Mortgage Glossary - D

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D.R. / Debt Ratio - The customer's monthly obligations divided by their monthly gross income. See also Back End.

Deed - Legal document which conveys the title to a property.

Deed of Trust - A document used which pledges real property to secure a debt. In some cases a deed of trust can replace a mortgage.

Default - Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

Deferred Interest - See Negative Amortization.

Delinquency - Failure to make payments on time. This can lead to foreclosure.

Department of Veterans Affairs - An independent agency of the federal government which guarantees long-term, low- or no-down payment mortgages to eligible veterans. (VA)

Derog Letter - A letter written by the borrower giving an explanation for any derogatory credit.

Derog - This is short for derogatory and refers to negative credit items.

Discharge - Following a completed bankruptcy proceeding, discharged debts are no longer owed or collectable. We will require copies of the discharge papers on any prior bankruptcy filings.

Discount Points - Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100,000 mortgage would cost $2,000).

Dismissal - If a bankruptcy is dropped without being completed, a Bankruptcy Dismissal document will be needed to proceed with the loan. Either the court or the debtor can prompt the dismissal.

Down Payment - Money paid to make up the difference between the purchase price and mortgage amount. Down payments usually are 10 percent to 20 percent of the sales price on Conventional loans, and no money down up to 5 percent on FHA and VA loans.

Due-On-Sale - Clause A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.