Waive escrows
Authorization made by the lender for the borrower to pay taxes and insurance directly as opposed to the standard procedure where the lender adds a charge to the monthly mortgage payment that is deposited in an escrow account, with which the lender pays the borrower’s taxes and insurance when they are due. Subject to the type of loan lenders may or may not waive escrows. Where a waiver is granted lenders may charge for it in the form of a marginal increase in points, or may restrict it to those borrowers making a large down payment.
Warehouse lender
A short-term lender for mortgage bankers. These firms lend to temporary lenders against the collateral of closed mortgage loans prior to the secondary market sale of these loans. If the loans that are “warehoused” decrease in value, Warehouse lenders can call the loans.
Warrantable condos
A condominium project that offers features lenders view as protection against risks to its value. This includes adequate insurance coverage, the majority of units sold prior to project completion, no one party owning more than 10% of the units and a developer independent ownership association.
Wholesale lender
A lender providing loans through mortgage brokers or correspondents who take the borrower’s application, and process the loan. As compared to a Retail lender who deals directly with clients.
Wholesale mortgage prices
The interest rate and points quoted to mortgage brokers and correspondent lenders by wholesale lenders.
Workout assumption
With the lender’s permission, assuming a mortgage from a borrower who is unable to continue making the payments.
Worst case scenario
The projection that the interest rate on an ARM will rise to the maximum extent the note permits. As an example on a one-month ARM without rate adjustment caps, the rate would increase to the maximum rate specified in the note in month 2.
Wrap-around mortgage
A new mortgage on a property where a mortgage is already in place with the new lender assuming the payment obligation on the old mortgage. These generally arise when the current market rates are above the rate on the existing mortgage, with home sellers frequently acting as the lender. A wrap-around mortgage is prevented by a due-on-sale clause in connection with the sale of a property except through violation of the clause.
