Glossary of Terms

Adjustable Rate Loan:
A loan with an interest rate that changes periodically as determined by a financial index. The payment amount may increase or decrease when the index increases or decreases. Most consumer related adjustable rate loans have "caps" or ceilings limiting interest rate increases or decreases.

Amortization:
The repayment of debt through a series of payments called installments.

Annual Percentage Rate:
The Annual Percentage Rate is intended to reflect the various costs associated with a loan in addition to interest. The APR represents fees, costs, and interest as a cumulative rate as required by the federal Truth in Lending Act.

Appraisal:
A report created by a licensed professional that estimates the fair and reasonable market value of the subject property.

Closing Costs:
An amount charged to the borrower to cover the lender's costs on a home loan.

Co-Borrower:
An individual or entity signing a legal document on an equal basis with other signer(s) who is then jointly liable with the other signers or borrowers for repayment of debt.

Credit Report:
A listing of an individual's credit history used by a lender to determine the probability of the applicant to repay debt.

Deed:
A legal document that provides evidence of ownership for real estate.

Down Payment:
The amount of the purchase price of the item that is not financed by the loan.

Equal Credit Opportunity Act (ECOA):
Federal law that requires lenders to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equity:
The difference between the market value of the property and the amount still owed on the mortgage or mortgages. This also represents a homeowner's financial interest in a property.

Fair Credit Reporting Act:
A consumer protection law regulating the disclosure of consumer credit reports by credit reporting agencies and establishing procedures for correcting mistakes on credit reports.

Fixed Rate Loan:
A loan in which the interest rate stays the same for the entire term of the loan. This translates into a set payment for the entire term of the loan.

Interest:
The fee charged by the lender for money borrowed.

Interest Rate:
A percentage, which is expressed as an annual rate and applied to the loan amount for the use of funds.

Line of Credit (LOC):
A loan with an option to borrow again and again as needed over time up to a specified limit. The borrower agrees to repay the money with interest through monthly payments.

Mortgage (Deed of Trust):
A legal document that pledges a property to the lender as security for payment of the loan.

Note:
A legal document specifying the terms of debt including the amount to be paid, when installments are due and the term of the loan.

Origination Fee:
A fee charged to the borrower to cover the lender's costs for creating the loan.

Principal:
The amount of money borrowed as evidenced by the note. The principal will decline as timely payments are made.

Right of Recission:
A period of three business days after the loan closing in which the borrower may cancel an owner occupied real estate transaction.

Secured Loan:
The borrower provides "security" that the loan will be repaid according to the agreed terms and conditions in the form of collateral (e.g. house, car, etc.). In the event the borrower is unable to repay a secured loan, the lender may be able to sell the collateral to pay off all or part of the loan.

Term Loan:
A one time borrowing option in which a lender gives money to a borrower, and the borrower agrees to repay the money with interest through monthly payments.

Title:
A document conveying legal ownership to a property.

Truth in Lending Act:
A federal law requiring lenders to fully disclose, in writing, the terms and conditions of a loan, including the Annual Percentage Rate (APR) and all other charges that are associated with producing the loan.

Unsecured Loan:
A loan not secured by specific collateral but by the income and creditworthiness of the borrower.

Variable Rate Loan:
A one time borrowing option with an interest rate that adjusts periodically usually based on a standard market rate. The repayment period may increase or decrease when the index increases or decreases. These rates often have a specified floor and/or ceiling, called cap, which limits the adjustment.

Security Terms

Anti-Spyware Software:
A program used to protect your computer from spyware.

Anti-Virus Software:
A program used to protect your computer from viruses.

Browser:
Short for Web browser, it is a software application used to locate and display Web pages.

Firewall:
Software or hardware designed to prevent unauthorized access to or from a private network. Firewalls are frequently used to prevent unauthorized Internet users from accessing private networks connected to the Internet, especially Intranets.

Identity Theft:
The act of stealing personal information about you, such as your Social Security Number, date of birth, credit card numbers, etc. and using that information to impersonate you. The identity thief will generally obtain credit using your name and other identifiers.

Intranet:
A network belonging to an organization, usually corporation, accessible only by the organization's members, employees or others with authorization. An intranet Website looks and acts just like any other Website, but the firewall surrounding an intranet fends off unauthorized access.

Masking:
Altering an account number so that the whole number cannot be seen (e.g. xxxxxx1234).

Pharming:
Pharming is when someone changes the Internet lookup system to redirect your browser to a fake site to obtain personal or private information. Your browser will show you a fake Website that appears to look like the real Website, which makes pharming a bit more serious and difficult to detect.

Phishing:
The act of sending an e-mail to you falsely claiming to be a legitimate enterprise in an attempt to have you surrender private information that may be used for either theft or to conduct unauthorized transactions on your account. The e-mail usually directs you to visit a Website where you are asked to update personal information such as passwords, credit card information, social security numbers, and bank account information. The people who generate these e-mails may use any personal information you update to steal your identity. Remember, a legitimate organization would not ask you via e-mail to update your personal information online.

Spam/Spammers:
Electronic junk mail. Spam is generally advertising for some product sent to a mailing list.

Spyware:
Any software that covertly gathers your information through the Internet connection without your knowledge or consent, usually for advertising purposes. Spyware is typically bundled as a hidden component of freeware or shareware programs that are downloaded from the Internet. Once installed, spyware monitors your activity on the Internet and transmits that information in the background to someone else. Spyware can also gather information about e-mail addresses, passwords, and credit card numbers.

Virus:
Viruses are software programs that are deliberately designed to damage files or interfere with your computer's operation while it spreads throughout your computer.

More about Phishing

There's a new type of Internet piracy called "phishing." It's pronounced "fishing," and that's exactly what these thieves are doing: "fishing" for your personal financial information. What they want are account numbers, passwords, Social Security numbers, and other confidential information that they can use to loot your checking account or run up bills on your credit cards.

In the worst case, you could find yourself a victim of identity theft. With sensitive information obtained from a successful phishing scam, these thieves can take out loans or obtain credit cards and even driver's licenses in your name. They can do damage to your financial history and personal reputation that can take years to unravel. But if you understand how phishing works and how to protect yourself, you can help stop this crime.

Here's how phishing works:

In a typical case, you'll receive an e-mail that appears to come from a reputable company that you recognize and do business with, such as your financial institution. In some cases, the e-mail may appear to come from a government agency, including one of the federal financial institution regulatory agencies.

The e-mail will probably warn you of a serious problem that requires your immediate attention. It may use phrases, such as "Immediate attention required," or "Please contact us immediately about your account." The e-mail will then encourage you to click on a button to go to the institution's Web site.

In a phishing scam, you could be redirected to a phony Web site that may look exactly like the real thing. Sometimes, in fact, it may be the company's actual Web site. In those cases, a pop-up window will quickly appear for the purpose of harvesting your financial information.

In either case, you may be asked to update your account information or to provide information for verification purposes: your Social Security number, your account number, your password, or the information you use to verify your identity when speaking to a real financial institution, such as your mother's maiden name or your place of birth.

If you provide the requested information, you may find yourself the victim of identity theft.

How to Protect Yourself

1. Never provide your personal information in response to an unsolicited request, whether it is over the phone or over the Internet. E-mails and Internet pages created by phishers may look exactly like the real thing. They may even have a fake padlock icon that ordinarily is used to denote a secure site. If you did not initiate the communication, you should not provide any information.
2. If you believe the contact may be legitimate, contact the financial institution yourself. You can find phone numbers and Web sites on the monthly statements you receive from your financial institution, or you can look the company up in a phone book or on the Internet. The key is that you should be the one to initiate the contact, using contact information that you have verified yourself.
3. Never provide your password over the phone or in response to an unsolicited Internet request. A financial institution would never ask you to verify your account information online. Thieves armed with this information and your account number can help themselves to your savings.
4. Review account statements regularly to ensure all charges are correct. If your account statement is late in arriving, call your financial institution to find out why. If your financial institution offers electronic account access, periodically review activity online to catch suspicious activity.

This message is provided by the federal bank, thrift and credit union regulatory agencies.
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Office of Thrift Supervision
http://www.fdic.gov/consumers/index.html

Tips for Safe Banking

As use of the Internet continues to expand, more banks and merchants are using the Web to offer products and services or otherwise enhance communications with consumers.

The Internet offers the potential for safe, convenient new ways to shop for financial services and conduct banking business, any day, any time. However, safe banking online involves making good choices-decisions that will help you avoid costly surprises or even scams.

This brochure offers information and tips to help you if you are thinking about or already using online banking systems.

Confirm that an Online Bank is Legitimate and that Your Deposits Are Insured

Whether you are selecting a traditional bank or an online bank that has no physical offices, it's wise to make sure that it is legitimate and that your deposits are federally insured. Here are tips specifically designed for consumers considering banking over the Internet.

• Read key information about the bank posted on its Web site.

Most bank Web sites have an "About Us" section or something similar that describes the institution. You may find a brief history of the bank, the official name and address of the bank's headquarters, and information about its insurance coverage from the FDIC.

• Protect yourself from fraudulent Web sites.

For example, watch out for copycat Web sites that deliberately use a name or Web address very similar to, but not the same as, that of a real financial institution. The intent is to lure you into clicking onto their Web site and giving your personal information, such as your account number and password. Always check to see that you have typed the correct web site address for your bank before conducting a transaction.

• Verify the bank's insurance status.

To verify a bank's insurance status, look for the familiar FDIC logo or the words "Member FDIC" or "FDIC Insured" on the Web site.

Also, you should check the FDIC's online database of FDIC-insured institutions. You can search for an institution by going to the FDIC's home page at http://www.fdic.gov and selecting "Is My Bank Insured?" Enter the official name, city, and state of the bank, and click the "Find My Institution" button. A positive match will display the official name of the bank, the date it became insured, its insurance certificate number, the main office location for the bank, and its primary government regulator. If your bank does not appear on this list, contact the FDIC. Some bank Web sites provide links directly to the FDIC's Web site to assist you in identifying or verifying the FDIC insurance protection of their deposits.

Also remember that not all banks operating on the Internet are insured by the FDIC. Many banks that are not FDIC-insured are chartered overseas. If you choose to use a bank chartered overseas, it is important for you to know that the FDIC may not insure your deposits. Check with your bank or the FDIC if you are not certain.

• For insurance purposes, be aware that a bank may use different names for its online and traditional services; this does not mean you are dealing with separate banks.

This means, for example, that to determine your maximum FDIC insurance coverage, your deposits at the parent bank will be added together with those at the separately named bank Web site and will be insured for up to the maximum amount covered for one bank. Talk to your banker if you have questions.

• Know where to get more information about FDIC insurance.

Don't worry about your deposit insurance coverage if you or your family has less than $100,000 in all your accounts combined at the same FDIC-insured bank. But if your accounts total $100,000 or more, find out if they're within the insurance limit. Contact your bank for more information.

For additional assistance from the FDIC about the legitimacy of an institution or the insurance of your deposits, call the FDIC's Division of Compliance and Consumer Affairs toll-free at 800-934-3342 or send an e-mail via the FDIC's online Customer Assistance page at http://www2.fdic.gov/starsmail/index.asp.

The FDIC's Web site also has an interactive service called EDIE (Electronic Deposit Insurance Estimator) that can help you determine the amount of your insurance coverage. You can find EDIE at http://www2.fdic.gov/edie/. Or, you can read the online deposit insurance brochure, "Your Insured Deposit," located at http://www.fdic.gov/deposit/deposits/insured/index.html.

It's important to note that only deposits offered by FDIC-insured institutions are protected by the FDIC. Nondeposit investment and insurance products, such as mutual funds, stocks, annuities and life insurance policies that may be sold through Web sites or at the bank itself, are not FDIC-insured, are not guaranteed by the bank, and may lose value.

• Remember that nonfinancial Web sites that are linked to your bank's site are not FDIC-insured.

As an added convenience to their customers, some banks offer online links to merchants, retail stores, travel agents and other nonfinancial sites. An outside company's products and services are not insured by the FDIC, and your bank may not guarantee the products and services.

As in everyday business, before you order a product or service online, make sure you are comfortable with the reputation of the company making the offer. Only then should you give out your credit card or debit card number. And never give the number unless you initiated the transaction.

This message is provided by the federal bank, thrift and credit union regulatory agencies.
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Office of Thrift Supervision
http://www.fdic.gov/consumers/index.html