MBA CMB key terms

A loan secured by real property, where the borrower pledges the home as collateral and the lender can foreclose if repayment terms are not met.

The written legal promise by a borrower to repay a specified sum plus interest on stated terms; it accompanies the mortgage or deed of trust.

A three-party security instrument used instead of a mortgage in some states, conveying title to a trustee who can foreclose on the lender's behalf.

The property pledged to secure a loan; if the borrower defaults, the lender may sell it to recover the unpaid balance.

The original amount borrowed, excluding interest and fees, and the portion of each payment that reduces the outstanding loan balance.

The percentage charged on outstanding loan principal, expressed annually, which determines the cost of borrowing over the life of the loan.

A standardized measure of credit cost that includes the interest rate plus certain fees, disclosed to borrowers for comparison shopping across loan offers.

The gradual repayment of principal over time through scheduled payments; on a fixed-rate loan, early payments are mostly interest and later ones mostly principal.

A loan whose interest rate stays constant for the entire term, giving predictable principal-and-interest payments that do not change.

A loan whose interest rate changes periodically according to an index plus a margin, typically starting below fixed rates but carrying future payment risk.

A contractual limit on how much an adjustable-rate mortgage's interest rate may rise at each adjustment or over the loan's life.

The loan amount divided by the property's appraised value or purchase price, whichever is lower; higher ratios signal greater lender risk.

The total of all mortgage liens on a property divided by its value, used when a borrower has a first and a subordinate loan.

Coverage a borrower pays for when the down payment is small, protecting the lender against loss while the loan-to-value ratio remains high.

The portion of a home's purchase price the buyer pays in cash, reducing the loan amount and the lender's exposure.

A lender-held account into which borrowers pay monthly amounts for property taxes and insurance, which the servicer disburses when bills come due.

Fees and expenses paid at loan settlement, including origination, appraisal, title, and recording charges, separate from the property price.

A federally required statement giving borrowers key loan figures, including the annual percentage rate, finance charge, and total payments, before consummation.

The lender's process of assessing a borrower's credit, income, assets, and the property to decide whether and on what terms to approve a loan.

Total monthly debt obligations divided by gross monthly income; lenders use it to judge whether a borrower can comfortably carry the new payment.

A numeric summary of a borrower's credit history, widely used in underwriting to estimate the likelihood of timely repayment.

An independent professional estimate of a property's market value, ordered by the lender to support the loan amount and collateral position.

A lender's conditional commitment, issued after reviewing a borrower's finances, stating a maximum loan amount before a specific property is chosen.

An early, informal estimate of how much a borrower may qualify to borrow, based on self-reported information and without full verification.

The legal process by which a lender takes and sells a property after the borrower defaults, using the proceeds to satisfy the unpaid debt.

A borrower's failure to meet loan obligations, such as missing payments or breaching other loan terms, which can trigger remedies including foreclosure.

Options a servicer offers struggling borrowers, such as forbearance, repayment plans, or loan modification, to avoid foreclosure and reduce losses.

A permanent change to loan terms, such as a lower rate or extended term, intended to make payments affordable and keep the borrower in the home.

The administrative handling of an existing loan, including collecting payments, managing escrow, and pursuing delinquent accounts on behalf of the owner.

The sale or reassignment of the right to collect payments and administer a loan from one servicer to another, with required borrower notice.

The marketplace where existing mortgages and mortgage-backed securities are bought and sold, supplying liquidity that funds new lending.

A bond whose payments come from a pool of mortgages; investors receive principal and interest collected from the underlying loans.

The process of pooling loans and issuing securities backed by their cash flows, spreading risk among investors and freeing lender capital.

A revolving credit line secured by a home, letting the borrower draw funds up to a limit during a set period, then repay.

A large lump sum due at the end of certain loans whose scheduled payments did not fully amortize the principal over the term.

The executive process of setting long-term direction, allocating capital and talent, and aligning the mortgage business with market and regulatory realities.

The amount and type of risk an institution is willing to accept in pursuit of its goals, set by leadership and embedded in lending and pricing decisions.

A measurable value executives track to judge how well the mortgage operation is achieving critical objectives such as volume, margin, or cycle time.

The difference between revenue from loan production or servicing and the costs of originating and managing it, often measured per loan.

The exposure of earnings or capital to movements in interest rates, affecting loan pipelines, servicing values, and the cost of funding.

Using offsetting financial positions, such as forward sales or derivatives, to reduce exposure to rate changes while loans are in process or held.

Executive oversight of loans in process, balancing expected closings against locked rates and hedged positions to control fallout and margin risk.