Glossary of Terms

Purpose: Defines key terms, acronyms, and concepts used throughout the mortgage lending platform and company-wide documentation.

Audience: All employees, stakeholders, and documentation readers.

Scope: Business terminology, underwriting concepts, platform-specific terms, and common acronyms. Does not include technical implementation terms or vendor-specific jargon.

How to Use This Glossary

• First-time readers: Review this glossary before reading other Tier A documents
• Document writers: Always use these definitions consistently across all documentation
• Confused by a term?: Search this document (Ctrl+F or Cmd+F)

Alphabetical Terms

A

Adverse Action
A delayed disqualification decision where the borrower is shown a 60-second countdown before their session ends and application is denied. Adverse actions trigger required regulatory notices to explain the denial reason. Typically used for credit-related knockouts that require disclosure under fair lending laws.

Application
The full loan application process that follows Pre-Qualification. Borrowers complete 7 core steps covering personal information, property details, employment history, income verification, demographics, and declarations. This stage collects detailed information required for loan underwriting.

Application Status
The current stage of a borrower's application journey. Examples: prequalified, application, applicationSubmitted, processing, approved, funded, adversed. Used to track progress and determine which pages a borrower can access.

AUS (Automated Underwriting System)
A rules engine that automatically evaluates loan applications against eligibility criteria. AUS rules check credit scores, property types, debt ratios, and other factors to determine if an application qualifies. Rules can be configured by administrators and may result in automatic approval, manual review, knockout, or adverse action.

AVM (Automated Valuation Model)
A third-party service that estimates property value using public records, recent sales data, and property characteristics. AVMs provide quick valuations without requiring a full appraisal. Used during Pre-Qualification to assess Loan-to-Value ratios.

B

Bank Statement Analysis
A process where borrowers connect their bank accounts to verify income through transaction history. Particularly useful for self-employed borrowers or those with non-traditional income sources. Analyzes deposits, withdrawals, and patterns to calculate qualifying income.

Borrower
The person applying for a loan through the platform. May be an individual, couple (with co-borrower), trust, or LLC depending on the loan program. Also refers to the user account in the borrower-facing application portal.

Broker Partner
A mortgage broker company that partners with the lender to originate loans. Brokers have their own Loan Officers who use the platform's portal to manage their borrowers. Brokers may have multiple branches (subsidiaries).

Building Type
The category of residential property: Single Family, Multi-Unit (2-4 units), Townhouse, Condominium, or Manufactured Home. Building type affects eligibility, pricing, and underwriting requirements.

C

CLTV (Combined Loan-to-Value)
The ratio of all loans secured by a property to its value. Formula: (Existing Mortgage Balance + New Loan Amount) / Property Value × 100. Example: A property worth $500K with a $200K existing mortgage and $150K new loan has 70% CLTV.
See also: LTV

Co-Borrower (also Coborrower)
A second applicant who applies for the loan jointly with the primary borrower. Typically a spouse or domestic partner. Co-borrowers complete parallel application steps, have their credit pulled, and their income/debts are considered in qualification. Increases borrowing capacity by combining incomes.
Avoid confusion with: Guarantor (who is liable but not an owner)

Condition (Loan Condition)
A requirement that must be satisfied before loan approval or closing. Examples: "Upload 2 months of bank statements," "Explain 60-day late payment from 2023," "Provide proof of homeowners insurance." Conditions may be borrower-facing (visible to applicant) or internal (admin-only).

Credit Check (Soft Pull)
A credit inquiry that does not impact the borrower's credit score. Used during Pre-Qualification to obtain credit scores, payment history, and debt information. Provides enough detail to generate loan offers without the hard inquiry required for final underwriting.
Avoid confusion with: Hard Pull (used in full underwriting, impacts credit score)

Credit Score
A numerical representation of creditworthiness (typically 300-850). The platform uses tri-merge credit reports (Experian, Equifax, TransUnion). When multiple scores exist, the representative score is determined by: 3 scores → middle score; 2 scores → lower score; 1 score → not eligible.
Note: Platform typically requires minimum 640-680 depending on program

D

Debt-to-Income Ratio (DTI)
The percentage of a borrower's monthly gross income that goes toward debt payments. Formula: (Total Monthly Debt Payments / Gross Monthly Income) × 100. Platform maximum is typically 50%. Includes mortgage, car loans, credit cards, student loans, alimony, and child support.

Disbursement
The distribution of loan funds at closing. Borrowers specify how funds should be allocated: paying off existing mortgages, consolidating debts, receiving cash out, or funding improvements. Configured in the final application stage.

Document Upload
The process where borrowers or loan officers upload required files such as paystubs, W-2s, tax returns, bank statements, IDs, or insurance documents. Documents are reviewed and approved by processors or underwriters.

E

Employment Verification
Confirmation that a borrower is employed and earning the reported income. May be automated through third-party services or manual through paystubs and employer contact. Required for all borrowers unless using alternative documentation (bank statements, tax returns).

F

FBM (First Borrower Mortgage) - TODO
Definition pending SME clarification - appears to relate to credit history events

Foreclosure
Legal process where a lender takes possession of a property due to borrower default. Recent foreclosures (typically within 4-7 years) disqualify applications. Detected automatically through credit reports and AUS rules.

H

Hard Credit Pull
A credit inquiry that impacts the borrower's credit score. Used in final underwriting after Pre-Qualification. Provides detailed credit report including full tradeline history, public records, and inquiries.
Avoid confusion with: Soft Pull (does not impact score, used in Pre-Qualification)

HELOC (Home Equity Line of Credit)
A revolving line of credit secured by home equity. Borrowers can draw funds as needed up to the credit limit. Platform may offer HELOC products depending on configuration.
Avoid confusion with: Cash-Out Refinance (lump sum, not revolving)

HOA (Homeowners Association)
An organization that manages a residential community (condos, townhomes, planned developments). Charges monthly fees for maintenance and amenities. HOA fees are included in debt-to-income calculations.

HMDA (Home Mortgage Disclosure Act)
Federal law requiring collection of demographic data (ethnicity, race, gender) for fair lending compliance. Collected in Application Step 6 (Demographics). Borrowers may decline to provide this information.

I

Income Verification
Confirmation of borrower income through paystubs, tax returns, bank deposits, or third-party services. Methods include: automated payroll connections, bank statement analysis, IRS tax transcripts, or manual document upload. Required for underwriting approval.

Invite (Borrower Invitation)
A process where loan officers send borrowers a secure link to begin Pre-Qualification. Includes pre-filled information (name, email, phone) and automatically assigns the loan officer. Creates a unique invitation code tracked in the system.

Investment Property
A property purchased to generate rental income or appreciation, not occupied by the owner. Requires different underwriting criteria than primary residences. Rental income may be used for qualification.

K

Knockout
An immediate disqualification decision during Pre-Qualification or Application. When a knockout occurs, the borrower sees a modal dialog explaining they cannot proceed, and their session is blocked at that step. Common knockout reasons: insufficient credit score, ineligible property type, recent bankruptcy/foreclosure.
Avoid confusion with: Adverse Action (delayed disqualification with countdown)

L

Lien
A legal claim against a property by a creditor. First lien (primary mortgage) has priority; second liens (HELOCs, second mortgages) are subordinate. Platform limits the number of liens that can be paid off (typically ≤2).

Loan Officer (LO)
A licensed professional who originates loans. Loan Officers use the portal to manage borrowers, create quotes, review applications, communicate with applicants, and submit loans to underwriting. May be retail (employed by lender) or wholesale (working for broker partner).

Loan-to-Value (LTV)
The ratio of the loan amount to the property's appraised value. Formula: (Loan Amount / Property Value) × 100. Example: A $150K loan on a $500K property is 30% LTV. Lower LTVs typically receive better rates.
See also: CLTV

LOS (Loan Origination System)
External software used by lenders to manage the full loan lifecycle. Platform integrates with LOS systems to export application data. Examples: Byte, Encompass, LendingPad. Integration is configurable per lender.

M

Manual Review
An AUS rule outcome that requires underwriter evaluation but does not automatically disqualify the borrower. Creates a pending task for the underwriter to review supporting documentation or explanations. Borrowers can usually continue the application while manual reviews are pending.

Multi-Unit Property
A residential property with 2-4 dwelling units (duplex, triplex, quadplex). Owner may live in one unit and rent the others. Rental income from other units may qualify for the loan. Requires different underwriting than single-family homes.
Note: Properties with 5+ units are typically commercial and not supported by residential programs

N

NMLS (Nationwide Multistate Licensing System)
A unique identifier assigned to licensed Loan Officers. Required for regulatory compliance. Loan Officers must provide their NMLS number when creating portal accounts.

O

Offer Preview
The final Pre-Qualification step where borrowers see loan terms including interest rate, monthly payment, loan amount, and fees. Borrowers select an origination fee option (discount points) and accept an offer to proceed to the full Application.

OTP (One-Time Password)
A six-digit security code sent via SMS for account verification. Required during login for enhanced security. OTP codes expire after a short period (typically 10 minutes).

Origination Fee
The fee charged by the lender to process and originate the loan. May be expressed as discount points (percentage of loan amount). Borrowers select origination fee level during Offer Preview, with trade-offs between upfront costs and interest rate.

P

Portal
The administrative interface used by Loan Officers, processors, branch managers, admins, and underwriters to manage borrowers, review applications, configure settings, and perform underwriting tasks. Separate from the borrower-facing application interface.

Pre-Qualification (Prequal)
The initial loan application phase where borrowers provide basic information to receive preliminary loan offers. Includes approximately 12-15 steps covering property details, credit check, mortgage/debt information, and offer selection. Faster and less detailed than the full Application.
Avoid confusion with: Pre-Approval (more rigorous, may require full documentation)

Primary Residence
A property where the borrower lives for the majority of the year. Receives the most favorable underwriting terms compared to second homes or investment properties. Borrowers must intend to occupy within 60 days of closing.

Processor
A portal user role responsible for assisting Loan Officers with administrative tasks: uploading documents, completing conditions, communicating with borrowers, and preparing files for underwriting. Typically assigned specific borrowers.

Q

Quote
A record representing a borrower's loan application and the system's assessment of their eligibility. Created during Pre-Qualification, contains all borrower data, property information, credit results, and offered loan terms. Tracked through all stages until funded or closed.

R

Retail vs Wholesale

• Retail: Loans originated directly by the lender's employed Loan Officers
• Wholesale: Loans originated by broker partner Loan Officers, then submitted to the lender for underwriting and funding
  Note: Platform supports both channels with different workflows

S

Seasoning Requirement
A waiting period after certain events before a borrower qualifies. Example: Properties purchased or refinanced in the last 6 months (non-primary residence) must "season" before cash-out refinancing. Prevents immediate equity extraction.

Second Home
A property owned by the borrower and used occasionally (vacation home), but not the primary residence. Subject to stricter requirements than primary residences: typically single-unit, owner-occupied part-time, not rented.
Avoid confusion with: Investment Property (rented for income)

Self-Employed
A borrower who owns a business (>25% ownership) or works as an independent contractor. Requires different income verification: tax returns, profit & loss statements, business bank statements rather than W-2s and paystubs.

Soft Pull
See: Credit Check (Soft Pull)

Status
See: Application Status

Subject Property
The specific property securing the loan. Distinguished from other properties the borrower may own (real estate owned). All underwriting decisions center on the subject property's value, condition, and eligibility.

T

Tradeline
A credit account listed on a credit report. Includes mortgages, auto loans, credit cards, student loans, and personal loans. Each tradeline shows payment history, balance, and account status. Analyzed by AUS rules for late payments, collections, and charge-offs.

Tri-Merge Credit Report
A credit report combining data from all three major bureaus: Experian, Equifax, and TransUnion. Provides a comprehensive view of credit history. Representative credit score calculated from the three bureau scores.

U

Underwriter
A professional who reviews loan applications to determine risk and approve/deny loans. Underwriters evaluate AUS rule results, review documentation, verify eligibility, impose conditions, and make final credit decisions. Can manually override AUS rule outcomes with justification.

Units (Number of Units)
The count of separate dwelling units in a multi-unit property. Platform typically supports 2, 3, or 4 units. Single-family homes are considered 1 unit (but selected as "Single Family" building type, not multi-unit).

W

W-2 Employee
A borrower employed by a company and receiving a W-2 tax form. Income verified through paystubs, W-2s, and employer confirmation. Easier to verify income than self-employed borrowers.
Avoid confusion with: Self-Employed (1099 contractors, business owners)

Acronyms Quick Reference

Common Synonyms and Variations

Be consistent! Use the preferred term shown in bold.

Avoid Confusion: Similar Terms

Pre-Qualification vs. Application

• Pre-Qualification: Quick initial process (12-15 steps, soft credit pull) → Results in loan offer
• Application: Detailed process (7 core steps, full documentation) → Results in loan approval

Knockout vs. Adverse Action

• Knockout: Immediate disqualification, user blocked at current step
• Adverse Action: 60-second countdown, regulatory notice required, session ends

LTV vs. CLTV

• LTV: New loan amount ÷ property value (single loan)
• CLTV: All loans combined ÷ property value (considers existing mortgages)

Primary Residence vs. Second Home vs. Investment Property

• Primary Residence: Borrower's main home (best terms)
• Second Home: Occasional use, not rented (moderate terms)
• Investment Property: Rented for income (stricter terms)

Retail vs. Wholesale Channels

• Retail: Lender's own Loan Officers
• Wholesale: Broker partner Loan Officers submitting to lender

Soft Pull vs. Hard Pull

• Soft Pull: No credit score impact, used in Pre-Qualification
• Hard Pull: Impacts credit score, used in final underwriting