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Glossary D
DD 214
The “Separation” paper issued to each Veteran after the completion of their service. This shows the veterans dates of service. I advise veterans to record a copy of their DD 214 with the county recorder’s office. That way, if they lose their copy, they can get a new one right away without having to wait for the Veteran’s Administration to do the research and send one out to them.
Debt-To-Income Ratio
A calculation that is made in order to show the borrower’s ability to repay the loan. It is the ration of how much debt the borrower owes (including the new loan) compared to the total income of the borrower. If, with the new loan, the borrower’s monthly payments will be $2,400 and the total income is $5,200, the debt ratio would be 46%. ($2,400 divided by $5,200.) A debt ratio of 45 or less is best, although there are loan products that allow a slightly higher debt ratio, usually with an extra cost involved.
There are two ratios that are calculated. The top ratio (also called the front-end) is made by dividing the proposed total monthly mortgage payment (PITI) by the gross monthly income. The bottom ratio (also called the Back-end) is calculated by dividing the total monthly payments (including proposed PITI and all recurring debt) by the gross monthly income.
Deed
The legal document that is used to transfer ownership (title) of a property. This is recorded with the county in which the property is located.
Deed of Trust
A document signed by the borrowers that creates a lien against the property. This is used as security for the loan. It is also recorded with the county in which the property is located.
Default
When a borrower fails to meet the requirements of the loan, the person is in default. Usually a borrower is in default when they fail to make the payments on the loan.
Deferred Interest
Interest that is not paid when it normally would be paid. In a negative amortization loan, only a portion of the interest due each month is required to be paid. The part of the interest that is not paid is said to be “deferred” or agreed to be paid at a later date. Deferred interest is added onto the loan balance, so instead of decreasing each month, the balance increases instead.
Delinquent
Being 30 days or more behind in loan payments.
Demand
A statement by the current lender stating the unpaid principal balance of a loan and accrued interest. This is requested by escrow so that they will know what the exact pay off of the loan will be.
Demand Fee
The fee charged by the lender to prepare a demand.
Discount Points
Also called Points. Money paid to a lender either at close of escrow or added onto the loan amount that lowers the interest rate of the loan. One point equals 1% of the loan amount.
Document Prep Fee
A fee sometimes charged by a lender, ostensibly to “prepare” the loan documents.
Do Not Call Registry
A national list that consumers may place their phone numbers on to reduce unwanted telemarketing calls. The Federal Trade Commission and The Federal Communications Commission enforce the registry.
Downpayment
A portion of the sales price of a property paid by the borrower at close of escrow. It is the difference between the purchase price and the mortgage amount.
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Letter A