MORTGAGE DICTIONARY

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DATE OF APPRAISAL:
The precise day, month and year upon which an assessment of the value of a property has been given.

DEBT:
1. An obligation to another person.
2. That obligation which is created by borrowing.
3. The total of all financial obligations of a person or corporation.

DEBT COVERAGE RATIO (DCR):
A comparison of the net income of a property with the cost of payments (principal and interest) on the mortgage on the property, used to assess the ability of the property to generate enough income to pay for itself.

DEBT EQUITY RATIO:
A comparison of the amount owing on a property with the equity (value of property minus amount owing).

DEBT FINANCING:
Paying for the purchase of a property with credit.

DEBT RATIO:
Also known as Debt-to-Income ratio. A comparison of the total monthly payments of all of the borrower's debts (including the mortgage) with the gross monthly income of the borrower, used to assess borrower's ability to pay mortgage.

DEBT SERVICE:
The mortgage payment for a given period of time.

DEBTOR:
A person who has borrowed and therefore owes (opposite of Creditor).

DECREE OF FORECLOSURE:
An order of the Court setting out the amount outstanding on a delinquent mortgage and ordering the sale of the property to pay the mortgagee.

DEDUCTION:
An amount of money held back by the lender from the mortgage advance. Could be for appraisal fee, commitment fee, interest adjustment or for realty tax account.

DEED IN LIEU OF FORECLOSURE:
A legal instrument in which a borrower conveys property to a lender under a mortgage to save the expense of foreclosure. See also quit-claim deed.

DEED OF RELEASE:
A legal instrument signed by lien claimants or mortgagees which gives up their claim to the property. See Discharge.

DEFAULT:
Failure. In mortgages, the failure to make payments in full, on time or at all or to live up to any other obligations placed on the borrower by the loan agreement.

DEFEASANCE CLAUSE:
A clause in a mortgage which ensures that, once the borrower has met all of her obligations under the terms of the mortgage and paid out the entire principle and interest borrowed, the lender's legal interest in the property is extinguished.

DEFERRED INTEREST:
Interest which is not paid as it accumulates but which is added, instead, to the loan principle.

DEFERRED INTEREST MORTGAGE:
A technique for reducing the amount of each periodic payment on a mortgage monthly by postponing the payment of a portion of the interest until a certain date in the future (or to when the property is sold), at which time the interest postponed is added to the principle owing.

DEFICIENCY JUDGMENT:
A Court order against a borrower under a mortgage to pay to the lender an amount sufficient to make up for the difference between what the borrower owes under the mortgage and the amount the lender sold the property for under a mortgage remedy action.

DELINQUENCY:
The condition of being late on a payment but not yet in default.

DEMAND LOAN:
A type of loan where the lender may require payment in full of the principal (and accumulated interest) at any time.

DEPARTMENT OF VETERANS AFFAIRS (VA):
An independent federal agency which oversees programs for military veterans, including loan and mortgage programs.

DEPOSIT OF TITLE DEEDS:
When a lender requires ownership documents to be left with it as further security for a loan.

DEVELOPMENT LOAN:
A loan specifically designed to finance the transformation of a vacant tract into a new survey. May provide for money to be advanced as the stages of the development are completed.

DIRECT REDUCTION MORTGAGE:
A kind of mortgage where the principal and interest to be paid are based on the principal remaining. An amortized mortgage.

DISCHARGE:
1. A document registered to remove a mortgage from title to a property.
2. To pay out a debt.
3. To meet one's obligations.

DISCLOSURE STATEMENT:
A document issued by a lender to a borrower in which the lender sets out the terms and conditions of the loan. Often required under legislation.

DISCOUNT:
A sum of money held back from a mortgage advance as prepaid interest.

DISCOUNT POINT: See point. Each point is equal to 1% of the principal.

DISCOUNT RATE:
A benchmark for interest rates, the rate charged by the Federal Reserve System on loans to banks.

DISTRESS:
The right of a party to sell the real or personal property of another party to pay for arrears in rent or loan payments.

DISTRESSED PROPERTY:
A property which is to be sold in order to pay arrears on a mortgage.

DOWN PAYMENT:
The amount of money provided by the Purchaser toward the total price of the property (not including legal fees or other acquisition costs). In general, downpayment plus mortgage equals purchase price.

DRAGNET CLAUSE:
A term of a mortgage which establishes the subject property as security for the present and for all future debts of the owner to the lender.

DRY MORTGAGE:
Also known as "non-recourse loan" because the lender has no personal right of action against the property owner in the event of default. The lender may only sell the property to enforce the loan obligation.

DUE DATE:
The date established in the loan agreement upon which all moneys then outstanding on the loan become due and payable in full.

DUE ON SALE CLAUSE:
A clause in a mortgage which requires that the mortgage be paid out in full upon the sale of the property against which it is secured. A mortgage with this clause may not be assumed by a purchaser.