUD program that enables an eligible single-family lender to conduct the processing and closing of FHA single-family loan applications without HUD's prior review.

Direct Leveraging Loan Program

The Direct Leveraging Loan Program makes it easier and more economical for rural residents to own a home through lower interest rates and no down payment. Under this program, the lender offers up to 50 percent of the mortgage amount as a conventional 30-year, fixed-rate first mortgage and the Rural Housing Service (RHS) offers the balance as a second mortgage at an interest rate that is generally below market. The RHS is part of the U.S. Department of Agriculture.

Discount Point

A fee paid by the borrower at closing to reduce the interest rate on a mortgage. A point equals 1 percent of the loan amount.

Dispossess

To obtain physical possession of property by due process of law.

Dower

The rights of a widow in the property of her husband at his death.

Down Payment

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage. Sources for down payments may come from buyers' savings accounts, checking accounts, stocks and bonds, life insurance policies, and gifts.

Draw

Disbursement of a portion of the loan proceeds, usually at a predetermined point in the construction or rehabilitation schedule, to pay for work already completed. The balance of the proceeds is retained until the next scheduled draw or until completion of the construction or rehabilitation work to protect the lender against the contractor's failure to complete the work as scheduled.

Due-on-sale Clause

A provision in a mortgage that allows the lender to demand full payment of the outstanding mortgage loan balance if the borrower sells the property securing mortgage.

Due-on-transfer Provision

This terminology is usually used for second mortgages. See also "Due-on-sale Clause"

Duplex

Dwelling divided into two units.