Glossary Letter: C

A credit score is a numerical representation of a borrower’s creditworthiness, calculated based on their credit history, including payment behavior, outstanding debts, and credit utilization. Ranging from 300 to 850, a higher score indicates better credit reliability and can result in more favorable loan terms and interest rates. Credit scores are crucial for assessing borrower… Continue reading Credit Score

Credit risk is the possibility that a borrower will fail to repay a loan or meet their financial obligations, leading to potential losses for the lender. This risk is assessed based on the borrower’s creditworthiness, including their credit history, income stability, and debt levels. Evaluating the credit risk of a borrower is crucial for determining… Continue reading Credit Risk

Contact Relationship Management (CRM) software helps lending businesses keep track of customer interactions and manage loan portfolios. It stores all borrower information, like contact details and loan history, in one place, making it easier to provide personalized service. CRM systems may also aid in automating tasks such as sending emails, generating reports, and sending reminders,… Continue reading Contact Relationship Management (CRM)

A conforming loan is a type of mortgage that meets the guidelines set by government-sponsored entities (GSEs) such as Fannie Mae and Freddie Mac. These guidelines include limits on the loan amount and borrower creditworthiness. Conforming loans typically offer lower interest rates and more favorable terms compared to non-conforming loans.  Adhering to conforming loan standards… Continue reading Conforming Loan

A co-borrower is an individual who shares the responsibility of repaying a loan with the primary borrower. Both co-borrowers have equal rights and obligations, including the responsibility to make payments and the right to access and manage the loan funds. Co-borrowers are jointly accountable for the loan, and their credit profiles are considered in the… Continue reading Co-Borrower

A Closing Disclosure is a detailed document provided to borrowers by lenders before the finalization of a mortgage loan. It outlines the terms of the loan, including the interest rate, monthly payments, closing costs, and other financial details. This document is designed to help borrowers understand the total cost of their mortgage and compare it… Continue reading Closing Disclosure

Closing costs are the fees and expenses associated with finalizing a loan or real estate transaction. These may include loan origination fees, appraisal fees, title insurance, taxes, and other related charges. In loan management, accurately calculating and managing closing costs is crucial for ensuring transparency and compliance.  Effective loan management systems help lenders and borrowers… Continue reading Closing Costs

A chattel mortgage is a type of loan where a movable personal asset, such as equipment or vehicles, is used as collateral instead of real estate. Unlike traditional mortgages secured by immovable property, chattel mortgages are used for financing personal property that can be easily transferred. The borrower retains possession of the asset while the… Continue reading Chattel Mortgage

A Certificate of Eligibility (COE) is issued by the Department of Veterans Affairs (VA) to confirm a borrower’s eligibility for a VA-backed home loan. It verifies that the borrower meets the VA’s service requirements and qualifies for VA loan benefits.  The COE is crucial in loan management for validating eligibility, securing VA-backed loans, and ensuring… Continue reading Certificate of Eligibility (COE)

Cash flow refers to the movement of money into and out of a business or individual’s accounts over a specific period. It includes all sources of income and expenditures, crucial for assessing financial health.  In loan management, monitoring cash flow helps lenders and borrowers understand the ability to meet loan payments and handle financial obligations.… Continue reading Cash Flow