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Glossary of Terms N O P Q R S T U V W X Y Z A * Acceleration - The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause. * Automated Clearing House (ACH) - ACH (Automated Clearing House) processing occurs between a nationwide network of financial institutions that send electronic messages, via telecommunication lines instead of paper (checks), to transfer money between two parties. The most common ACH transactions are direct deposit, pre-authorized debits, cash concentration and corporate to corporate payments. * Adjustable Rate Loans- also known as variable-rate loans, usually offer a lower initial interest rate than fixed-rate loans. The interest rate fluctuates over the life of the loan based on market conditions, but the loan agreement generally sets maximum and minimum rates. When interest rates rise, generally so do your loan payments; and when interest rates fall, your monthly payments may be lowered * Adjustment interval - On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index. * Amortization - the process of repaying a loan that allows most of the payment at the beginning of the loan term to be applied to the interest on the loan, and most of the payment at the end of the loan term to be applied toward the principal. * Applet - A small program written in the Java programming language. * Appraisal - An estimate of the value of property, made by a qualified professional called an "appraiser". * APR (annual percentage rate) - A measure of the cost of credit that expresses the finance charge, which includes interest and may also include other charges, as a yearly rate. * APY (annual percentage yield) - the amount of interest earned on an account after one year. * ARM (adjustable rate mortgage) - Is a mortgage in which the interest rate is adjusted periodically based on a preselected index. Also sometimes known as the re-negotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage. * Assessment - A local tax levied against a property for a specific purpose, such as a sewer or street lights. * Assumption - The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost and new, probably higher, market-rate interest charges will apply. * Automated Teller Machine (ATM) - A machine that allows the customer to perform some of the more common teller transactions, such as cash withdrawals, deposits and transfers. ATMs are generally accessible 24 hours a day, 7 days a week. * Auto financing - Car buyers can get a wealth of information on the Internet from finding a car and comparing prices to financing by loan or lease. Consumers can now apply for loans online. Some lenders respond to completed applications in 15 minutes, while others take an hour or a day. Checks can often be delivered the day after approval. * Average daily balance - A method for calculating interest in which the balance owed each day by a customer is divided by the number of days. B * Balloon (payment) mortgage - Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract. * Bandwidth - The volume of data that can be transmitted on a particular media. It is measured in bits per second. Online bankers and online banking customers both seek the greatest possible bandwidth to increase the speed at which Web pages load. * Bill presentment - An online system that allows customers to receive and view the bill on a computer screen, and then pay the bill electronically. Users can pay their bills immediately and the money is transferred from the account. * Bit - The smallest piece of data that a computer system can use. Bits, which computers read as either 1 or 0, are the building blocks from which all programs are built. * Blanket Mortgage - A mortgage covering at least two pieces of real estate as security for the same mortgage. * Browser - A computer software program used for accessing and viewing Internet Web sites. * Byte - A series of eight bits that represent a specific character. C * Caps - Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan. * Cashier’s Check - A check drawn by a bank on itself, signed by a cashier or other authorized bank officer and payable to a third party named by the customer. Cashier’s checks are universally accepted. * Certificate of Deposit (CD) - A type of deposit account typically with a fixed minimum term and a minimum initial deposit; interest payments may be either fixed or variable. Generally, CDs offer a higher interest rate than other deposit accounts. * Check safekeeping - The process of microfilming customers' paid checks. The microfilm is the official record of the transaction and is retained by the financial institution. Canceled checks are stored rather than being returned to the customer. * CheckCard (Debit Card) - A plastic card with the Visa or MasterCard logo, designed to give a customer access to funds in his/her checking account to obtain cash, purchase goods and services, or transfer funds from one account to another. The cards are accepted around the world wherever you see the Visa or MasterCard logo. * Client-based - Customers use money management software and their own computers to access the bank using a modem and a phone line. * Closing - The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement. Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing usually are about 3 percent to 6 percent of the mortgage amount. * Closing Costs - costs associated with the loan that are paid when the loan process is complete and the loan documents are signed. These may include title insurance, appraisal fees, survey fees, attorney fees, loan discount points, and document preparation fees. Closing costs typically range from three to four percent of the sale price of the property. * Collection Float - The period between the time is deposited a check in an account and the time funds are made available. * Commitment - A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgages from a lender with specific terms or conditions. An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paper work or compliance with stated conditions. * Compounding Interest - Interest compounded daily" means that each day, interest is credited to the account balance. The account then earns interest on the balance plus the credited interest. The interest is added to the account monthly, quarterly and/or at maturity depending on the type of account. * Construction Loan - A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses. * Contract for Deed - a document that outlines the terms of a transaction between a buyer and seller. * Conventional Loan - A mortgage not insured by FHA or guaranteed by the VA. * Cookie - Some Web sites may track a user’s online activity with a "cookie." A cookie is simply a block of text that the Web site places in a file on the hard drive of the viewer's computer. Although a code in the cookie file enables the site to label a particular user, it does not identify the user’s name or address unless such information is provided automatically by the user's browser. * Credit card - A plastic card that can be used by the holder to make purchases or obtain cash advances using a line of credit made available by the card-issuing financial institution. * Credit card site - Major credit cards now offer Web sites where card holders may view transactions, email a customer service representative and pay bills online. * Credit Report - A report documenting the credit history and current status of a borrower's credit standing. * Cyberspace - A term used to describe the range of information resources available through computer networks such as the Internet. The term was coined by science fiction author William Gibson. D * Daily Compounding - A frequency of calculating interest whereby interest is added to the principal each day and then earns interest itself. * Daily Periodic Rate - The interest rate factor used to calculate interest charges on a daily basis. The factor is computed by dividing the yearly rate by 365 days. * Debt-to-Income Ratio - The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio. * Deed of Trust - In many states, this document is used in place of a mortgage to secure the payment of a note. * Delinquency - Failure to make payments on time. This can lead to foreclosure. * Digital wallet - Encryption software that conducts secure transactions online in a fashion that resembles using a physical wallet. * Direct Deposit - A pre-authorized system in which customers' government benefits or other payments are automatically deposited to their checking or savings accounts. Some types of Direct Deposit are social security, SSI, VA benefits, annuities, payroll checks and dividend checks. * Download - The method used to transfer or "pull down" a file of data from one computer to another, usually via a modem. E * Education IRA - An investment tool created for the purpose of paying for the future cost of a child's post-secondary education. Contributions and their earnings are tax free when withdrawn to pay for qualifying education expenses. * Electronic banking - See online banking. * Electronic bill payment - A method for receiving and paying a bill with personal finance manager software provided by the bank. * Electronic bill presentment, or e-billing - See bill presentment. * Electronic cash, or e-cash - A system used to transfer cash over the Internet to pay for goods and service. * Electronic commerce, or e-commerce - A system used to conduct business transactions of buying and selling goods and services over a computer network. * Electronic Communications Privacy Act - A law that prohibits "intentional interception, use and disclosure of electronic communications" but makes exceptions for law enforcement agencies, including the IRS. * Electronic mail, or email - Messages that are sent from one person’s computer to another’s via the Internet. Files can be attached to the email message for downloading by the recipient of the message. * Encryption - A method for ensuring the privacy and security of a consumer’s personal finance information at a bank or financial institution Web site. Encryption is the process of scrambling data so that only the intended receiver can use it. To be effective, encryption needs to be used by both the sender and the receiver. Consumers should make sure it is being used when sending sensitive information. See also key. * Equal Credit Opportunity Act (ECOA) - Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs. * Equity - The difference between the fair market value and current indebtedness, also referred to as the owner's interest. The value an owner has in real estate over and above the obligation against the property. * Escrow - An account held by the lender into which the home buyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing. F * FAIRWINDS University - Our ongoing effort to better educate credit union members on all things financial. From wizards, articles, and seminars, our goal is to give members access to a wide variety of resources so they can make informed decisions about their financial futures. Visit the FAIRWINDS University now. * FAQ or Frequently Asked Questions - The section of a Web site where the bank or financial institution posts answers to consumers' most commonly asked questions about the banking services. * Farmers Home Administration (FmHA) - Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere. * Federal Home Loan Bank Board (FHLBB) - The former name for the regulatory and supervisory agency for federally chartered savings institutions. Agency is now called the Office of Thrift Supervision. * Federal Home Loan Mortgage Corporation(FHLMC) - also called "Freddie Mac". Is a quasi-governmental agency that purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers. * Federal Housing Administration (FHA) - A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages. * Federal National Mortgage Association (FNMA) - also know as "Fannie Mae". A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable. * FDIC Insured - Deposit insurance by the Federal Deposit Insurance Corporation (deposit insurance offered by the federal government) for up to $250,000.00 per account. * Fees - Online banking fees vary widely. Some charge separate fees for online banking and online bill payment, others combine the fees. Sometimes the fees are waived for customers who make direct deposit of paychecks or maintain a large minimum balance. Many offer a free trial period. * Fee Simple - An absolute fee. A fee without limitations to any particular class of heirs or restrictions, but subject to restrictions of sovereign; an inheritable estate. * Firewall - A means of protecting a computer system from unauthorized outside use. * Fixed Interest Rate - (loans) the borrower pays the same interest rate for the life of the loan. (deposits) the interest rate does not change for the full term of the deposit or loan product. * Foreclosure - A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property. G * Grace Period - A time period within which a depositor can withdraw funds from a certificate without penalty. * Graphical User Interface, or GUI - Graphical user interface, pronounced "gooey." It uses graphical icons to represent options that are available to computer users. Using a mouse to double-click on a picture and start a program is an example of GUI in action. H * Hacker - Someone with expertise in computer systems and how to enter them in an unauthorized fashion. Hackers may be simply curious or malicious in intent. * Hazard Insurance - A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like. * Home Equity Loans/Lines of Credit - loans that use the borrower's equity in their home as collateral for the loan. * HTML - Stands for hypertext markup language, the programming language used to create web sites; HTML creates hypertext documents. * HTTP - Stands for hypertext transfer protocol, the protocol used for moving hypertext files over the Internet. * HTTPS - By Web convention, pages whose URL begins with https instead of http are encrypted pages offered on a site that employs secure sockets layer. Also see encryption. * Hypertext - A way of presenting information in which text, sounds, images and actions are joined by links together in a way that allows the user to go from one page to another in any order. * Hyperlink - See link. I * Individual Retirement Accounts - Two types to choose from for eligible individuals, the Traditional IRA and the Roth IRA. * Internet - A global network of interconnected computer networks that can be accessed by computer users worldwide. * Internet Bank - A bank that exists only on the Internet without any "brick-and-mortar" branches. By eliminating the overhead costs of structures, Internet banks consistently offer interest rates, including money market yields, that are higher than the national average. Also known as a virtual bank. * Internet Banking - See online banking. * Internet security - To check if security is operating at a Web site, check for the browser security icon. Internet Explorer shows a closed padlock icon, and Netscape Navigator shows a key icon. Also see security. * Internet Service Provider (ISP) - A company that provides access to the Internet for a fee, most often via phone lines. Some provide access via cable lines. * Intranet- A private network, like the Internet, that is for use only by selected users, usually set up for internal use by employees of a single company. * IRA- Individual Retirement Account. J * Java - A general-purpose programming language whose small applications, called applets, can be downloaded from a Web site and run on computers with Java-compatible browsers, such as the newer versions of Netscape Navigator or Microsoft Internet Explorer. Java applications add motion and interactivity to Web sites. * Javascript - A scripting language that has many of the features of Java, but is chiefly designed to work with HTML pages. It is used to add interactivity and fancy design elements to pages. K * Key - A password needed to decipher encrypted data. Also see security and encryption. * Kilobyte - 1,024 bytes. L * Leasehold - A property held under tenure of lease. The right of use and occupancy of real property by virtue of a lease agreement. The right of a lessee to use and enjoy real estate for a stated term and upon certain conditions, such as the payment of rent. * Lien - A claim upon a piece of property for the payment or satisfaction of a debt or obligation. * Link - Refers to any highlighted words or phrases in a hypertext document that allow the user to click through to another section of the same document or to another document on the World Wide Web. Also known as a hyperlink. * Loan-to-Value Ratio - The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. * Log in - The procedure by which a customer "enters" an online financial institution. When logging in, customers enter their passwords to gain access to a secure area of the institution's Web site, where they can view their financial records and take action, such as online bill payment. * Loss of float - For Internet bill payments, the customer often loses use of the money as soon as the bill is paid. With paper checks, there is often a lag of one or more days, or float, between the time a check is written and when the recipient deposits it. These days, most Internet bill-paying software programs allow consumers more precise control over when the bill is to be paid by allowing a user to make out the payment today, but dictating that the money be dispensed on a future date. * LOWDOC - The LOWDOC program is no longer available. It was an SBA program that had quicker response of the loan decision (SBA had to render a decision within 36 hours), but there were limitations. The maximum loan amount was no more than $150,000, the purpose of the loan was to start or grow a business; the existing business employed no more than 100 people, had average annual sales for the preceding three years not exceeding $5 million, and the business included affiliates. M * Margin - The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate. * Maturity - the date that the term on a deposit product ends. For example, the maturity date on a six-month CD would be six months from the date the CD is opened and the funds are deposited. * MMA - Money Market Account * Modem - An acronym for modulator-demodulator, it's a device that allows remote computers to communicate, transmit and receive data using telephone lines. * Mortgage Insurance - Money paid to insure the mortgage when the down payment is less than 20 percent. N * Navigate - A term used to describe moving around a Web site and looking at the various pages. * NCUA Insured - All deposit accounts offered by Fairwinds CU are insured by the National Credit Union Administration (deposit insurance offered by the federal government) for up to $250,000.00 per account. * Network - A connection of two or more computers that can share resources. O * Online banking - Online systems allow customers to plug into a host of banking services from a personal computer by connecting with the bank’s computers over telephone lines. * Online bill payment - A service offered by online banks, usually for a small monthly fee, that relieves consumers from having to write checks and lick stamps to pay their monthly bills. Online bill payment systems allow people to enter the names of their creditors and the numbers of their utility accounts and pay virtually all routine bills. * Online mortgage - Online mortgage offerings may seem familiar because most companies have stuck to traditional industry methods even as they ventured onto the Internet. Some direct lenders take online applications in much the same way they take applications at their bank branches. Other businesses operate like online brokers and have wholesale agreements with many lenders. Then there are the sites that allow people to auction off their lending business to the highest -- or technically, lowest -- bidder. * Origination Fee - The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan. * Overages - are the difference between the lowest available price and any higher price that the home buyer agrees to pay for the loan. Loan officers and brokers are often allowed to keep some or all of this difference as extra compensation * Overdraft Protection - A service that allows the customer to write checks for an amount over and above the amount in their checking account. Funds are transferred from their line of credit or other designated account to their checking account as needed. P * PC banking - Personal Computer banking. See online banking. * Personal finance manager - Specialized computer programs that help customers carry out a variety of personal finance activities. These programs typically allow consumers to do much of their work off-line, then dial in to complete their bank transactions. * Personal Identification Number (PIN) - A secret number or code used by the account holder to authorize a transaction or obtain information regarding his or her account. Often used in conjunction with a plastic card or with a telephone voice response system. * Points - additional money paid at closing to the lender in return for a lower interest rate. * Power of Attorney - A legal document authorizing one person to act on behalf of another. * Prepayment Penalty - Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states. * Principal - the amount borrowed or remaining unpaid on a loan. * Privacy - These are important to look for when visiting a Web site. They appear in various locations. Look for a privacy policy under "Privacy," "About Us" or company information sections of the site, or under a privacy icon. Some companies don't label their information practices specifically but make a statement such as "no information is being collected on this Web site." That counts as a privacy policy. If a privacy policy can’t be found, send an email message to the site Webmaster to ask about its policy. * Private Mortgage Insurance (PMI) - In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on you loan's structure. * Protocol - An agreed-upon convention for transferring data between computers. Q R * Recording Fees- Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records. * Refinance- Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property. * Regulation D- Regulation D (Reg-D) is defined as a transaction that is done without a member present at a branch or ATM location. This regulation limits you to six Reg-D transactions per month from each share savings account including your main share, money market, vacation and Christmas accounts.
* RESPA - Short for the Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only. * Rollover IRA - A type of IRA that allows employees who receive a lump-sum distribution upon leaving an employer, or upon termination of an employer's qualified retirement plan, to deposit all or any portion of the funds in an IRA. The portion of eligible distribution that is put into such an account enjoys the same tax-deferral status as a regular IRA. * Roth IRA - Contributions are not deductible but distributions can generally be withdrawn tax free. S * SBA (Small Business Administration) - a government agency that guarantees loans for small, independently owned businesses. * SBA (Small Business Administration) 7A Loan Program- 7(a) loans are the most basic and most used type loan of SBA's business loan programs. Its name comes from section 7(a) of the Small Business Act, which authorizes the Agency to provide business loans to American small businesses. The 7A program serves as the SBA’s primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels. It is also the agency’s most flexible business loan program, since financing under this program can be guaranteed for a variety of general business purposes. * Second Mortgage - A mortgage made subsequent to another mortgage and subordinate to the first one. * Security - Web browsers can be set to create a signal if a user is about to take an action that poses a security risk. For example, if a credit card number is about to be sent to an insecure site, Netscape Navigator and Internet Explorer will send a warning that the site is not secure. If the site claims to be secure but its security credentials are suspect, both browsers can send warnings that the site might have been tampered with or might be misrepresenting itself. * SSL - Short for secure sockets layer, SSL is a protocol designed to increase security on the Internet by allowing encrypted files to be transferred from computer to computer. It works by using a private key to code data that's sent over a SSL connection. See also HTTPS and encryption. * Servicing - All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like. * SIMPLE IRA - Savings Incentive Match Plan for Employees of small employers. This Retirement Plan is simple to administer and offers contribution options that are both flexible and substantial; generally available to both for-profit and not-for-profit employers having no more than 100 employees. * Simplified Employee Pension Plan - A plan by an employer to make contributions toward an employee's retirement income. The employer makes contributions, up to the annual contribution limits, directly to an IRA set up by an employee with a qualified financial institution. T * Tax Identification Number (TIN) - The number used to identify an individual or entity for federal income tax purposes. * TCP/IP - Stands for Transmission Control Protocol/Internet Protocol. It's the protocol that defines the way information is sent over the Internet. * Thrift institution - is a general term for savings banks and savings and loan associations. * Tiered Interest Rate - An interest rate structure in which the entire account balance earns a higher rate once it reaches the designated level. * Title - A document that gives evidence of an individual's ownership of property. * Title Insurance - A policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests. * Title Search - An examination of municipal records to determine the legal ownership of property. Usually is performed by a title company. * Traditional IRA - Contributions may be partially or fully deductible, but distributions are generally taxable. * Truth-In-Lending - A federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z. U * Underwriting - the process of reviewing information about the borrower and making decisions about a loan. * URL - Stands for uniform resource locator. Term used for the address of a Web site, for example, www.fairwinds.org * Usage data - Data about where an individual goes and how much time is spent at a specific site. This is particularly useful for advertisers, whose payments are based on how many times the Web page containing their advertisement is viewed. Also, online services such as America Online must track a user’s sign-on and sign-off times for billing purposes. V * Virtual bank - See Internet bank. W * Webmaster - The person who is in charge of administering a Web site. Usually the Webmaster is the one designated to handle any questions or complaints users may have about a company’s Web site. * Wire Transfer - An electronic transfer of funds from one financial institution to another. * World Wide Web, or www - The global, interconnected collection of hypertext pages that also contain embedded images and links to other pages -- like a web. The pages are accessed by servers over the Internet. X Y * Y2K - Year 2000 computer problem. All federally insured financial institutions are required to have Y2K customer awareness programs. In addition, an FDIC report entitled "The Year 2000, Your Bank and You" and a Year 2000 "statement stuffer" are being made available to banks so they can pass them on to customers. Many banks also have Y2K information on their Web sites and some are making information available through toll-free hot lines. Z |
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Federally Insured By The NCUA | About FAIRWINDS | Privacy, Security & Legal |
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