Debt Consolidation
The rolling of short-term debt into a home mortgage loan, either at the time of the home purchase or later.
Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.
Default
The failure of a borrower to honor the terms of the loan agreement. Lenders as well as the law usually view borrowers that are delinquent in payment for 90 days or more as in default.
Deferred Interest
Negative amortization.
Delinquency
A mortgage payment that is over 30 days late. Not to be confused with Late payment.
Demand Clause
A clause in the note allowing the lender to demand repayment at any time for any reason.
Desecuritization
Reversing the securitization process through the converting of a security back into individual loans.
Direct Lender
Lender.
Disaster Myopia
The tendency of lenders to ignore the possibility of potential shocks that may cause them major losses if a significant period of time has elapsed since such a shock has occurred.
Discount Point
See point.
Down Payment
The difference between the value of the property and the loan amount, expressed in dollars, or as a percentage of the price. In a down payment, money is paid to make up the difference between the purchase price and the mortgage amount.
Dual Index Mortgage
A mortgage whereby the interest rate is adjustable based on an interest rate index, while the monthly payment adjusts based on a wage and salary index.
Due-on-sale Clause
A provision in a loan contract stipulating the outstanding loan balance must be repaid in its entirety if the property is sold prior to repayment of the existing loan. This precludes the seller from transferring responsibility for an existing loan to the buyer when the interest rate on the old loan is below the current market. If a mortgage contains a due-on-sale clause it is not an assumable mortgage.
