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GLOSSARY
Deed of release
A deed of release is legal documentation that a claim on a property has been removed. Once a mortgage debt is completely satisfied, either through regular payments or refinance, a deed of release is issued to indicate that the lender no longer holds a security interest in that property.
Deed of trust
In some states a deed is used instead of a mortgage to secure payment and the title is conveyed to a trustee.
Deed-in-lieu
This is the title given to the lender when the borrower wants to avoid foreclosure due to default of loan. The lender retains the right to stop the foreclosure activities if the borrower asks to provide for this document. In such a case the deed-in-lieu will preclude the inclusion of documents related to the foreclosure from appearing in the credit hisotry of the borrower and being a matter of public record. However, irrespective of whether the lender accepts the deed-in-lieu or not, the non-repayment of debt will show on the credit history of the borrower.
Deeds
Deeds are legal documents that confer some privilege, such as property ownership, on the holder. A deed for a vehicle, for example, gives the holder the right to possess and use that vehicle. Deeds are most commonly associated with real estate property ownership.
Default
When the borrower fails to meet the promise of monthly mortgage repayment as per the legally binding contract within a specified time it is known as default.
Default premium
Default premium is the extra charge that a bad credit borrower must pay for borrowed funds. Financial institutions charge higher rates when lending money to individuals and corporate debtors with poor credit histories, because these borrowers present a higher risk of default.
Default probability
Default probability is a value representing the chances that a borrower will violate the terms of a loan contract. If a borrower fails to make payments as specified in the loan documentation, that borrower is said to be in default. Lenders use default probability as one factor in approving and setting terms for loan requests.
Default risk
Default risk describes the likelihood that a borrower will fail to make debt repayments as promised, or fail to meet other covenants of a loan agreement. Lenders assess a borrower's default risk when deciding whether to make a loan offer and what the terms of the offer should be.
Deferment
A postponement of loan repayment, often allowed by the lender during the duration of a student's education and for certain post-college programs such as the Peace Corps. Students may also request a deferment post graduation in times of financial hardship; this can change the terms of loan, however.
Deferred account
A deferred account is a savings vehicle, such as an IRA, that postpones income tax liabilities until some future date. In regular IRAs, for example, earnings are not taxed until funds are withdrawn.
Deferred annuity
A deferred annuity is a savings program that postpones income payments and income tax liability until some future date. The annuity is structured with a savings phase, during which the accountholder makes contributions, and an income phase, during which the saved funds are paid out in installments.
Deferred compensation
Deferred compensation is the portion of an employee's income that's set aside for use at some future date. Most commonly, the deferred compensation is funneled into a retirement account or pension plan. Income tax on these funds is usually postponed until the money is accessed by the employee.
Deferred Interest
A deferred interest loan is when a loan payment stays the same while the interest rate increases. A deferred interest loan will let you choose to pay only the minimum payment--a payment less than the entire interest owed for that month. The unpaid interest is then added to your loan amount to be paid at a later date.
Deferred payment
Deferred payment is a form of short-term credit, where an amount due is to be paid back at some future date.
Deferred Profit Sharing Plan - DPSP
A Deferred Profit Sharing Plan, or DPSP, is a profit-sharing and pension arrangement available in Canada. Qualified DPSPs are registered with the Canada Revenue Agency and sponsored by employers. The employer deposits a portion of profits into the plan, and employees are not liable for income taxes until funds are withdrawn.