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Mortgage Dictionary

"T"

Take-out Loan


A first mortgage loan that is committed and expected to be made upon completion of a property with the loan proceeds to be used to repay an interim or construction loan.

Target Market


The clients or customers that are sought after by a business. They typically share similar demographic characteristics.

Tax Account


An account that is created by a lender to hold property taxes collected as part of the mortgage payments on behalf of the homeowner. The lender will then remit the taxes to the municipality from this dedicated account.

Tax Certificate


A certificate from the appropriate taxing authority giving the status of real estate taxes or other assessments affecting the property.

Tenants in Common


An ownership of property by two or more people, each of whom has an interest in the property. Tenants in common may have different shares in the property. Unlike the case in joint tenancy, a tenancy in common does not end because one party chooses to sell his or her interest. Instead, the purchaser simply becomes the new tenant in common.

Term


In a mortgage, term is the actual length of time for which the money is loaned. The term is usually shorter than the amortization period. At the end of the term the outstanding debt must either be refinanced at current market rates or paid off in full.

Term Mortgage


A non-amortizing mortgage under which the principal is paid in its entirety at the maturity date. A term mortgage is sometimes called a straight loan.

Third Mortgage


A mortgage placed on real property which is already encumbered with a first and second mortgage. Determination of first, second, and third or subsequent mortgage is by priority of registration (time and date).

Time (Unities)


All joint tenants must receive their interests at the same time.

Title


The legal evidence that shows the rightful owner of land.

Title (Unities)


All joint tenants must obtain their interest from the same document.

Title Fraud


A range of fraudulent activity regarding the ownership of property. One form of title fraud involves taking out a mortgage against a home that the fraudster does not own. The fraudster assumes the homeowner's name and credit history, but absconds with the loan proceeds.

Title Insurance Policy


A contract by which the insurer, usually a title insurance company, agrees to pay the insured a specific amount for any loss caused by insured defects to title of a property, for which the insured has an interest as purchaser, lender or otherwise.

Title Search


An examination of public records to determine the state of title.

Torrens System


The Land Titles System as originated in Australia by a Mr. Torrens in 1858. The Torrens system is a system for the registration of land title, indicating the state of the title, including ownership and encumbrances, without the necessity of an additional search of the public records.

Total Debt Service Ratio (TDS)


One of the ratios used to determine whether or not a borrower is able to carry the debt load for a mortgage. The ratio is calculated as the percentage of annual income required to cover housing costs (GDS) plus any other loans that an individual has, such as those resulting in credit card and car payments. There is a maximum amount associated with this ratio to ensure that borrowers can afford to carry the debt.

Trading Down


Typically, "empty nesters" or aging people sell their existing homes and buy smaller homes with the aim reducing the cost of home ownership and helping to fund retirement.

Trailer Fee (Mortgage Financing)


A fee that a lender may pay to a mortgage originator for sourcing a mortgage with that lender. The fee is paid annually and continues for as long as the borrower keeps the mortgage with that lender. This practice is relatively new to the mortgage industry but has a long standing history in the mutual fund industry.

Transfer of Charge


Assignment of a mortgage.

Trust Company


A commercial bank or other corporation that manages, holds, or invests assets for the benefit of others.

Trust Companies Act


A federal act regulating trust companies.

Trust Deed


A written instrument duly executed, sealed, and delivered, conveying or transferring property to a trustee. A trust deed usually, but not necessarily, covers real property.

Trustee


An individual who is given legal responsibility to hold property in the best interest of or "for the benefit of" another.

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