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Glossary S
Second Mortgage
A loan on a property obtained after the first loan.
Second Trust Deed
See Second Mortgage and Deed of Trust
Secondary Market
After a loan is closed, most lenders sell the loan to investors so they can get money to fund more new loans. These investors, grouped together, are what make up the secondary market. Secondary market investors include Fannie Mae and Freddie Mac.
Service Release Premium
Extra income a bank pays to the lender for a FHA or VA loan. The amount of the SRP is based upon the type of loan and the loan amount. They range from .75% to 1.25% of the loan amount, with the average being 1%.
Servicing
The receipt of payments, customer service, collections and foreclosure are actions a lender does when servicing an account.
Servicing Disclosure Statement
A document provided by the lender which states whether the new loan will be serviced by the lender originating the loan.
Settlement
See Closing.
Settlement Costs
See Closing Costs.
Settlement Statement
See Closing Statement
SRP
See Service Release Premium.
Stated Assets
In some loans, instead verifying the assets listed on a loan application, the underwriter may use the amount stated by the borrower.
Stated Income
In some loans, instead verifying the income listed on a loan application, the underwriter may use the amount stated by the borrower.
Stated Value
In some loans, instead of requiring an appraisal, the underwriter may use the value of the property as stated by the borrower. On the loan application.
Statement of Identity
See Statement of Information
Statement of Information
A form a borrower must fill out and return to the title company during the escrow process. This seems like an intrusion to some borrowers, but it is actually for their benefit. In searching title, the title company will inevitably encounter judgments, liens, bankruptcies, etc. against persons with names similar to the borrower’s. The title company uses the Statement of Information to show the borrower is not the person involved in those difficulties.
Subordination Agreement
A lender in second position agrees to stay in second position, thereby allowing the loan in first position to be refinanced. (Paid off and replaced by a new first mortgage.) If there is no agreement to subordinate, the second mortgage would become the first mortgage and the new mortgage would be in second position. For instance, suppose you had a first mortgage of $300,000 and a second mortgage of only $15,000. You wanted to refinance the first mortgage with a new one with a loan balance of $400,000. The minute the $300,000 mortgage is paid off, the $15,000 mortgage would move into first position. The new loan of $400,000 would be in second position. This would be unacceptable to the lender of the $400,000. A subordination agreement would need to be signed by the holder of the $15,000 mortgage, saying they would stay in second position. If the lender does not agree to the subordination, the refinance would not be completed.
Subprime Mortgage
A mortgage designed for people with credit problems. These loans are riskier for the lender and therefore cost more.
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