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GLOSSARY
Burnout
Burnout is a slowdown of mortgage prepayment activity on mortgages that are packaged into a mortgage-backed security (MBS). Mortgagors often prepay the mortgage debt, through refinancing, when interest rates go down. Such prepayment activity is bad for MBS investors, because it reduces future income potential. When an MBS has burnout, a percentage of the underlying mortgages were not prepaid when rates went down. Investors interpret this to mean that these mortgagors are less likely to refinance if rates drop again.
Business bankruptcy
A business bankruptcy is the legal declaration that a business or commercial entity is unable to repay its debts.
Business credit
Business credit is any form of debt instrument extended to a commercial entity.
Business finance companies
Business finance companies are lenders that specialize in providing credit to commercial entities.
Business interest expense
Business interest expense is the total of interest charges incurred by a commercial entity within a financial reporting period.
Bust-up takeover
A bust-up takeover is a corporate buyout financed primarily by debt, where the purchaser sells part of the assets of the acquired company to repay the debt.
Buy-down
It is the term used when the lender brings down the rate of interest on the fixed rate mortgage for a temporary period. For the balance period the borrower's payment is calculated at note rate. In order to facilitate this, a lump sum payment is made and kept in an account which helps to supplement the borrower's monthly payments. These funds are sourced out from the seller or elsewhere as an incentive to buy their property. When the initial sum is paid by the lender, it is called the 'lender funded buydown'. This is possible because the note rate on the loan, tafter taking into consideration all adjustments, is higher than the exisitng market rate. The reason for doing this is that it will help in getting the borrower to qualify for the start rate and thus for a higher loan amount. Also, the borrower maybe expecting his earnigns to increase considerably in the future but would prefer a lower payment right now.
Buy-down mortgage
A buydown mortgage is debt secured by real estate property that's structured with a cash payment upfront to reduce the monthly payment amount for a specified time period.
Buydown
Buydown is an upfront cash payment made to temporarily reduce a mortgage interest rate and monthly payment. A seller might fund a buydown as a means of enhancing the deal for the buyer, or to help a buyer qualify for mortgage financing.
Buyer broker
An agent who represents the buyer and keeps the buyer's interests and fiduciary obligations in the buyer's best interest.
Buyer's agent
An agent whose duty it is to get the best possible price and terms for the buyer. This person must disclose all the material facts about the property, good and bad. He or she will also disclose personal facts, if given permission from the seller that will indicate if the seller will accept a reduced price.
Buyer's market
A situation in the real estate market when sellers significantly outnumber buyers, driving prices down. This is historically a good time to buy your home. The conditions are constantly changing.
Buyer's remorse
A buyer's second thoughts after buying a house or other major purchase, a feeling of anxiety or being overwhelmed by the thought of another financial responsibility.
Bylaws
Bylaws are the rules adopted by a corporation that define the roles and responsibilities of shareholders, directors, and officers.