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INTEREST 1) A charge for borrowing money. It is usually expressed on an annual rate, or as a percentage, of the money still owed. For example, the interest rate might be 10%. If a person borrowed $10,000 and agrees to pay it in full at the end of one year, the interest will be $1,000. 2) A right, share or title in property. 3) A general term meaning partial or total right to a property. An interest in real estate might be a right, such as an easement, a lease or partial or full ownership.

INTEREST RATE The percentage of an amount of money which is paid for its use for a specified time; usually expressed as an annual percentage.

INVESTOR In mortgage lending, the holder of a mortgage, or a permanent lender for whom the mortgage banker services the loan.

JUDGMENT Final determination by a court of the rights and claims of the parties in action.

LETTER OF COMMITMENT A document that advises the borrower that the loan has been approved, spells out the terms and conditions of the loan and confirms the closing date.

LIQUIDITY The amount an individual or entity holds in cash, checking and savings accounts and other assets quickly convertible to cash without any significant loss.

LOAN CLOSING A meeting between the borrower and the lender in which transfer of ownership is accomplished, funds and deed are exchanged, and all loan documents, including the promissory note and mortgage, are signed.

LOAN TO VALUE Mathematical computation that compares the loan amount to the value of the property.

LOAN-TO-VALUE RATIO The ratio, expressed as a percentage, of the amount of a loan (numerator) to the value or selling price of real property (denominator). Usually, the higher the percentage, the greater the interest charged. Maximum percentages for banks, savings and loans, or government-insured loans are set by statute.

LOT EQUITY If a borrower owns the land and is seeking a mortgage for a home under construction, the value of the land may be recognized as a down payment equivalent to cash.

MARGIN Under the terms of an adjustable-rate mortgage (ARM), the margin is a premium that a lender charges which is added to the index. This premium is typically two or three percentage points. Once the lender specifies the margin, it remains fixed.

MISREPRESENTATION Information that is provided to and is relied upon by a third party as fact, but that is untrue and material to the risk assumed. The information may be provided with the knowledge that it is untrue and with the intent to deceive, or provided as the truth without knowing for a fact that it is not true.

MORTGAGE A pledge or security for the payment of a debt.

MORTGAGE BACKED SECURITIES Bond type investment securities representing an undivided interest in a pool of mortgages or trust deeds. Security guaranteed by the Government National Mortgage Association (GNMA), issued to savings and loan associations, mortgage bankers, commercial banks and other institutions. The GNMA security holder is backed by the "full faith and credit of the United States."

MORTGAGE BANKING 1) The origination, sale and servicing of mortgage loans by a firm or individual. 2) The packaging of mortgage loans secured by real property to be sold to a permanent investor with servicing usually retained by the originator for the life of the loan for a fee.