Glossary of Debt Related Terms

Debit Card (EFT Card)

A plastic card, looks similar to a credit card, that consumers may use to make purchases, withdrawals, or other types of electronic fund transfers.

Declaration Of Trust

A written acknowledgement by one holding legal title to property that the property is held in trust for the benefit of another.

Declining Balance Method Of Depreciation

Depreciation by a fixed annual percentage of the balance after deducting each yearly depreciation amount.

Deed

A formal written instrument by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the purchaser at closing day. There are two parties to a deed: the grantor and the grantee. (See also deed of trust.

Deed of Trust

In many states, this document is used in place of a mortgage to secure the payment of a note.

Default

Failure to repay a loan or otherwise meet the terms of your credit agreement.

Deferred Interest

Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of deffering your interest is that the buyer ends up owing more than the original amount of the loan. Also called Negative Amortization.

Deficiency Judgment

Commonly the amount for which the borrower is personally liable on a note and mortgage if the foreclosure sale does not bring enough to cover the debt. Actually the judgment is for the total amount and not for the deficiency, the recovery from the foreclosure sale being deducted from this amount.

Delinquency

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

Delivery

In conveyancing, the placing of the property in the actual or constructive possession of the grantee. Usually accomplished by delivery of a deed to the buyer, or by recording said deed.

Demand

The lender's statement of the amount due to pay of a loan.

Demand Note

A note having no date for repayment, but due on demand of the lender.

Deposit

(1) Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money. (2) A natural accumulation of resources (oil, gold, etc.) which may be commercially recovered and marketed.

Depreciation

(1) Decrease in value to real property improve-ments caused by deterioration or obsolescence. (2) A loss in value as an accounting procedure to use as a deduction for income tax purposes.

Direct Reduction Mortgage

An amortized mortgage. One on which principal and interest payments are paid at the same time (usually monthly) with interest being computed on the remaining balance.

Disclosures

Information that must be given to consumers about their financial dealings.

Discount Points

The fee associated with the note rate for your loan, the more discount points you pay the lower the rate you can buy, the fewer you pay, the higher your rate. If the rate is high enough, the loan is priced above par and these premium points are available to pay closing costs creating a no or low fee loan.

Disposition of Real Estate Statement

A statement that the buyer will occupy the property being purchased even though the buyer owns other property. The buyer states that the other property will be sold or rented. Particulars must be given as to any loan on the property and the equity or rent to payment amounts.

Documentary Transfer Tax

The tax, based on sales price, less loans which are being assumed, which is charged by the city and/or county on the transfer of real property.

Double Declining Balance Method Of Depreciation

A use of the declining balance method, but with double the depreciation allowable by straight line. An accelerated method.

Double Escrow

Two concurrent escrows on the same property, having the same party as buyer and seller of the property. Example: Escrow 1 -A buys from B. Escrow 2 -A sells the same property to C. A is using C's money to buy B's property. The process is illegal in many states unless full disclosure is made.

Dual Agency

The representation of opposing principals (buyer and seller) at the same time. In brokerage many states get around this by saying that the agent aids the buyer but is the agent of the seller only. A problem arises if both buyer and seller pay the broker, Then full disclosure must be made. An escrow agent is the agent of buyer and seller and usually paid by both. This is why an escrow agent must be neutral.

Due on-Sale-Clause

A clause in a mortgage loan which gives the lender the right to demand payment in full when the property changes ownership. Not applicable to FHA or VA loans.