Late fees
Penalty fees lenders are entitled to collect from borrowers who don’t remit payment within the allotted grace period. Many mortgage notes offer borrowers a 10 or 15-day grace period, with payments received on the 16th day or later incurring a late charge of about 5%.
Late payment
A payment that is received later than the grace period that is stipulated in the note; many mortgage grace periods are set at 10 or 15 days.
Lead-Generation site
A mortgage web site designed to provide potential customers to lenders. Whereas a referral site provides information about lenders to consumers, with consumers contacting the lenders, a lead-generation site provides information about the consumers to the lenders, with the lenders contacting the consumers. These are sometimes referred to as “auction sites” as lenders post their prices directly to the consumer.
Lease-to-own purchase
A transaction wherein a prospective homebuyer enters into a home lease agreement that grants the lessee an option to buy it within a specified time period.
Lender
See Mortgage lender
Liabilities
A person or entity’s financial obligations. Liabilities include long term and short term debt.
Lien
The right of the lender to claim the borrower’s property in the event the borrower defaults on the loan. If there is more than one lien on the property, the claim of the lender holding the first lien will be satisfied before that of second lien, and so forth.
Lifetime Rate Cap
For an adjustable rate mortgage (ARM), a limit placed on the amount that the interest rate can increase or decrease over the life of the loan. See cap.
Loan
A sum of borrowed money (principal) that is generally repaid with interest.
Loan amount
The amount the borrower promises to repay, as set forth in the mortgage contract. This differs from the actual amount of cash that is disbursed by the lender by taking into account the amount of points and other upfront costs that are also included in the loan.
Loan “churning”
A process of periodically raising cash through a succession of cash-out refinancing by mortgage brokers, victimizing wholesale lenders, in collusion with borrowers.
Loan discount fee
A term used in describing points on the GFE (Good Faith Estimate.)
Loan level price adjustments
The risk-based pricing system utilized by Fannie Mae.
Loan modification
See Mortgage modification.
Loan officer
Lender or mortgage broker employees who identify borrowers, provide sales and counsel services, and take loan applications.
Loan provider
A lender or a mortgage broker.
Loan to Value Ratio
Expressed as a percentage and also referred to as LTV, this represents the loan amount divided by the lesser of the property selling price or the appraised value. The LTV and down payment are different methods of expressing the same set of facts.
Lock
A lender’s guarantee that the mortgage rate quoted will be applicable for a specific number of days from the day of application. It is also an option that may be exercised by the borrower, at the time of the loan application (or later), to “lock in” the prevailing rates and points in the market at that specific time. A lock commits both the lender and borrower to those terms, irrespective of what occurs between that point and the closing date.
Lock commitment letter
A written statement verifying that the price and additional terms of a loan have been locked issued by a lender.
Lock failure
The incapability or opposition of a lender in honoring a mortgage price that a borrower had believed was guaranteed.
Lock jumper
A borrower, more commonly refinancing rather than purchasing a home, who when interest rates go down allows a lock to expire in order to obtain another lock at the lower rate.
Lock period
The number of days or period of time for which any lock or float-down is valid. Usually, the longer the lock period, the higher the price to the borrower will be.
