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GLOSSARY
Debt-to-income ratio
Debt-to-income ratio, or DTI, is the quotient of a borrower's minimum debt payments divided by that borrower's gross income for the same time period. DTI is used by lenders as one factor in the evaluation of risk associated with a debt request. From the lender's perspective, a higher ratio indicates greater risk.
Debt-to-income ratio - DTI
Debt-to-income ratio, or DTI, is the quotient of a borrower's minimum debt payments divided by that borrower's gross income for the same time period. DTI is used by lenders as one factor in the evaluation of risk associated with a debt request. From the lender's perspective, a higher ratio indicates greater risk.
Debtor
A debtor is an individual or entity that owes money. Debtors owing money to a bank or lender are called borrowers, and debtors owing money to investors (who have purchased the debtor's bonds or debentures), are called issuers.
Debtor-in-possession
A debtor-in-possession is an individual or entity that has petitioned for bankruptcy protection, but still holds property in which creditors have a security interest. A business in Chapter 11 bankruptcy can continue to operate, using the assets that are secured by creditors to generate income. A business in this situation is a debtor-in-possession.
Debtor-in-possession financing
Debtor-in-possession financing, or DIP financing, is a debt facility made to a company in Chapter 11 bankruptcy. DIP financing usually takes priority over other debts. The debt is subject to strict covenants, and the company must fulfill its ongoing reorganization obligations.
Deceased alert
A deceased alert is a security notification indicating that a person has died, and should therefore not be issued credit. The alert prevents fraudulent parties from taking out credit in the decedent's name, or pursuing other, similar identity theft activities. Relatives of the deceased must request the issuance of a deceased alert from the credit bureaus.
Decedent
A decedent is a deceased person.
Decreasing term insurance
Decreasing term insurance is a life insurance policy under which the death benefit amount payable declines over time. If the insured's death event occurs in the first month the policy is in force, the beneficiaries will receive the maximum death benefit. In each subsequent period, the death benefit will be lowered by a specified amount or percentage. Decreasing term insurance addresses circumstances where the insured has higher liabilities and lesser assets in the earliest years of the policy.
Deed
A document or contract of legal bearing with evidence of title to property
Deed in lieu of foreclosure
A deed in lieu of foreclosure is an exchange of outstanding (and usually past-due) mortgage debt in return for full ownership rights to the mortgaged property. A property owner in distress can sometimes avoid foreclosure by negotiating this arrangement with the lender.
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.