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MORTGAGE BROKER An individual or a firm that act as an agent for both the borrower and the lender of a mortgage loan. The broker places the borrower and the lender in contract with each other, and receives a commission from the borrower if a loan results. Unlike a mortgage banker, a mortgage broker does not negotiate the terms of the loan, issue the loan commitment, prepare the loan documents or service the loan.

MORTGAGE LOAN CORRESPONDENT A mortgage banker who services mortgage loans as an agent for either the owner of the mortgage or an investor. Also applies to the mortgage banker in the role of originator of mortgage loans for an investor.

NON-OWNER-OCCUPIED PROPERTY Property purchased by a borrower not for a primary residence but as an investment with the intent of generating rental income, tax benefits and profitable resale.

NOTE RATE The interest rate on the mortgage loan.

ORIGINATION FEE The fee that the lender charges the borrower to cover the cost of issuing a loan commitment. It pays for processing the loan which includes collecting information about the borrower's creditworthiness and the property. The fee is usually computed as a percentage (for example, 1%) of the mortgage loan. It usually does not include fees for appraisals, credit reports, inspections and loan documentation preparation.

OWNER-OCCUPIED PROPERTY The borrower or a member of the immediate family lives in the property as a primary residence. PAR The principal amount of a mortgage with no premium or discount (100%).

PAYMENT SHOCK Occurs when the terms of a mortgage instrument require an increase payment and the borrow is unable to make or keep up with the increased payment obligations.

PERFECTING TITLE The process of eliminating any and all claims, other than the owner's, to the title of a property.

PERMANENT FINANCING A mortgage loan, usually covering development costs, interim loans, construction loans, financing expenses, and marketing, administrative, legal and other costs. This loan differs from a construction loan in that the financing goes into place after the project is constructed and open for occupancy. It is a long-term obligation, generally for a period of 10 years or more.

PITI See Principal Interest Real Estate Tax Insurance.

PITI RATIO Compares the amount of the monthly income to the amount the borrower will owe each month in principal, interest, real estate tax and insurance on a mortgage. It is used by lenders in deciding whether to give the borrower a loan. (Compare to Qualifying Income Ratio.) Also called "income-to-debt" ratio.

PLANNED UNIT DEVELOPMENT A project that may consist of any combination of one-to-four-family homes, condominiums and other styles of residential housing. The individual unit and often the real estate under it are owned by the individual owner. The common facilities are owned and maintained by a homeowner's association.

POINTS An amount equal to one percent of the principal amount of a note. Loan discount points are a one-time charge assessed at closing by the lender to increase the yield on the mortgage loan to a competitive position with other types of investments.

PREPAYMENT PENALTY A penalty under a note, mortgage or deed of trust imposed when the loan is paid before its maturity date.

PRIMARY UNDERWRITER An underwriter at the lending institution who takes the most comprehensive look at the entire loan package because he or she is responsible for the decision whether to make a loan to a prospective borrower.