L



Glossary



Late Charge
An additional fee assessed on a debt when a payment is not received by the due date


Lender (Mortgagee)

A person or entity from which money is borrowed.


Lease Purchase Option

A rent-to-own purchase plan under which the buyer takes possession of the property with the first payment and takes ownership with the final payment. Such a lease is usually treated as an installment sale. Under a capital lease, the lessee is responsible for paying taxes and other expenses on the property.


Liabilities

A person’s debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims.



Liability insurance

Liability Insurance provides the insured party with protection against claims resulting from injuries and damage to people and/or property. Liability Insurance policies cover both legal costs and any payouts for which the insured party would be responsible if found legally liable. Intentional damage and contractual liabilities are generally not covered in these types of policies. See Homeowners Insurance Liability Section



LIBOR

London Interbank Offering Rate; an index commonly used for some adjustable-rate mortgages (ARMs).



Lien

The legal claim of a creditor on a borrower’s property, to be used as security for a debt.



Lien holder

An individual or entity that has placed a lien on real property.



Lifetime Payment Cap

For an Adjustable Rate Mortgage (ARM), a limit on the amount that payments can increase or decrease over the life of the mortgage.



Lifetime Rate Cap

For an Adjustable Rate Mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the mortgage.



Lifetime adjustment cap

A limit on how much the variable interest rate can increase during the term of a loan.



Liquid Asset

An asset that is readily convertible into cash, such as marketable security, a note, or an account receivable.



Line of credit

An agreement by a lender to extend credit up to a maximum amount for a specified time. In a home equity line of credit, the line of credit is secured by the borrower’s home.



Loan

An Act of Lending.



Loan Application Fee

A fee the buyer pays to a lender when applying for a mortgage.



Loan Discount Points

Prepaid interest on the mortgage loan. The more points paid, the lower the interest rate. Typically, borrowers can pay for 0-4 points.



Loan commitment

A formal notification from a lender stating that the borrower’s loan has been conditionally approved and specifying the terms under which the lender agrees to make the loan.



Loan Estimate (LE)

Disclosure to help consumers understand the key loan terms and estimated costs of a mortgage before they make a complete application. After a consumer submits 6 key elements: name, income, social security number, property address, estimated property value and desired loan amount, the lender is required to provide this form. All lenders are required to use the same standard loan estimate form to make it easier for consumers to compare and shop for a mortgage.



Loan modification

Changes to one or more of the terms of a loan.


Loan origination

The process by which a mortgage lender makes a home loan and records a mortgage against the borrower’s real property as security for repayment of the loan.



Loan Origination Fee

A fee charged by a lender to cover the administrative costs of making a loan.



Loan Sevicing / Administration

The process by which a company collects interest, principal, and escrow payments from a borrower.


Loan-to-value ratio (LTV)

The ratio between the unpaid principal amount of your loan, or your credit limit in the case of a line of credit, and the appraised value of your collateral. Expressed as a percentage. For example, if you have an $80,000 first mortgage on a property with an appraised value of $100,000, the LTV is 80% ($80,000 / $100,000 = 80%).



Lock

A guarantee that the lender will deliver a specific combination of interest rate and points if the mortgage closes by a specific date.



Lock period

The amount of time prior to closing that you can secure an interest rate for your loan. Lock periods typically range from 30 days to more than 90 days. Generally, the longer the lock period, the more you pay in points or interest.



Lock-In-Rate

A mortgage application interest rate that is established and guaranteed for a specified period.



Large capitalization (Cap)

A reference to either a large company stock or an investment fund that invests in the stocks of large companies.



Large-cap fund

A fund that invests primarily in large-cap stocks.



Large-cap stocks

Stocks of companies with a large market capitalization. Large caps tend to be well-established companies, so their stocks typically have less risk than smaller caps, but they also offer less potential for dramatic growth.



Life annuity

An annuity that makes periodic payments only for the life of one individual. Also known as a single life annuity.



Lifecycle fund

A fund designed to provide varying degrees of long-term appreciation and capital preservation based on your age or target retirement date. As you get older or closer to retirement, a lifecycle fund’s mix of asset classes becomes less focused on growth and more focused on income. Also known as target date retirement or age-based funds.



Lifestyle fund

A fund that maintains a predetermined risk level and generally uses words like “conservative,” “moderate” or “aggressive” in its name to indicate the fund’s risk level. Used interchangeably with target risk fund.



Liquidity

The ease that an investment can be converted into cash. If a security is very liquid, it can be bought or sold easily. If a security is not liquid, it may take additional time and/or a lower price to sell it.



Longevity risk

The risk that you will live longer than expected and run out of retirement money.




Low Down Payment Feature

A feature of some mortgages, usually fixed-rate, that helps you buy a home with a low-down payment.




Acronyms



LA
Loan Amount



LARA
Land Safe Appraisal Risk Analysis



LE
Loan Estimate



LGD
Loss given Default



LP
(Loan Prospector) The AUS used by freddie mac



LHFS
Loan Held for Sale



LLPA
Loan Level Pricing Adjustments



LN
Loan



LPMI
Lender Paid Mortgage Insurance



LQI
LQI FNMA Loan Quality Initiatie



LTV
(Loan to value)
LTV is a ratio used by the lender that divides the amount of money borrowed by the appraised value of the home expressed as a percentage for example, a borrower may purchase a home appraised at dollar 200,000 with a down payment of dollar 40000. This means he has a loan to value ratio of 80 percent.



LO
Loan Officer



LOCOM
Lower of cost or market



LOS
Loan Origination System