ACH - Automated Clearing House
APR - Annual Percentage Rate
APY - Annual Percentage Yield
APYE - Annual Percentage Yield Earned
ARM - Adjustable Rate Mortgage
ATM - Automated Teller Machine
Abstract of Title - A summary of the successive title deeds to a piece of property.
Account - Term is usually associated with checking accounts. See "Demand Deposits"; share (savings), or checking account held by HFCU and established primarily for personal, family, or household purposes. Accounts are products that have been opened or activated. There are three characteristics that further define an account: (1) An account has identification or an account title indicating to whom it belongs. By using the name, address, Social Security number or account number, it can be determined to whom the account belongs. (2) The second feature is that an account has a balance. (3) The third feature is that debits and credits can be posted to the account. This term is applied to both deposit and loan products, but is generally used more often when discussing deposit products.
Account Relationship - This is a term that is used when discussing a member's portfolio. It represents all the products and services that a member maintains with the credit union at a given point in time. This relationship could include deposit products, loan products, and other products. An account relationship could represent an 1) individual member or a 2) member's household (which could include more than one individual).
Accrued Interest - Interest earned but not yet credited or posted to an account.
Adjustable Rate Mortgage (ARM) - Mortgage agreement between the credit union and a real estate buyer stipulating predetermined adjustments of the interest rate at specified intervals. Mortgage payments are tied to some index outside the credit union, such as the interest rates in U.S. Treasury bills or the average national mortgage rate. Adjustments are made regularly, usually at intervals of one, three, or five years. In return for taking some of the risk of a rise in interest rates, borrowers get lower rates at the beginning of the ARM than they would if they took out a fixed rate mortgage covering the same term. A homeowner who is worried about sharply rising interest rates should probably choose a fixed rate mortgage, whereas one who thinks rates will rise modestly, stay stable, or fall should choose an adjustable rate mortgage. Critics of ARMs charge that these mortgages entice young homeowners to undertake commitments beyond their means.
Amortization - Systematic and continuous payment of an obligation through installments until the debt has been paid in full.
Amortization Schedule - Table that shows the periodic payment, interest and principal requirements, and unpaid loan balance for each period of the life of a loan.
Annual Percentage Rate (APR) - Cost of credit on a yearly basis which is expressed as a percentage, resulting from an equation that considers three factors: the amount financed, the finance charge and the term of the loan. According to the federal Truth in Lending Act, every consumer loan agreement must disclose the APR prominently.
Annual Percentage Yield (APY) - Total amount of dividends paid based on the dividend rate and compounding frequency for 365 days.
Annual Percentage Yield Earned (APYE) - Total amount of dividends paid based on the dividend rate and compounding frequency for 365 days.
Applicant - Member who applies for a loan.
Appraisal - Report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.
Appraisal fee - Charge for estimating the value of collateral being offered as security.
Appreciation - Increase in value.
Asset-Liability Management - Matching the maturities of member deposits and credit union investments with the length of member loan commitments to keep from being adversely affected by rapid change in interest rates.
Assumption - Taking on primary liability for payment of an existing mortgage while the seller remains secondarily liable unless specifically released by the lender.
Automated Clearing House - A funds transfer system governed by the rules of NACHA - The Electronic Payments Association, which provides for the interbank clearing of electronic entries for participating Depository Institutions. One of the most common transactions moving through the system is direct deposit entries, whereby an individual's payroll or retirement funds are automatically deposited to an individual's financial institution account.
Automated Teller Machine (ATM) - Unmanned equipment used by a member to obtain financial services, activated by a plastic card, push buttons, and a personal identification number (PIN) for each user.
Automatic Loan Payment (Automatic debit) - Loan payments made for the member directly debiting the member's account either manually (by suspense card) or automatically through the computer. Can also be done by ACH.
Average Collected Balance - Sum of daily balances in an account, less the total of uncollected items, divided by the number of days in the period, usually a month.
Average Daily Balance - Dividends are calculated by average daily balance method which applies a periodic rate to the average daily balance in the account for the period. Calculated by adding the balance in the account for each day of the period and dividing that figure by the number of days in the period.
Balloon - Final payment on a debt that is substantially larger than the preceding payments. Loans or mortgages are structured with balloon payments when some projected event is expected to provide extra cash flow or when refinancing is anticipated.
Bi-weekly mortgage - Mortgage plan which splits the traditional single monthly mortgage payment into one payment every other week, or 26 times a year.
Board of Directors - Organized body of volunteer persons that govern the affairs of the credit union. Board is elected by the membership at the Annual Meeting.
Business Account - Commercial profit account; can be either a savings or checking account. used by a proprietorship that makes a profit.
Buydown - With a buydown, the seller pays an amount to the lender so that the lender can give you a lower rate and lower payments, usually for an early period in an Adjustable Rate Mortgage (ARM). The seller may increase the sales price to cover the cost of the buydown. Buydowns can occur in all types of mortgages, not just ARMs.
Bylaws - Rules adopted by the shareholders and Board of Directors to define the field of membership, set the par value of shares, and give the general method by which credit union functions are to be carried on.
CD - Certificate of Deposit
CUNA - Credit Union National Association
CAP - Capital Accumulation Plan
Cap - Limit on how much the interest rate or the monthly payment can change, either at each adjustment or during the life of the adjustable rate mortgage. ARMs may contain one or more types of caps. Payment caps do not limit the amount of interest the lender is earning, so they may cause negative amortization.
Carbonless Copy - "No-carbon-required" copy of a check which is automatically made when the check is written.
Certificate of Deposit - Money market instrument that is a marketable receipt for funds deposited in a financial institution for a specific period of time at a specified rate of interest.
Check Digit - Algorithmic formula used to verify account number on checks, ATM cards, etc. for processing purposes. (HFCU uses MOD. 10 formula).
Check Hold - Procedure whereby a certain amount of a member's balance is held intact until funds are released or a certain period of time elapses. (In some cases, dividends are not earned on held funds.) See also: Stop Payment.
Clearing - Process by which a payment order moves from the initiator of the order to the final recipient.
Closing Costs - Money paid by the borrower in connection with the closing of a mortgage loan. The generally involves an origination fee, discount points, appraisal, credit report, title insurance, attorney's fees, survey, and prepaid items such as taxes and insurance escrow payments.
Co-Maker - Each co-maker must meet the same eligibility requirements as those governing the member who has applied for the loan or the co-maker must be able to show a credit rating satisfactory to the Credit Union. Signature loan are not eligible to be co-secured unless the member resides in Texas or a non-community property state where in order for spousal income to be considered, he must sign as co-applicant/co-borrower. However, under unusual circumstances, Credit Committee may request a co-maker on unsecured credit.
Co-signer - (See Co-Maker)
Collateral - Asset pledged to a lender until a loan is repaid. If the borrower defaults, the lender has the legal right to seize the collateral and sell it to pay off the loan.
Commercial Account - Term which refers to other types of accounts which are available to credit union members besides the basic consumer share account.
Comparison Shopping - Evaluation of a lender's annual percentage rate (APR), which tells the borrower the relative cost of credit against the APRs quoted by other lenders.
Compounding Interest - When the interest earned on a sum of money in an account is paid to that account, and begins earning interest also.
Conventional Loan - Loan not insured or guaranteed by a government agency.
Correspondent Bank - bank that accepts deposits of and performs banking service for other depository institutions.
Correspondent Credit Union - Credit union that acts as an agent and processes transactions for members of another credit union pursuant to a service agreement.
Credit Check - verifying debts and payment history by a Credit Report and verifying income with employers.
Credit Committee - Group of credit union volunteers that has the responsibility to approve or disapprove all requests from members for loans.
Credit Disability Insurance - Insurance that provides loan payments to be made on behalf of the member who is temporarily or permanently disabled.
Credit History - Continuing record of a borrower's debt commitments and debt payments.
Credit Life Insurance - Insurance that will pay off the loan balance in the event the member dies during the course of the loan. There are two types: Single life (pays loan balance for one member in the event of death); Joint life (pays loan balance if a member or his/her spouse dies).
Credit Limit - Maximum amount of credit available to a consumer on a specific account at any time.
Credit Union - Member owned, nonprofit cooperative thrift institution formed for the purpose of encouraging savings by offering a good return, using collective monies to make loans at competitively low interest rates to members, and providing other financial services. Members are united by a common bond of association and democratically operate the credit union under state or federal regulation.
Credit Union National Association - National, nonprofit, dues-supported confederation serving credit union leagues in the United States.
Cross-selling - Introducing members to additional products and services besides the one(s) they are currently using.
CRT - Cathode Ray Tube (computer screen)
CRV - Cash Received Voucher
Debt - Money, goods, or services that one party is obligated to pay to another in accordance with an expressed agreement. Debt may or may not be secured. General name for bonds, notes, mortgages, and other forms of paper evidencing amounts owed and payable on specified dates or on demand.
Debt Consolidation - Combining several debts into one loan, usually to reduce the annual percentage rate or the dollar amount of payments made each month.
Deficit - Excess of liabilities and debts over income and assets. Deficits usually are corrected by borrowing or by selling assets. In finance, an excess of expenditures over budget.
Deliquency - Failure to make a payment on an obligation when due.
Demand Deposit - Funds that are available to the member at any time, and which require no advance notice of withdrawal. They can be accessed by writing a check, (checking accounts are the most common form of demand deposit account), cash withdrawal from an ATM, or by transfer to other accounts using the telephone or home computers. Demand deposits are the largest component of the U.S. MONEY Supply, and the principal medium through which the Federal Reserve implements monetary policy.
Deposit - Cash, checks, or drafts placed into a member's account for credit and safekeeping.
Deposit (Share) Insurance - Insurance to guarantee the safety of your savings. There are 3 types of deposit insurance programs for financial institutions: (1) private insurers, (2) state insurers and (3) federally backed insurance programs. Each is distinctly different. Only one, federal insurance is backed by the financial strength of the U.S. government. There are 2 funds that can be called federal insurance programs:
(1) FDIC: This refers to the Federal Deposit Insurance Corporation, an agency of the federal government that protects deposits in banks.
(2) NCUSIF: National Credit Union Share Insurance Fund is the insurance program that protects the savings in your credit union. It is administered by an independent agency of the federal government, the National Credit Union Administration or NCUA.
Deregulation - Greatly reducing government regulation in order to allow freer markets to create a more efficient marketplace. After the stock-brokerage industry was deregulated in the mid 1970's, commissions were no longer fixed. After the banking industry was deregulated in the early 1980's, banks were given greater freedom in setting interest rates on deposits and loans. Industries such as communications and transportation have also been deregulated, with similar results: increased competition, heightened innovation, and mergers among weaker competitors. Some government oversight usually remains after deregulation.
Direct Deposit - Having a check, such as a payroll, retirement, or disability check sent directly to an individual's account at their financial institution. The process by which a credit to a member's account is delivered electronically such as the direct deposit of Social Security checks by the federal government.
Disclosure Statement - Release by companies of all information, positive or negative, that might bear on an investment decision or on a loan account.
Discount Points - A point is 1% of the mortgage amount borrowed, so if you borrow $60,000 plus 2 points, you actually borrow $61,200. When points are involved, as they almost always are with today's mortgages, the lender earns a higher effective rate on the loan. Generally, the lower the rate you receive, the higher the points. In effect, discount points are what you pay to buy the rate you're getting.
Discount Rate - Interest rate that the Federal Reserve charges member banks for loans, using government securities or eligible paper as collateral. This provides a floor on interest rates, since banks set their loan rates a notch above the discount rate. Interest rate used in determining the present value of future cash flows.
Discretionary Income - What remains of disposable income, after essential living costs are paid.
Dividend - Distribution of earnings to shareholders, prorated by class of security and paid in the form of money. The amount is decided by the Board of Directors and is usually quarterly.
ECOA - Equal Credit Opportunity Act
EFT - Electronic Funds Transfer
Early Withdrawal Penalty - Charge assessed against holders of fixed-term investments if they withdraw their money before maturity. Such a penalty would be assessed, for instance, if someone who has a 6-month certificate withdrew the money after four months.
Earnest Money - Amount of money to bind a contract used in conjunction with a real estate loan.
Electronic Funds Transfer - Any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephone, or computer or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit an account. The term includes, but is not limited to, point-of-sale transfers, ATM transfer, direct deposits or withdrawals of funds, and transfers initiated by telephone. It includes all transfers resulting from debit card transactions, including those that do not involve an electronic terminal at the time of the transaction. The term does not include payments made by check, draft, or similar paper instrument at an electronic terminal.
Eligibility - Meeting the qualifications for membership. Endorsement - Refers to the signature placed on the back of a check or negotiable instrument (money order or traveler's check) which transfers that check or note to another party.
Equal Credit Opportunity Act (ECOA) - Federal law that prohibits discrimination against an applicant for credit on the basis of age, sex, marital status, race, color, religion, national origin, and other factors.
Equity - Value of property that exceeds any claim or lien on it.
Escrow - Money, securities, or other property or instruments held by a third party until the conditions of a contract are met, for example, finds held by a financial institution -- often collected together with monthly mortgage payments -- to meet tax bills and insurance premiums.
FDIC - Federal Deposit Insurance Corporation
FHA - Federal Housing Administration
FHLBB - Federal Home Loan Bank Board
FHLMC - Federal Home Loan Mortgage Corporation
FICA - Federal Insurance Contribution Act
FOM - Field of Membership
Fannie Mae - Nickname for the Federal National Mortgage Association
Fed Float - Time that elapses between the Federal Reserve granting availability and the actual time it takes to clear the check to the drawee bank.
Fed Funds - Reserves traded among banks, usually for overnight investment.
Fed Wire - Wire transmission service established by the Federal Reserve to facilitate the transfer of funds through debits and credits of funds within the Fed system.
Federal Credit Union - Credit Union chartered, examined and supervised by the federal government through the NCUA.
Federal Credit Union Act - Federal law enacted in June 1934 that allowed the organization of federal credit unions and established methods for their chartering, supervision, and examination.
Federal Deposit Insurance Corporation - Originally established by the Banking Act of 1933, it insures deposits of banks and performs other functions such as making loans to or buying assets from member banks to facilitate mergers or prevent failures.
Federal Home Loan Bank Board - Regulatory and supervisory agency for federally chartered savings institutions.
Federal Home Loan Mortgage Corporation - Congressionally chartered corporation that purchases residential mortgages in the secondary mortgage market from savings and loans, banks, and mortgage bankers, and securitizes these mortgages for sale to the capital markets.
Federal Housing Administration - Division of HUD, it primarily acts as an insurer of residential mortgages made by private lenders.
Fee Income - Sources of operating income other than interest income from loans or investments, i.e., fees for NSFs.
Finance Charge - Cost of credit, including interest, paid by a member for a consumer loan. Under the Truth in Lending Act, the finance charge must be disclosed to the member on closed-end loans, along with the term of the loan, or upon request. The APR must be disclosed in advance.
Financial Institution - State or national bank, a state or federal savings and loan association, a state or federal mutual savings bank, a state or federal credit union. The term also includes any person who issues an access device and agrees with a consumer to provide electronic fund transfer services.
First Mortgage - Real estate loan that gives the mortgagee (lender) a primary lien against a specified piece of property. A primary lien has precedence over all other mortgages in case of default.
Fixed Rate (loan) - Type of loan in which the interest rate does not fluctuate with general market conditions. There are fixed rate mortgages as well as fixed rate business and consumer loans. Fixed rate loans tend to have higher original interest rates than flexible rate loans because lenders are not protected against a rise in the cost of money when they make a fixed rate loan.
Float - After a check is presented for payment, there is a processing period during which the check is deposited and then delivered to the issuer's bank for payment. The time that elapses during this process is the float during which the issuer is still earning interest on his money and the payee is waiting for funds to be collected.
Foreclosure - Process by which a homeowner who has not made timely payments of principal and interest on a mortgage loses title to the home. The holder of the mortgage whether it be a bank, a savings and loan, or an individual, must follow legal procedures to seize the property, which may then be sold to satisfy the claims of the mortgage.
Freddie Mac - Nickname for Federal Home Loan Mortgage Corporation (FHLMC)
FSLIC - Federal agency established in 1934 that insured deposits in members saving and loans institutions. Now defunct.
Ginnie Mae - Nickname for the Government National Mortgage Association and the securities guaranteed by that agency.
Government National Mortgage Association (GNMA) - Federal agency within HUD. It administers the mortgage-backed security program that guarantees timely payment of principal and interest on privately issued Ginnie Mae pass-through securities.
Grace Period - Segment of time in which no interest is charged. At HFCU, our credit cards have a grace period starting from the date of the billing cycle and extending 25 days thereafter in which no interest is charged.
HELOC - Home Equity Line of Credit
HIL - Home Improvement Loan
History - Statement of past transactions having occurred on an account.
Hold - To delay the use of money for a short period of time, until funds have cleared the account they are coming from.
Home Banking - Form of electronic funds transfer carried out from the member's home via computer of home-phone linkage with a financial institution.
Home Equity Line of Credit - A line of credit secured by the equity in a home.
Home Equity Loan - A loan where you can borrow against the equity of your home. Your home equity can be collateral for loans such as car, college, bill consolidation, and home repair loans.
Home Improvement Loan - by improving the appearance or comfort factor of your home, you add to the value of your home. This loan, which can be made by a financial institution, contractor or realtor, is easy to live with.
HUD - Housing and Urban Development
IRA - Individual Retirement Account
Index - Regularly published statistical measure of widely accepted rates that change periodically, such as Treasury bill interest rates. (HFCU publishes rates in the quarterly member newsletter and on lobby rate boards.)
Individual Retirement Account - Retirement fund established by an individual in which one deposits wages and defers taxes until retirement.
Installment Loan - Direct loans to individuals that are repaid in fixed, periodic payments.
Interest - Cost of using money, expressed as a rate per period of time, usually one year, in which case it is called an annual rate of interest. Money paid for the use of money. A member will pay interest on a loan, or may earn interest (dividends) on share accounts.
Investment - Use of capital to create more money, either through income-producing vehicles or through more risk-oriented ventures designed to result in capital gains.
Joint Account - Account carrying the names of two of more persons. Any account which lists two or more persons who share equally in the rights and liabilities associated with the account. Either party may perform any transaction on the account. Only the primary member has loan privileges under this one member number.
Jumbo Certificate of Deposit - Certificate with a minimum deposit of $100,000.
Keogh Plan - Tax-deferred pension account designated for employees of unincorporated businesses or for persons who are self-employed. As of 1984, eligible people could contribute up to 25% of earned income, up to a maximum of $30,000. Like the IRA, the Keogh plan allows all investment earnings to grow tax-deferred until capital is withdrawn, as early as age 59 1/2 and starting no later than age 70 1/2. Almost any investment except precious metals or collectibles can be used for a Keogh account. Typically, people place Keogh assets in stocks, bonds, money-market finds, certificates of deposit, mutual funds, or limited partnerships. The Keogh plan was established by Congress in 1962 and was expanded in 1976 and again in 1981 as a part of the Economic Recovery Tax Act.
Kiting - Depositing and drawing checks between accounts at two or more financial institutions and thereby taking advantage of the float -- that is, the time it takes the institution of deposit to collect from the paying institution. This is an illegal activity.
LIFO - Last in, First Out
LOC - Line of Credit
LRB - Low Reference Balance
Last In, First Out - Method of computing earnings on savings accounts whereby earnings are computed on the balance of the savings account at the beginning of the period, plus additions received, minus withdrawals from the latest previous receipt.
Late Charge - Percentage of the payment due that is charged for being late or paying after a predetermined grace period.
Lease - Contract granting use of real estate, equipment, or other fixed assets for a specified time in exchange for payment, usually in the form of rent. The owner of the leased property is called the lessor, the user the lessee.
Lien - Creditor's claim against property. For example, a mortgage is a lien against a house; if the mortgage is not paid on time, the house can be seized to satisfy the lien. Similarly, a bond is a lien against a company's assets; if interest and principal are not paid when due, the assets may be seized to pay the bondholders. As soon as a debt is paid, the lien is removed. Liens may be granted by courts to satisfy judgements.
Line of Credit - Quantity of credit granted to a member on an open-end signature loan. The financial institution makes a certain amount available to the customer and he/she may draw funds up to that amount as deemed necessary. (HFCU does not offer a true Line of Credit loan other the Home Equity Loan. This is the only loan that does not require approval for an advance.)
Liquid Asset - Cash or easily convertible into cash with little or no loss of value.
Loan - Transaction wherein an owner of property, called the Lender, allows another party, the Borrower, to use the property. The borrower customarily promises to return the property after a specified period with payment for its use, called interest. The documentation of the promise is called a Promissory Note.
Loan Application - Questionnaire calling for information used to determine whether a member will be granted a loan.
Loan Policy Committee - Group of members appointed by the Board of Directors to review loans that have been appealed by the member.
Low Reference Balance - Computer file which stores information used to calculate interest due on an account. The computer stores the lowest monthly balance in a file, when the dividend period ends, dividends are computed on the lowest monthly reference or balance.
MICR - Magnetic Ink Character Recognition
Magnetic Ink Character Recognition - Electronic recognition of machine-readable characters (printed with magnetic ink) appearing at the bottom of checks. Used to route the check to the proper financial institution and to charge the check to the appropriate account within the institution.
Magnetic Strip - Electronically encoded magnetic field placed on the surface of a plastic card for the purpose of enabling a machine to identify unique information about the issuing institution and the account holder.
Maturity Date - Date on which the principal amount of a note, draft, acceptance, bond or other debt instrument becomes due and payable. Also termination or due date on which an installment loan must be paid in full.
Member - Person holding at least one credit union share who has the opportunity to receive the credit union's financial and related services, and depending upon age has a right to vote at the annual meeting.
Microfiche - Plastic film material used to store account information in small images.
Money Center Bank - Bank in one of the major financial centers of the world, among them New York, Chicago, San Francisco, Los Angeles, London, Paris and Tokyo. These banks play a major national and international economic role because they are large lenders, depositors, and buyers of money market instruments and securities as well as large lenders to international governments and corporations. In the stock market, bank analysts usually categorize the money center banks as separate from regional banks -- those that focus on one area of the country. Also known as money market bank.
Money Market Accounts - Market-sensitive account that generally requires a minimum of $1,000 and only three checks drawn on it per month. Account has liquid funds that are available without penalty. Interest rate is generally comparable to rates in money market mutual funds. Rates reflect general economic factors as well as the relative investment liquidity, security, size, and term.
Mortgage - Debt instrument by which the borrower (mortgagor) gives the lender (mortgagee) a lien on property as security for the repayment of a loan. The borrower has use of the property, and the lien is removed when the obligation is fully paid. A mortgage normally involves real estate. For personal property, such as machines, equipment, or tools, the lien is called a "chattel mortgage."
Mortgage Servicing - Administration of a mortgage loan, including collecting monthly payments and penalties on late payments, keeping track of the amount of principal and interest that has been paid at any particular time, acting as escrow agent for funds to cover taxes and insurance, and if necessary, curing defaults and foreclosing when a homeowner is seriously delinquent.
Mutual Fund - Fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities, or money market securities. These funds offer investors the advantages of diversification and professional management.
Mutual Savings Bank - Savings bank organized under state charter for the ownership and benefit of its depositors. A local board of trustees makes major decisions as fiduciaries, independently of the legal owners. Traditionally, income is distributed to depositors after expenses are deducted and reserve funds are set aside as required.
NCUA - National Credit Union Administration
NCUSIF - National Credit Union Share Insurance Fund
NOW - Negotiable Order of Withdrawal
NSF - Non-Sufficient Funds
NADA - National Automobile Dealers Association
NADA Book - Used car, truck, RV and motorcycle price guide found in the loan department that gives present-day value of vehicles.
National Bank - Commercial bank whose charter is approved by the U.S. Comptroller of the currency rather than by a state banking department.
National Credit Union Administration - Federal Agency which regulates credit unions and insures credit union accounts up to $250,000.
National Credit Union Share Insurance Fund - Insurance program that protects the savings in your credit union. It is administered by an independent agency of the federal government, the National Credit Union Administration (NCUA). The NCUSIF is the strongest of the funds. Recently, voluntary capitalization of the fund by all federal credit unions resulted in an insurance fund that equals 1.3% of all federal credit union shares. This is the highest ratio of the federal funds.
Negotiable Instrument - Unconditional order or promise to pay an amount of money, easily transferable from one person to another.
Negotiable Order of Withdrawal - Bank of savings and loan withdrawal ticket that is a negotiable instrument. Accounts from which such withdrawals can be made, called NOW accounts, are thus interest-bearing checking accounts.
New Money - When source of funds from is outside the financial institution.
Non-Sufficient Funds - When there are not enough funds in an account to cover the amount a check has been written for.
Off-line - Refers to the computer equipment operating outside the direct control of the central computer equipment.
On-line - Refers to the computer equipment operating under the direct control of the central computer equipment.
Origination Fees - Major expense of making a loan is upfront for the lender so the lender pulls more money out of the transaction at the beginning to get immediate earnings on loans. There are 2 kinds of loan origination fees. One is fixed dollar or percentage of the loan amount, sometimes charged instead of application or appraisal fees, but more often a separate charge. Another origination fee is call a loan discount fee, or points.
Promissory Note - Written promise committing the maker to pay the payee a specified sum of money, either on demand or at a determinable future date, with or without interest. Instruments meeting these criteria are NEGOTIABLE. Often called, simply, a NOTE.
Regulation A - Securities and Exchange Commission provision for simplified registration of small issues of securities. It requires a shorter form of prospectus and carries lesser liability for officers and directors for false or misleading statements.
Regulation AA -- (Unfair or Deceptive Acts or Practices) - Establishes procedures for handling consumer complaints about member bank unfair or deceptive practices.
Regulation CC -- (Funds Availability Act) - A Federal Reserve System regulation for compliance by all financial institutions regarding the limits on the number of days that a check may be held for collection upon being deposited. Also defines the requirements of disclosures which must be made in support of account holder awareness of the hold policies of individual financial institutions and establishes endorsement criteria that must be met by each financial institution handling a check.
Regulation D -- (Reserve Requirements of Depository Institutions Act) - Federal Reserve Board regulation defining types of deposits handled by institutions and explains how reserves are to be computed.
Regulation DD -- (Truth in Savings) - Federal regulation designed to inform consumers of the terms and conditions on which dividends or interest are paid and fees are assessed. (Credit unions must comply by January 1, 1995).
Regulation E -- (Electronic Funds Transfer Act) - Federal Reserve Board regulation detailing disclosures and rights of electronic finds transfers.
Regulation G - Federal Reserve Board rule regulating lenders other than commercial banks, brokers, or dealers, who, in the ordinary course of business, extend credit to individuals, to purchase or carry securities. Special provision is made for loans by corporations and credit unions to finance purchases under employee stock option and stock purchase plans.
Regulation T - Federal Reserve Board regulation covering the extension of credit to customers by securities brokers, dealers, and members of the national securities exchanges. It establishes initial margin requirements and defines registered (eligible), unregistered (ineligible), and exempt securities.
Regulation U - Federal Reserve Board limit on the amount of credit a financial institution may extend a customer for purchasing and carrying margin securities.
Regulation Z -- (Truth in Lending Act) - Federal Reserve Board regulation covering provisions of the Consumer Credit Protection Act of 1968. Requires creditors to provide full disclosure of the terms of a loan. The interest rate must be stated as an annual percentage rate (APR). Enables the consumer to make informed decisions regarding the cost of credit.
Repossession - Act of reclaiming durable goods purchased on credit, for which payment is past due.
Reserve Requirement - Federal Reserve System rule mandating the financial assets that member banks must keep in the form of cash and other liquid assets as a percentage of demand deposits and time deposits. This money must be in the bank's own vaults or on deposit with the nearest regional Federal Reserve Bank. Reserve requirements, set by the Fed's Board of Governors, are one of the key tools in deciding how much money banks can lend, thus setting the pace at which the nation's money supply and economy grow. The higher the reserve requirement, the tighter the money -- and therefore the slower the economic growth.
Retention - Preservation of members and their funds already on deposit.
Retention Ratio - Ratio or relationship between the number of services a member uses of the credit union and the likelihood of that member leaving the credit union for another financial institution. The higher the retention ratio, the less likely the member will leave.
Rule of 78s - Method for computing rebates of interest on installment loans. It uses the sum-of-the-year's digits as basis in determining the interest earned by the finance company for each month of a year, assuming equal monthly payments, and gets its name from the fact that the sum of the digits 1 through 12 is 78. Thus, interest is equal to 12/78ths of the total annual interest in the first month, 11/78ths in the second month, and so on. A method to compute a borrowers interest refund due if an equal installment loan is paid.
Savings Bonds - Bond issued by the U.S. government to help pay its expenses and also encourage savings. Bonds can be cashed with interest after a six-month period.
Second Mortgage - Mortgage on real estate that already has a first mortgage.
Share - Given amount of money a person deposits with a credit union to become a member that confers ownership rights, has a stated par value, and pays dividends. A share account is what a credit union refers to as a savings account.
Share Account Certificate (CD) - Account that will earn dividends at a particular rate if held to maturity, and on which a penalty shall be assessed for the withdrawal of all or any portion of the principal amount prior to maturity.
Share Draft - Printed document allowing payment for goods and services. Considered a check only if drawn directly on a financial institution. If "payable through" is involved, it's a draft.
Simple Interest - Interest calculation based only on the original principal amount. Simple interest contrasts with compound interest, which is applied to principal plus accumulated interest.
SOP - Standard Operating Procedures
Spousal IRA - Account which allows a married couple, of which one individual is not a wage earner, to contribute a total of $2,500 between two separate IRAs or the lesser of 100% of the compensated spouse's earned income.
State Credit Union - Credit union chartered, examined and supervised by a state government.
Statement - Summary for members of the transactions that occurred over the preceding month. A credit union statement lists all deposits and withdrawals, as well as the running account balance.
Stop Payment - Member's instructions to the credit union directing it to dishonor a specific check.
Supervisory Committee - Credit union committee established to protect the financial welfare of the members by examining the affairs of the credit union, performing an annual audit, and reporting to regulatory agencies as required.
Symitar - Network computer system of HFCU
Tax Deferred - Term describing an investment whose accumulated earnings are free from taxation until the investor takes possession of the funds.
Third Party Check - Check negotiated through a financial institution, except one payable to the writer of the check.
Time Deposit - Deposit that may not be withdrawn unless stated time or notice requirements are met (e.g., CDs IRAs).
Title Search - Check of public records to determine current ownership of a parcel of real estate.
Transfer - Moving funds between two accounts held by the same or different members.
Truth-in-Lending Act - Section of the Consumer Credit Protection Act that provides for a complete and conspicuous disclosure of credit charges on dollars and cents and as an annual percentage rate. (Regulation Z)
Truth-in-Savings Act - Federal regulation to assist consumers in comparing deposit accounts offered by depository institutions. Institutions are required to calculate dividends on daily balance method or average daily balance method. Disclosure information must accompany all deposit accounts. (Regulation DD)
Two Party Check - Check presented by a member to the credit union, but the check is drawn off the member's account with another financial institution.
UCC - Uniform Commercial Code
Uniform Commercial Code - Legal instrument that the credit union uses to record its priority lien on boats, mobile homes, and household goods.
Usury - Charging a higher rate of interest than the law allows.
VA - Veterans Administration
VA Mortgage - Home mortgage loan granted by a lending institution to qualified veterans of the U.S. Armed Forces or to their surviving spouses and guaranteed by the VA. The guarantee reduces the risk to the lender of all or part of the purchase price on conventional homes, mobile homes, and condominiums. Because of this federal guarantee, financial institutions can afford to provide 30-year VA mortgages on favorable terms with a relatively low down payment even during periods of tight money.
Variable Rate CD - Savings certificate on which the rate of interest payable varies. The interest rate changes periodically and is set by the financial institution, along with other money market rates.
Variable Rate Loan - Either open-end or closed-end loans having interest rates that vary with a credit union's cost of funds or a money market index.
Variable Rate Mortgage - Mortgage with an interest rate that fluctuates during the life of the mortgage. Mortgage agreement that stipulates predetermined adjustments of the interest rate at specified intervals.
Vesting - Right of an employee who is covered by a contributory or noncontributory retirement plan to acquire the employer's contribution to that plan.