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GLOSSARY
Service charge
Service charge is a generic term for a fee charged to a customer. Service charges are usually associated with a violation of account terms, such as allowing an account balance to drop below a specified minimum.
Service contract
A contract that covers certain car repairs or problems after the manufacturer's or dealer's warranty expires. These warranties are sold by car manufacturers, dealers and independent companies.
Servicer
An organization or company that collects monthly mortgage principal and interest payments from homeowners and manages escrow accounts. This company will also handle the collection of funds and the payment for your property taxes when they are due.
Servicing
Servicing loans include collecting monthly payments, keeping records of loan progress, assuring payments of taxes and insurance etc.
Servicing strip
Servicing strip is a security that's backed by mortgage servicing fees. Theoretically, mortgage servicing fees are a long-term stream of cash flows. As such, the securities backed by these fees trade on the secondary market, similar to the way in which mortgage-backed securities trade.
Settle
Settle is to resolve. In financing, to settle is to pay off a loan obligation. In legal matters, to settle is to come to an agreement on a dispute. In investing, to settle is to finalize the processing of purchase transaction transfers.
Settlement cost (HUD guide)
A book given to consumers after completing a loan application that provides an overview of the lending process.
Settlement sheet
Settlement sheet is a statement that lists the distribution of funds associated with the closing of a real estate transaction. Items on the settlement sheet might include loan fees, property tax prepayments, insurance premiums, etc.
Settlement statement
A document detailing who has paid what to whom.
Severance pay
Severance pay is compensation provided by an employer to an employee upon termination of that person's employment.
Share appreciation mortgage
Share appreciation mortgage is a type of real estate property loan where the homeowner/borrower exchanges a portion of the property's future value increases for a lower interest rate. Say, for example, that the agreement provides the lender 25 percent of the property's appreciation over a period of 10 years. If the property value increases $100,000 in that time, the lender would be due $25,000. Usually, the lender receives its portion of the appreciation when the home is sold. If the borrower doesn't sell the home, he must pay the lender its portion in cash.
Share certificate
A share certificate is a time deposit product issued by credit unions. Similar to a certificate of deposit (CD), the share certificate earns a fixed payment if it's held for the designated time period.
Shared equity partnership
An arrangement where one buyer lives in a home and the other has money invested in the property as an investment. The partners split the capital gain after the property is sold.
Shared-appreciation mortgage
A home loan in which the lender offers a very low interest rate in exchange for a share in the home's profit upon its sale.
Short hedge
Short hedge is the process of selling a derivative that isn't owned (i.e., selling short), where the derivative hedges against an investment that is owned. In other words, a short hedge strategy is pursued to reduce risk associated with an investment that has already been purchased.