Office of Loan Programs Glossary
IMPORTANT
NOTICE REGARDING THIS GLOSSARY
The terms and definitions that follow are
meant to give simple, informal meaning for words and
phrases you may see on our Web site that may not be
familiar to you. The specific meaning of a term or
phrase will depend on where and how it is used, because
the relevant documents, including signed agreements,
customer disclosures, internal Program policy manuals
and industry usage, will control meaning in a particular
context. The terms and definitions that follow have
no binding effect for purposes of any contracts or
other transactions with us. Your
Campus Housing Programs Representative or the Office
of Loan Programs staff will be happy to answer
any specific questions you may have.
To find a definition, click the first
letter of the term.
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ACH: (see Automated Clearing House)
Agent
Letter: A cover
letter prepared by the campus representative and sent
to the real estate agent once a borrower has entered
into contract. The letter includes a list of the purchase
transaction documents required to facilitate the loan
process.
Amortization: Loan
payments by equal periodic amounts calculated to pay
off the debt at the end of a fixed period, including
accrued interest on the outstanding balance.
Amortized
Loan: A loan to be repaid, by a series of
regular installments of principal and interest, that
are equal or nearly equal, without any special balloon
payment prior to maturity.
Anniversary
Date: The date upon which the twelfth payment
is due. This occurs in the same calendar month and
day each year thereafter on any MOP Promissory Note.
Annual
Percentage Rate (APR): A percentage rate that
reflects the amount of interest earned or charged.
Applicant: An
eligible Appointee designated by one of the ten University
campuses, Office of the President or, three major University
laboratories as eligible to apply for a loan under the
UC Home Loan Program.
Appointee: A
person who has been offered and has accepted a full-time
position with the University of California.
Appraised
Value: The dollar value assigned to a single-family
residence by an appraiser approved by the Office of
Loan Programs.
Automated
Clearinghouse (ACH): An electronic funds transfer
network that enables direct money transfers between participating
bank accounts and lenders. This feature is available only
to borrowers who are not currently on active payroll status.
Balloon
Payment: An installment payment on a promissory
note - usually the final one for discharging the debt
- which is significantly larger than the other installment
payments provided under the terms of the promissory
note.
Beneficiary: The
lender on the note secured by a deed of trust.
Borrower
Checklist: An
itemized list of documentation that the borrower and
the campus need to provide to the Office of Loan Programs
for either pre-approval or loan approval. Also known
as form OLP-09.
Borrower: An
eligible person as specified in an executed Certification
of Eligibility, prepared by the appropriate campus representative,
who will be primarily responsible for the repayment of
a Program loan.
Bridge
Loan: A temporary loan, usually less than 12 months,
provided to a borrower when the net proceeds from a sale
of a prior residence are not available for the purchase of
a new home. It is intended that a bridge loan will be paid
off with the net proceeds from the prior residence's sale.
Close
of Escrow: The meeting between the buyer,
seller and lender (or their agents) where the property
and funds legally change hands.
Certification
of Eligibility: Form
signed by campus representative certifying that the
applicant is eligible for Program participation and
the amount of the loan allocation. Also known as form
OLP-30.
Community
Property: Property acquired by husband and
wife, or either, during marriage, when not acquired
as the separate property of either.
Co-Borrower: Any
individual who will assume responsibility on the loan,
take a title interest in the property and intends to
occupy the property as their primary residence.
Co-Signer: Any
individual who will assume responsibility on the loan,
but who will not take a title interest in the property
nor occupy the property.
Curtailment: An
additional payment made to reduce the principal balance
of a loan.
Current MOP Rate: MOP rate currently in effect for Program loans. The “locked-in” MOP rate will be the Program rate in effect at the time of loan commitment. This rate is calculated by using the four-quarter average of the University’s Short-Term Investment Pool (STIP), rounded to the nearest five hundredths of a percent and adding an administrative fee component of 0.25%. Also known as the Standard Rate.
Date
of Recordation: The date on which a deed of
trust is officially entered on the books of the county
recorder in the county in which the property is located.
Deed
of Trust: A security instrument, used in place
of a mortgage, conveying title in trust to a third
party covering a particular piece of property. It is
used to secure payment of a promissory note.
Default: Failure
to fulfill a duty or promise as specified in the Promissory
Note and/or Deed of Trust.
Deferred
Payment Loan: A loan which allows the borrower
to defer all the monthly principal and interest payments
until the maturity date of the promissory note, at
which time the outstanding principal loan balance and
all accrued interest is due and payable.
Downpayment: The
difference between the purchase price of real estate and
the loan amount. The borrower is responsible for providing
the funds for the downpayment.
Employee: An
Appointee who has actively begun to serve in his or her
full-time position.
Equity: The
difference between the fair market value of a property
and the current indebtedness secured on the property.
Escrow: A
situation in which a third party, acting as the agent
for the buyer and the seller, carries out the instructions
of both and assumes the responsibilities of handling
all the paperwork and disbursement of funds at settlement
or at closing.
Escrow
Holdback: Funds
retained by the escrow company after the close of escrow
until repairs and/or required termite work has been
completed.
Evidence
of Insurance: Written
documentation from a hazard insurance company that a homeowners’ policy
is in existence on a property. Typically, this is NOT an
insurance policy, but a commitment from the insurance company
to provide a policy for a specific property at a specific
time and premium amount
Graduated
Payment Mortgage: The Graduated Payment Mortgage
(GP-MOP) is an alternative loan product under the Mortgage
Origination Program (MOP) that results in an initial lower
interest rate (Borrower Rate) than the most recently published
MOP rate (Standard Rate). The initial Borrower Rate is stated
as a percentage below the Standard Rate, subject to a 3%
minimum rate. The stated reduction in the Standard Rate is
known as the Interest Rate Differential. The Interest Rate
Differential is established to decrease annually between
0.25% to 0.50% until such time as the Borrower Rate equals
the Standard Rate.
Hazard
Insurance: A contract where an insurer, for a premium,
undertakes to compensate the insured for loss on a specific
property due to certain hazards. (See Homeowner’s Insurance
Policy). Home Improvement: Repairs and/or
additions made to better the status of the permanent
structure of the primary residence.
Home Loan Coordinator: The person
designated by the Chancellor of each campus and Director
at each laboratory as the Home Loan Coordinator.
This individual serves as the primary contact at
the campus level for loan applicants.
Homeowners Association: An organization
of homeowners residing within a particular development
whose major purpose is to maintain and provide community
facilities and services for the common enjoyment
of the residents.
Homeowner’s
Insurance Policy: An
insurance policy available to owners of private dwellings
that covers the dwelling and contents in the case
of fire, wind damage, theft, and, personal liability.
The typical policy does not include flood or earthquake
coverage.
HUD-1 Closing Statement: A financial
disclosure giving an accounting of all funds received
and disbursed at loan closing.
Impound: That portion of the mortgagor’s
monthly payments held by the lender to pay for property taxes
or hazard insurance premiums as they become due. The University
does not impound for either property taxes or hazard insurance
premiums.
Initial
Loan Submission Checklist: A
checklist prepared by the campus that serves as a cover
letter for the loan application package being forwarded
by the campus to the Office of Loan Programs.
Inspection
Reports: Reports ordered by the borrower to
assess the quality of the home. Typically, this includes
a Termite Report and “whole house” inspection.
Other reports that may be ordered include roof, foundation,
geological, and, septic tank inspections.
Interest: Consideration
in the form of money paid for the use of money, usually
expressed as an annual percentage. Also, a right, share
or title in property.
Interest-Only
Payment Loan: A non-amortizing loan in which
the lender receives interest during the term of the
loan and principal is repaid in a lump sum at maturity.
IRS
1098 Mortgage Interest Statement: A statement
provided by the lender to the borrower indicating the
total amount of interest paid by the borrower for a
given calendar year.
Joint Tenancy: Joint ownership by two or
more persons giving each tenant equal interest and equal
rights in the property, including the right of survivorship.
Lender’s Escrow Instructions: Instructions
produced by the Office of Loan Programs for an escrow or
title company detailing the documentation and procedures
required before a loan is funded. Loan-to-Value
Ratio: The ratio of the principal balance
of a mortgage loan to the value of the securing
property, as determined by the purchase price
or Appraised Value, whichever is less. Loan Commitment: A commitment letter (also known as “loan approval”) issued by the Office of Loan Programs (OLP) committing to the funding of a Program loan for a specific borrower and property. A loan commitment letter will only be issued after OLP’s satisfactory review of all property documentation (i.e. purchase contract, property appraisal, inspections, etc.) and will state the approved loan amount, initial interest rate and loan term. The letter will also require that certain conditions are met prior to loan funding. The initial interest rate specified will be the Program rate in effect at the time a loan commitment is issued.
Loan
Denial letter: A
letter from the Office of Loan Programs denying
a loan to a specific individual. The reasons
for denial may include credit history, lack of
verifiable liquid assets, inadequate income,
etc. Loan
Underwriting: The analysis of risk and
the decision whether to make a loan to a potential
homebuyer based on credit, employment, assets,
and other factors.
Loan
Withdrawal letter: A
letter from the Office of Loan Programs acknowledging
that a borrower no longer wishes to pursue a loan from
the University of California. A loan may be withdrawn
due to dissatisfaction with the property or desire
to use another lender, among other reasons.
MOP-QUAL: A
web-based computer program, which enables the user
to determine if an applicant has sufficient income
and assets to qualify for a MOP loan.
Mortgage Origination Program (MOP): MOP
was established by The Regents of the University of
California in 1984 and utilizes funds from the unrestricted
portion of the University's Short?Term Investment Pool
(STIP) to make variable interest rate first deed of
trust loans of up to 40 years in length to eligible
Faculty and members of the Senior Management Group.
The program provides loans at maximum amounts of 85%
to 90% of value, depending upon loan size, with the
initial interest rate equal to the most recently available
four-quarter average rate of return of STIP, plus a
servicing fee of one-quarter of one percent. The maximum
annual adjustment of the interest rate for a loan,
upward or downward, is one percent.
Mortgagee: A
lender or creditor who holds a mortgage or Deed
of Trust.
Mortgagor: A
borrower who is obligated to pay on a mortgage or Deed
of Trust.
Net Income: The monthly salary
paid to a borrower after deducting any Federal
and/or State payroll taxes.
Notice
of Completion: Documentation,
typically from a termite company, stating that
required repairs have been completed. Sometimes
called a “clear” termite report.
May also refer to work completed by a contractor
for other, non-termite related work done on a
property.
Office of Loan Programs: Located within
the Facilities Administration Department of the Office
of the President, the Office of Loan Programs is responsible
for the design, delivery and management of housing
assistance programs for recruitment and retention of
faculty and senior managers.
PAF: An
acronym for Personnel Action Form, referring to
a campus generated document verifying an applicants’ employment
data (salary, title code, start date, etc.) that
is printed from the campus payroll computer system.
Participant: The
term "Participant" shall mean an Appointee
who has been designated as an eligible Applicant
and Primary Borrower.
Pre-approval: Certificate of Pre-Approval issued by the Office of Loan Programs that states a borrower’s credit, assets and income have been verified and the applicant qualifies for a Program loan at a specified amount and interest rate. At the time of pre-approval, the specified initial interest rate is not “locked-in” and is therefore subject to change prior to the issuance of a loan commitment letter. The initial interest rate will be the Program rate in effect at the time a loan commitment is issued.
Pre-Qualification Letter: A letter prepared and signed by the Campus Housing Representative that informs an Applicant that he/she has been allocated a Program loan and has been pre-qualified based upon a review of stated income, assets, and credit. Final determination of the qualified loan amount will not be made until a complete loan application package is submitted and reviewed by the Office of Loan Programs.
Preliminary
Disclosures: A
generic term referring to a group of disclosure
forms required by Federal law to be sent to a
loan applicant. The forms include Truth-in-Lending,
Estimate of Settlement Charges, Fair Lending
Notice, and a California Credit Disclosure.
Preliminary Title Report: A
title search by a title company prior to issuance
of a title binder or commitment to insure,
required during the processing of a loan.
Prepaid
Interest: Mortgage interest that is
paid from the date of the funding to the end
of that calendar month.
Primary
Residence: A dwelling where one actually
lives and is considered as the legal residence
for income tax purposes.
Principal: The
amount of debt, exclusive of interest, remaining
on a loan.
Principal
and Interest to Income Ratio: The
ratio, expressed as a percentage, which results
when a borrower's proposed Principal and Interest
payment expenses is divided by the gross monthly
household income. The maximum allowable ratio
for MOP loans is 40%. Also known as P&I
ratio.
Processing: The
preparation of a mortgage loan application and
supporting documents for consideration by a lender.
Program: The
term "Program" refers to any loan made
under a University of California Home Loan Program.
Purchase
Transaction Documents: The
aggregate term for independent third party documentation
pertaining to the subject property. This includes property
appraisal, termite report, preliminary title report,
property hazards disclosures, roofing, geological,
foundation, septic inspections, and overall home inspection.
Quit Claim Deed: A deed relinquishing
all, or a portion of, the interest, title, or claim
in a property by a grantor.
Reconveyance: The transfer of the
title of land from one person to the immediate preceding
owner. This instrument of transfer is commonly used
to transfer the legal title from the trustee to the
trustor after a deed of trust has been paid in full. Refinancing: The process of paying
off an existing loan and establishing a new loan.
Renovation: The restoration of
the primary residence. Generally, this includes repairs,
improvements and additions to the permanent structure
of the primary residence.
Rights of Rescission: The right to
cancel a contract and restore the parties to the same
position they held before the contract was entered
into. For a refinance transaction, a borrower has three
working days from the signing of the loan documents
to cancel the loan without penalties. The right to
rescind does not apply to purchase transactions.
Salary Differential Housing Allowance Program: A
University of California program authorizing the granting
of special housing allowances to assist with down payments,
mortgage payments, and other housing related costs.
The assistance may be paid in one lump sum or over
a period not to exceed ten years in equal, unequal,
or declining balance amounts. The maximum assistance
amount is indexed based upon salary increases for faculty.
The eligible population for the program is full?time
University appointees who are members of the Academic
Senate or who hold equivalent titles and Acting Assistant
Professors. Campuses have the option to require repayment
of a portion of the housing allowance in the event
that the recipient leaves University employment prior
to a specified date. Servicing: The collection of payments
and management of operational procedures related
to a mortgage loan. All MOP loans are serviced by
the Office of Loan Programs.
Short-Term Investment Pool (STIP): STIP
was established in fiscal 1976 and is an interest-only
cash investment pool in which all University fund
groups participate, including current funds earmarked
to meet payrolls, operating expenses, and construction
at all campuses and teaching hospitals of the University.
Standard Rate: The
most recently available average rate of return earned
by the Short-Term Investment Pool (STIP) for the
four quarters preceding the funding of the mortgage
loan, plus an administrative fee component.
Subordination Agreement: An agreement
by the holder of an encumbrance against real property
to permit that claim to take an inferior position to
other encumbrances against the property. The University
may, as its option, refuse to sign a Subordination
Agreement.
Tenants in Common: Joint ownership
by two or more persons giving each tenant an interest
and rights in a property, these interests need not
be equal in quantity or duration. Title: The evidence of the right
to or ownership in property.
Title Insurance: A
policy, usually issued by a Title Insurance company,
which insures
a homebuyer and the lender against errors in the
title search. The cost of the policy is usually
a percentage of the sales price and the lender’s
policy is a percentage of the loan amount.
Trustee: One
who holds legal title to a property for the benefit
of another, or for the purpose of securing performance
of an obligation.
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