1229 Lake Plaza Dr. #D | Colorado Springs, CO 80906
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| Glossary of Lending Terms |
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waive To knowingly and willingly give up or surrender a right, benefit or claim. |
waiver A written instrument stating that a right, benefit or claim is being surrendered voluntarily. |
warehouse fee Many mortgage firms must borrow funds on a short-term basis in order to originate loans, which are to be sold later in the secondary mortgage market or to investors. When the prime rate is higher on short-term loans than on mortgage loans, the mortgage firm has an economic loss, which is offset by charging a warehouse fee. |
warehousing Mortgage bankers and other financial institutions make loans that are then periodically sold on the secondary market. After the loan is made but before it is sold, the loan is said to be in the lenders warehouse. |
warm-air heating system A system that uses fans or blowers to circulate warm air from the furnace throughout the house. |
warrant 1. To legally guarantee that the title being transferred is of good quality. 2. To legally assure that the physical condition of a property is as represented. |
warranty A written or implied guarantee that property (including mechanical systems or appliances) is in the condition described and will perform as promised. |
warranty deed A deed conveying the title to a property with a warranty of a clear marketable title. The grantor guarantees the quality of the title to the grantee. |
water rights The rights of an owner of real property to the use of certain water. Water rights may run with the land or be transferred separately without land, depending on state laws. |
water table The depth below the surface of the land under which natural underground water is found. |
wear and tear The loss of value or the deterioration of a property due to normal and reasonable use. |
what-if analysis or scenario A change in the amounts that are used as the basis of an affordability analysis. A what-if scenario can include changes to monthly income, debts, or downpayment funds to influence the qualifying ratios or down payment expenses that are used in the affordability analysis. What-if scenarios are used to explore different ways to improve the borrower’s ability to afford a house. |
wholesale lender A wholesale lender only works with mortgage brokers. They take completed loan packages and underwrite them. They offer discounted pricing in return for the upfront work done by the mortgage broker. Some companies may have both retail and wholesale divisions. |
without recourse See non-recourse. |
working capital The difference between current assets and current liabilities. |
workout A mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default; generally involves substantial reduction in the debt service burden during an economic depression. |
wraparound mortgage A junior mortgage with a face value greater than the first mortgage (and possible other junior mortgages) that it secures. The mortgagee under the wrap-around collects the payment, and then from this amount, makes the payment on the first mortgage or, in the case of more than one wrap, on the most previous wrap. The new lender accepts the obligation to make payments on the old loan. The existing loan generally carries an interest rate below the rate available on new loans. The buyer at a later date may refinance the property and close both loans. Also known as an all-inclusive deed of trust. Example: The seller sells his property for $200,000. The buyer puts $80,000 down. The seller has an existing loan balance of $100,000 for a remaining period of 25 years at an interest rate of 6%. The seller then makes a wraparound mortgage to the buyer, (where the seller acts as a lender) for $120,000 at 8%. The seller has to continue making payments on his old loan. The buyer has to pay the seller on the new loan. |
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