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GLOSSARY
Clearinghouse
A clearinghouse is an agency or organization that settles transactions. In banking, a clearinghouse facilitates the exchange of checks and the corresponding settlement of account balances. In futures trading, clearinghouses are responsible for trade settlement as well as reporting trade information, collecting margin funds, and ensuring contract fulfillment. Each futures exchange has its own clearinghouse.
Clearinghouse funds
Clearinghouse funds are monies that are in the process of being settled by a central clearing agency. This settlement process often results in a delay between when a check is deposited into an account and when those funds are available for withdrawal.
Client-based
Client-based describes banking arrangements that allows customers to access their bank records remotely, usually by way of the Internet.
CLO
A CLO, or collateralized loan obligation, is a debt security that's securitized by a pool of commercial loans. CLOs allow financial institutions to raise capital and redistribute the risk of the loans to a group of investors. Investors benefit by being able to take a percentage of ownership in attractively priced commercial loan obligations.
Close
Close generally refers to the finalization of a transaction. In real estate, the close is the point in time when ownership is transferred. This transfer typically involves the settlement of mortgage funds from the lender to the borrower, and the settlement of down payment funds from the buyer to the seller. In investing, the close can be either the end of a trading period, or the price for which a stock traded in the final transaction of a given trading period.
Close-out sale
A close-out sale occurs when a retailer discounts prices in order to sell off discontinued items.
Closed fund
A closed fund is a diversified securities portfolio that's no longer accepting monies from investors. Funds might be closed to constrain the asset base to a level where the fund's investing strategy can still be implemented effectively. Sometimes closed funds will continue to accept additional investments from existing investors only.
Closed-account fee
A closed-account fee is a charge assessed when a customer closes an account. A bank might charge a closed-account fee if a customer fails to keep a line of credit open for a specified time period. Closed-account fees should be defined in the account documentation or loan agreement.
Closed-end credit
Closed-end credit describes any debt facility that must be paid back in full, with interest, by a specific date. Most closed-end credits require regular principal and interest payments over time. Mortgage loans and auto loans are closed-end, but a revolving line of credit is not.
Closed-end lease
A closed-end lease is an agreement that allows one party to use a second party's property temporarily without any obligation to purchase the property at a later date. Closed-end leases are common in auto leasing; if the lease is closed-end, the individual leasing the vehicle has the option to return the car at the end of the lease arrangement.
Closed-end management company
A closed-end management company sells shares of its funds or investment portfolios in limited, fixed quantities. The company would make a specific number of shares available to the public through an initial public offering. Once those shares are sold, new investors could only invest in the fund by purchasing shares from existing investors.
Closed-end mortgage
A closed-end mortgage is a real estate loan that cannot be increased after the initial funding. The traditional first mortgage is closed-end, because the borrower is not able to borrow more under the same loan.
Closing
In some states a real estate transaction is considered 'closed' only when all the pertinent documents are recorded at at the local recorders office. In others, closing is a meeting between the buyer, seller and lender or their agents where all documents are signed and funds legally change hands. Closing is also called settlement and includes fees like origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing is usually about 3 percent to 6 percent of the mortgage amount.
Closing costs
These are expenses incurred over and above the price of the property, by buyers and sellers when transferring ownership of property. They are of two types, non recurring and pre paid. The former costs are incurred on items paid just once as a result of buying property or obtaining a loan. Pre-paid are costs which are recurring such as property taxes and homeowners insurance. A lender usually gives the borrower an estimate of the total costs on Good Faith within three days of receiving a home loan application. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country.
Closing statement
This is the final statement of costs incurred on purchasing property or closing of a loan. It is also known as the HUD-1