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E-3-12, Acronyms and Glossary of Defined Terms: L (09/04/2018)

last paid installment date

The due date of the last paid installment that had been collected for the mortgage.

late charge

A penalty that a borrower must pay when a mortgage payment is made a stated number of days (usually a minimum of 15) after its due date.


A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.

leasehold estate

A way of holding title to a property wherein the borrower does not actually own the property but rather has a recorded long-term lease on it.

lender-purchased mortgage insurance

Mortgage insurance coverage for a conventional mortgage loan that the lender pays for by using its own funds, rather than requiring the borrower to include periodic accruals for such coverage as part of their mortgage payment.

limited cash-out refinance

A refinance transaction in which the mortgage amount generally is limited to the sum of the unpaid principal balance of the existing first mortgage, closing costs (including prepaid items), points, and the amount required to satisfy any mortgage liens if the documented proceeds of the subordinate financing were solely used to acquire the property (if the borrower chooses to satisfy them), and other funds for the borrower’s use (as long as the amount does not exceed the lesser of $2000 or 2% of the principal amount of the new mortgage).

limited liability company (LLC)

A flexible form of business enterprise that blends elements of partnership and corporate structures.

living trust

See inter vivos revocable trust.


limited liability company


loan-level price adjustment

loan amount

The original amount of the loan as indicated by the note; also known as the original loan amount or original principal balance.

Loan Delivery

A Fannie Mae Web-based application that allows a lender to electronically prepare, edit, and transmit information from the Schedule of Mortgages for various MBS pool purchase transactions and whole loan/cash deliveries.

loan estimate

A form required by federal law that provides disclosures to borrower(s) to help them understand the key features, costs, and risks of the mortgage loan for which they are applying. References to the “loan estimate” include the Loan Estimate and Good Faith Estimate forms, as applicable, based on the application date of the mortgage loan.

Loan Quality Center (LQC)

A division of Fannie Mae that reviews acquired loans to confirm that the loans meet underwriting and eligibility requirements.

loan-level price adjustment (LLPA)

LLPAs are assessed based on certain eligibility or other loan features, such as credit score, loan purpose, occupancy, number of units, product types, etc. For whole loan transactions, LLPAs will be deducted from (or credited to) the loan proceeds.

loan-to-value (LTV) ratio

The relationship between the original loan amount of the first mortgage and the property’s appraised value (or sales price, if it is lower).

long-term standby purchase commitment

A negotiated structure that enables a lender to reduce its credit exposure by paying a monthly commitment fee on an identified portfolio of mortgages in exchange for the lender’s agreement to deliver on a mandatory basis, and Fannie Mae’s agreement to purchase any mortgage at par should it become a specified number of months delinquent after the date of the commitment.

look-back period

The date on which the index value that will be used to establish the next interest rate change for an ARM is determined. It is a specified number of days (at least 45) before the interest rate change date.


Loan Origination System

losses incurred by Fannie Mae

See Fannie Mae losses.


Loan Quality Center