Yield Spread Premium | Dodd-Frank Wall Street Reform Act

Yield Spread Premium The term 'Yield Spread Premium' is derived from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (USA). Yield Spread Premium is a fee or commission paid by a lender to a mortgage loan originator (mortgage broker or retail bank) in exchange for a commitment by a borrower to pay a higher interest rate. A similar fee may be paid by a lender to induce a broker to introduce a borrower to a particular program, such as a loan for a term or rate that is more … [Read more...]

Appraisal Management Company | Dodd-Frank Wall Street Reform

Appraisal Management Company (AMC) An individual or business entity that performs appraisal management services, i.e. a person or entity that for a fee maintains and administers a list of appraisers and fulfills requests for appraisal services using the services of those appraisers An AMC selects and appoints the firm that will carry out valuation-related services, usually for a regulated institution, such as a bank or insurance company. “The term ‘appraisal management company’ means, in … [Read more...]

Risk Retention | Dodd-Frank Wall Street Reform Act

risk retention(US) The retention of a part of a risk, usually by ‘self-insurance’, of all or part of a potential business loss. As a rule, risk retention represents a contingent liability against which a company should set aside a reserve fund. In particular, a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. A “securitizer” of an asset-backed security (ABS) continues to accept part of the credit risk of any loss that might occur during the life of the … [Read more...]

Clog Equity of Redemption | Fetter on Mortgage Redemption

clog equity of redemption A fetter, restriction or impediment, especially such an impediment on the mortgagor’s equity of redemption. A stipulation or provision in a mortgage deed that prevents the mortgagor from recovering his property unencumbered, after repayment of all the monies due to the mortgagee or performance of all the obligations for which the property was given as security. A clog on the equity of redemption may arise, for example, “where the mortgagee will suddenly bestow … [Read more...]

Hypothèque | Mortgage in French law

hypothèque Hypothèque mortgage. "A mortgage is a real right [droit réel] over immovables [immeubles] encumbered for the performance of an obligation [obligation]”, C. Civ., art. 2114 (Quebec CC, art. 2660). A mortgage (i) “is, by nature, indivisible and exists as a whole over all the immovables encumbered, over each and every portion of the immovables.”; and (ii) provides a droit de suite whereby if the immovables are transferred, or otherwise alienated, the lender can follow them “into … [Read more...]

Real Estate Mortgage Investment Conduit | Mortgage Securitization

What is a REMIC? In the US, a Real Estate Mortgage Investment Conduit is: a form of mortgage-backed security that allows the income to be taxed only when received by the bond holder and not by the entity that holds the right to the mortgages. Under the provisions of the Tax Reform Act of 1986, any corporation, partnership, trust company or similar organization may elect for Real Estate Mortgage Investment (REMIC) status. In order to maintain this status, the real estate mortgage investment … [Read more...]

Zombie Business | Interest-only loan Sub-Prime Mortgage

A Zombie Business may have an interest-only loan that was granted as a sub-prime mortgage. A zombie business is one that is over leveraged so that the business is unable to pay its debt in full. In particular, a business that is only able to pay interest on its loans, but cannot repay any of the outstanding capital. A zombie business is unlikely to be able to deal with unexpected costs, lost orders or bad debts and certainly cannot fund working capital nor invest in growth. A similar … [Read more...]

Collateralized Mortgage Obligation (CMO) A Defined Explanation

A Collateralized Mortgage Obligation (CMO) is a form of securitization. Collateralized Mortgage Obligation Securitization is the packaging of a number of asset-backed loans or mortgages into tradeable securities. The conversion of a pool of investments or a number of loans into the right to a bond or security that is partially or wholly dependent on the income from the underlying investments or loans. The process of transferring certain receivables, such as consumer loans, mortgage loans, … [Read more...]

Clog on Equity of Redemption | Fetter on Redemption

A Clog on Equity of Redemption is a fetter, restriction or impediment, especially such an impediment on the mortgagor's equity of redemption. A stipulation or provision in a mortgage deed that prevents the mortgagor from recovering his property unencumbered. This may be after repayment of all the monies due to the mortgagee or performance of all the obligations for which the property was given as security. A position that may arise, for example, "where the mortgagee will suddenly bestow … [Read more...]

Mortgagee Power of Sale | Mortgagee right to sell property

Mortgagee Power of Sale: The mortgagee power of sale is the right to sell property, secured by a mortgage, upon default of the mortgagor. The power of a person who has a right to the proceeds of sale of property held as security for a debt to substitute money for property sold. In particular, the means by which a mortgagee exercises his power as contained in mortgage deed to sell the property pledged as security for the mortgage loan, without recourse to a court of law. In the US, the ‘power … [Read more...]