The Real Estate Dictionary

Closing Protection Letter

admin — Tue, 05 Aug 2008 14:59:43 +0000

Closing Protection Letter (also known as Insured Closing Letter, CPL, or ICL). A document issued by the title insurance company which sets out the that company’s responsibility for negligence, fraud, and other errors that might be committed by a closing agent. In practice, almost every lender requires a CPL for each closing.

Agent

admin — Wed, 25 Jun 2008 20:28:21 +0000

Agent. A person legally authorized to act on the behalf of another.

Adjustable Rate Mortgage

admin — Wed, 25 Jun 2008 20:27:39 +0000

Adjustable Rate Mortgage (ARM). A mortgage loan which allows the lender to adjust periodically the interest rate. Such changes generally come after some initial time period during which the rate is fixed, and are tied to an index such as the Treasury Bill rate or the six-month LIBOR.

Ad Valorem Tax

admin — Wed, 25 Jun 2008 20:25:14 +0000

Ad Valorem Tax. A tax levied against real property based upon its assessed value.

Acceleration Clause

admin — Wed, 25 Jun 2008 20:23:49 +0000

Acceleration Clause. A provision in a loan which, upon certain events such as a default or a transfer of the property in violation of the due-on-sale clause, allows the lender to demand all sums owed by the borrower to be immediately due and payable.

FiFa

admin — Tue, 24 Jun 2008 20:33:47 +0000

FiFa (Fi. Fa. or Writ of Fieri Facias). A writ issued by a court pursuant to a judgment in a civil lawsuit. Once recorded in the General Execution Docket, the FiFa becomes a lien against all real property owned by the judgment debtor in the county where the FiFa has been recorded.

In most typical transactions, all FiFas must be collected for and paid in full at or before closing.

Wraparound Mortgage

admin — Tue, 24 Jun 2008 20:33:20 +0000

Wraparound Mortgage (Wrap Mortgage or Wrap). A form of owner financing whereby the seller of real property extends to the purchaser a junior mortgage which wraps around and exists in addition to the seller’s own mortgage.

Typically the new purchaser makes monthly payments to the seller, who is responsible for making the monthly payments on the underlying mortgage. If the purchaser then defaults, the seller then can foreclose and take back the property.

Because title transfers from seller to purchaser, most wrap mortgage transactions will violate the due-on-sale clause of the seller’s mortgage.

HUD-1

admin — Tue, 24 Jun 2008 20:32:41 +0000

HUD-1 (HUD, Settlement Statement, Uniform Settlement Statement). A form prepared by the closing attorney which itemizes and discloses all financial details of a real estate transaction.

Charges that are listed on the settlement statement include real estate agent commissions, lender charges, initial escrow reserves, title charges, and any other charge affecting the transaction.

The HUD is required for all transactions which involve a federally-related mortgage loan. As a practical matter however, every closing will have a HUD.

A sample HUD for a sale transaction may be viewed here. Please note, though, that the figures used are for example only.

Closing Attorney

admin — Tue, 24 Jun 2008 20:31:19 +0000

Closing Attorney. The attorney responsible for all aspects of the closing. In most cases, the closing attorney represents the lender and prepares all of the documents to be signed by the buyer and seller at closing. The closing attorney is also responsible for the preparation and recording of all deeds as well as handling the monetary disbursments in conjunction with the closing.

In Georgia, all closings must be supervised by an attorney.

Planned Unit Development

admin — Tue, 24 Jun 2008 20:30:21 +0000

Planned Unit Development (PUD). A subdivision of individually-owned property lots maintained by a mandatory homeowner’s association.