Mortgage Glossary

Second Mortgage - A mortgage that has a lien position subordinate to the first mortgage.

Secondary Mortgage Market - The buying and selling of existing mortgages.

Secured Loan - A loan that is backed by collateral.

Security - The property that will be pledged as collateral for a loan.

Seller Take-Back - An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing.

Servicer - An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

Servicing - The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

Settlement - See closing.

Settlement Sheet - See HUD-1 statement.

Special Deposit Account - An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed.

Standard Payment Calculation - The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.

Subdivision - A housing development that is created by dividing a tract of land into individual lots for sale or lease.

Subordinate Financing - Any mortgage or other lien that has a priority that is lower than that of the first mortgage.

Subordination of Loan - The act of carrying over a loan balance when a refinance occurs.

Survey - A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Sweat Equity - Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.