MORTGAGE DICTIONARY

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NEGATIVE AMORTIZATION:
When the periodic payments on a loan are not sufficient to pay the interest which has accumulated during the previous period resulting in an increase rather than a decrease in the amount owing on the mortgage.

NEGATIVE AMORTIZATION CAP:
A limit, expressed as a percentage of the principal, of the negative amortization allowed under a variable or adjustable rate mortgage.

NEGOTIABLE RATE MORTGAGE:
See adjustable rate mortgage or variable rate mortgage.

NO BID:
Where the VA chooses not to acquire a property in foreclosure upon default but instead to pay out on the amount it has guaranteed of the mortgage (generally 60% of the principal).

NO CASH-OUT REFINANCE:
The replacement of a matured loan with a new loan where no additional principal is borrowed and added to the loan.

NO CHANGE SCENARIO:
A method of calculating the future payments required under a variable or adjustable rate mortgage on the assumption that the index (and therefore the interest chargeable on the mortgage) will not change.

NOMINAL LOAN RATE:
The interest rate stated on the loan agreement.

NON-ASSUMPTION CLAUSE:
A term of a mortgage contract that forbids the transfer of the mortgage to a new owner without prior consent of the lender.

NON-CONFORMING LOAN/MORTGAGE:
A mortgage or loan that is not eligible for Fannie Mae (FNMA) or Freddie Mac (FHLMC) programs.

NONDISTURBANCE CLAUSE:
A term of a mortgage which guarantees that leases regarding the subject property will be allowed to continue uninterrupted in the event of mortgage default.

NOTE:
A written instrument of indebtedness, promising to pay a certain person a particular sum of money upon stated terms.

NOTE RATE:
The interest rate as set out in the mortgage/loan contract.

NOTICE OF DEFAULT:
The written notice sent by a lender to a borrower stating that the borrower has not met his obligations under the loan contract and the lender may take legal action to enforce the agreement.