Lending Glossary

Plain definitions for the terms that come up between an application and a whole loan sale.

DSCR loan

A DSCR loan is an investment property mortgage underwritten on the debt service coverage ratio, the relationship between the property's rental income and its debt service, rather than on the borrower's personal income. DSCR loans are commonly made to entities rather than individuals and are frequently sold into the secondary market against a specific buyer's guidelines. A lender selling to more than one buyer is running more than one credit box at once, and conditioning each file to the box it will actually be sold into is the difference between a clean delivery and a kickback after funding.

RTL, residential transition loan

An RTL, or residential transition loan, is a short-term loan for bridge, fix-and-flip or rehab purposes rather than long-term buy-and-hold financing. RTL underwriting runs on construction draws, short terms, extensions and default tracking instead of long-dated cash flow analysis, so it needs a trust ledger and inspection ordering on the same record as origination.

Loan tape

A loan tape is the standardized data file summarizing a pool of loans offered for sale, covering balance, rate, term and status for each loan so a buyer can price the pool without opening every individual file. A loan tape built from inconsistent source systems is slower to underwrite and more likely to get kicked back with questions.

LLPA

An LLPA, or loan level price adjustment, is a price change applied to a specific loan based on risk factors such as credit score, loan-to-value or property type, layered on top of a buyer's base rate. Each note buyer publishes its own LLPA grid, so the same loan can price differently across buyers.

Credit box

A credit box is the full set of underwriting guidelines, eligibility rules and pricing a lender or note buyer will accept for a given program, covering credit score minimums, loan amount caps and property type restrictions among other rules. A lender selling to multiple buyers is holding multiple credit boxes at once, not one.

Condition template

A condition template is a standardized set of underwriting conditions applied by channel, program or note buyer, rather than a checklist each underwriter writes per file. A template carries per-condition checklists, separate internal and broker-facing descriptions, and overrides that require a typed reason recorded on the file.

Table funder

A table funder closes a loan in its own name while a direct lender underwrites and wires the funds, so credit authority sits downstream of the closing name. The loan changes hands immediately after closing rather than being originated and held.

Correspondent lender

A correspondent lender closes a loan with its own funds and then sells it, taking on funding risk that a table funder does not. Both models depend on post-close document generation and collateral review before the loan moves to its buyer.

Whole loan sale

A whole loan sale is the transfer of an entire loan, principal and servicing rights included, to a buyer, as opposed to selling a participation or interest in the loan while retaining the rest. The loan and its full document set need to move intact for the sale to close without a diligence delay.

Warehouse line

A warehouse line is a short-term credit facility a lender draws against to fund loans at closing, repaying the line once each loan sells to its end investor. A warehouse counterparty underwrites the lender's process as much as any individual loan, so standardized files and a clean audit trail directly affect what a lender can borrow against.

TPR, third-party review

TPR, or third-party review, is an independent diligence review of a loan file by a firm the buyer trusts, run before a whole loan sale to confirm the file matches the guidelines it was sold against. Only approved conditions should reach the reviewer, filtered by document status rather than sent as a full raw file.

Purchase advice

Purchase advice is the document confirming the price and terms at which an investor is buying a loan, generated on both the buyer's and seller's side of the trade. Mismatched purchase advice between counterparties is a common cause of a delayed settlement.

Dutch interest

Dutch interest is a construction loan structure where interest is charged on the full loan amount from day one, regardless of how much has actually been disbursed in draws. Non-Dutch interest charges only on funds actually drawn, so the same loan amount produces a different interest bill depending on which method applies.

Construction holdback

A construction holdback is a portion of a construction draw withheld from disbursement until a specific condition, such as a completed punch list item or a lien waiver, is satisfied. Holdbacks protect against paying for work that hasn't actually cleared.

Trust ledger

A trust ledger is the running record of every disbursement, fee, payment and balance tied to a loan, used to reconcile what has actually moved against what the loan terms allow. A trust ledger that lives apart from the origination record is a common reason a borrower dispute over a number takes days to resolve instead of minutes.

Allonge

An allonge is a document physically or digitally attached to a promissory note to record an endorsement or transfer of the note when there isn't room to endorse it on the note itself. An allonge has to travel with its note, an orphaned allonge is a defect a buyer's diligence will catch.

Escrow holdback agreement

An escrow holdback agreement sets aside funds at closing to cover a specific repair or condition that will be completed after the loan closes, releasing the held funds once the work is verified. It lets a loan close on schedule without waiting on a repair that doesn't affect habitability or value.

Collateral review

Collateral review is the check confirming that the collateral a lender has received or purchased actually matches the loan file, run before the loan goes to a custodian or a buyer. A configurable checklist standardizes what gets checked so nothing is confirmed by memory.