Mortgage Glossary
RESPA (Real Estate Settlement Procedures Act)
A federal law that, among other things, requires lenders to disclose all settlement costs. It gives you the legal right to review estimated closing costs after you apply for a loan, and again at or before settlement. It also requires lenders to tell you about other business relationships it has with companies that may provide you with services.
Reverse Mortgage
A type of loan that can provide income to people who own their home or have considerable equity. The lender makes periodic payments to the homeowner, using the equity as collateral. At the end of the loan, the lender usually sells the home. Many retired people consider reverse mortgages as a way to supplement their fixed income.
Right of Rescission
Your legal right to cancel a refinance on your primary residence, bridge loan or home equity loan for any reason, for three business days after you have signed the loan contract. As required by federal law, the loan will not be finalized and no money will be issued until the rescission period has ended.
Second Mortgage
A mortgage for a property that already has one mortgage. The first mortgage has priority for all rights and claim settlements. A second mortgage is sometimes used to get cash, and can also be used to reduce the size of the down payment required by the first mortgage. Also known as a Piggyback Mortgage.
Secondary Mortgage Market
The open, national market where residential mortgages are bundled, bought and sold to private organizations and investors such as Fannie Mae and Freddie Mac. The secondary market enables primary lenders, such as PHH Mortgage, to sell their loans and get funds to make new mortgage loans available to the American public.
