Safe deposit box -- a container in a secure vault that is rented to an
individual or organization for the safekeeping of valuables.
Safety and soundness exam -- an
examination of a thrift institution's financial strength and operating policies
and procedures to determine whether the institution is being run in a safe and
sound manner.
Sale-buyback -- a financing arrangement in which the developer
sells a property to an investor and then buys it back under a long-term sales
contract.
Sale-leaseback -- an arrangement in which a seller deeds property to
a buyer for cash or other consideration, and the buyer simultaneously leases
the property back to the seller, usually on a long-term basis.
Sales -- the income received when goods or services are sold.
Sallie Mae -- nickname for the Student Loan Marketing
Association.
S and L -- short for savings and loan association. Also S&L.
Satisfaction of mortgage -- the recordable instrument given by the lender that
evidences payment in full of the mortgage debt. Also known as a release deed.
Save -- to put aside a portion of
income, deferring its consumption until a future date.
Savings -- the total
accumulated amount of income that is not spent on consumption.
Savings account -- an account maintained by a customer with a
depository institution for the purpose of accumulating funds over a period of
time. Funds deposited in a savings account may be withdrawn only by the account
owner or a duly authorized agent, or on the owner's nontransferable order. The
account may be owned by one or more persons. Some accounts require funds to be
kept on deposit for a minimum length of time, while others permit unlimited
access to funds. Earnings may be in the form of dividends, as in the case of a
share type savings account, or interest as in the case of a deposit type
account.
Savings account loan -- a loan secured by funds on deposit in a savings
account, normally maintained at the lending institution. Funds in the savings
account equal to the amount of outstanding principal of the loan, may not be
withdrawn.
Savings & Community Bankers of America --
see America
Savings and loan association -- an association of savers and borrowers formally
established to accept deposits and make loans, primarily on residential real
estate. An association may be organized as a mutual or a stock association. A
mutual association is owned by its depositors and, in some cases, its
borrowers. A stock association is owned by its shareholders. A savings and loan
association may be chartered by a state or receive a federal charter from the Office
of Thrift Supervision. Savings and loan associations are also called S&Ls,
savings associations, building and loan associations, cooperative banks, or
homestead societies.
Savings association -- see savings and loan association.
Savings Association Insurance Fund (SAIF) -- the fund that provides deposit insurance for
savings institutions. SAIF was authorized by Congress in 1989 to take over the
thrift deposit insurance role held by the former Federal Savings and Loan
Insurance Corporation (FSLIC). SAIF is administered by the Federal Deposit
Insurance Corporation (FDIC).
Savings Association Trade Executive -- an organization made up of executives from state
savings and loan trade associations.
Savings bank -- a financial intermediary that accepts savings
deposits and invests these funds in loans primarily for commercial and
residential real estate, plus investments in government and high quality
corporate bonds and blue chip stock. Savings banks may be state-or federally
chartered and insured by the SAIF or the FDIC. In 1982, Congress removed all
differences between federally chartered savings banks and federally chartered
savings and loan associations as to the kinds of loans and investments they can
make.
Savings certificate -- a document that is evidence of ownership of a
savings account, typically an account in which a stated amount of funds is
deposited for a fixed term.
Savings flow -- the net increase or decrease of the total of all
savings account balances held by a savings institution during a specified
period of time.
Savings inflows -- the net increase over a period of time of the
total of all savings account balances held by one institution or all balances
held by a group of savings institutions.
Savings institution -- a financial intermediary established to promote
thrift by accepting savings from the public. Savings institutions include both
savings and loan associations and savings banks. Savings institutions are also
called thrift institutions.
Savings liability -- the total amount of savings deposits entrusted to
a depository institution by its depositors. It is the total amount of all
savings account balances held by an institution, including earnings credited to
such accounts, less redemptions and withdrawals.
Savings outflows -- the net decrease over a period of time of the
total of all savings account balances held by one institution or all balances
held by a group of savings institutions.
Sawbuck -- slang for a $10 bill.
Scheduled items -- problem
assets, which all SAIF-insured savings institutions must list in a separate
category in their financial reports to the Office of Thrift Supervision.
Scheduled items include slow real estate and consumer loans, real estate owned
as a result of foreclosure, and real estate sold on contract or financed at a
loan-to-value ratio greater than normally permitted. The amount listed as
scheduled items is one measurement of the soundness of an institution's
portfolio.
Scoping an exam -- slang for planning the activities to be performed
during a forthcoming examination of a savings association. The scope determines
the areas to receive special attention, the procedures to be used and the depth
of the review. In determining the scope, OTS staff considers: the institution's
regulatory plan, prior examination reports, supervisory actions,
correspondence, newspaper/magazine clippings, business plans, capital plans,
audit reports, management letters, OTS financial analysis reports, SEC filings,
and discussions with OTS and institution staff.
Scratch -- slang for readily available money.
Seasoned mortgage -- a mortgage that has been in effect at least one
year and on which principal and interest payments are being made on time.
Secondary mortgage market -- a market through which existing mortgage loans are
bought and sold to other lenders, to government or private agencies, or to
investors. Mortgage loans are originated to home buyers in the primary market
and sold to investors in the secondary market.
Second mortgage -- see junior mortgage.
Section -- a parcel of land in a government survey comprising one square mile
or 640 acres.
Secured -- guaranteed as to full payment by the pledge of something of equal or
better value.
Secured loan -- a loan for which the borrower pledges collateral
that will be forfeited to the lender if the borrower fails to repay the loan.
Secured party -- the person or organization holding a security
interest or lien against collateral. Also known as the mortgagee, the conditional
seller, or the pledgee.
Securities Act of 1933 -- federal legislation requiring the full and fair
disclosure of all material information about the issuance of new securities.
Securities Exchange Act of 1934 (SEA) -- federal legislation that established the
Securities and Exchange Commission (SEC). The Office of Thrift Supervision
administers the act's requirements for savings associations that are organized
as stock corporations.
Securities and Exchange Commission (SEC) -- a federal agency that regulates the securities
exchanges and the over-the-counter markets, and works to protect investors from
unfair and inequitable practices. The SEC administers the Securities Act of
1933, the Securities Exchange Act of 1934, the Trust Indenture Act, the Investment
Company Act, and the Public Utility Holding Company Act.
securities market -- a place or places where securities are bought and
sold, the facilities and people engaged in such transactions, the demand for
and availability of securities to be traded, and the willingness of buyers and
sellers to reach agreement on sales. Securities markets include
over-the-counter markets, the New York Stock Exchange, the Chicago Board of
Trade and the American Stock Exchange.
Securitization -- the process
of gathering a group of debt obligations such as mortgages into a pool, and
then dividing that pool into portions that can be sold as securities in the
secondary market.
Security -- (1) the collateral
that is given, deposited, or pledged to guarantee an obligation or the payment
of a debt. For example, the property on which a mortgage is issued is the
security for the mortgage loan. (2) a financial instrument that provides
evidence of a debt, or of rights to share in earnings or the distribution of
property. Stocks and bonds are securities. (3) measures taken to protect
property against theft or vandalism.
Security agreement -- a document or section of a note that contains a
description of the loan collateral. It establishes the lender's rights to the
collateral in the event of default on the loan.
Security deposit -- money paid by a renter to a landlord as security
against abuse of the rented property. The deposit is returned to the renter
when the renter leaves the property in good condition, except for normal wear and
tear.
Security instrument -- the mortgage or trust deed that is the evidence of
the pledge of real estate as security, as distinguished from the note or other
credit instrument.
Security interest -- an enforceable claim to collateral pledged to
secure payment of a debt or performance of an obligation.
Security interest in household goods -- a clause in a loan contract giving a lender a
nonpossessory lien on a borrower's personal property, including household
goods. This credit practice was prohibited for savings institutions by federal
regulation in 1985.
Seed money --
funds required to start a development
project, or to attract other capital investment.
Seisin --
the act of taking possession of real estate by its rightful and lawful owner.
Seizure -- the act of taking possession.
Self-check -- (1) a check deposited in a financial institution
for credit to the check writer's account. (2) a check presented for payment at
the institution on which it was drawn.
Self-liquidating -- the status of an asset that over a period of time
returns the total amount of its cost. For example, a fully amortized mortgage
is a lender's self-liquidating asset.
Seller’s market -- a market condition in which demand for a product
or service exceeds available supply, resulting in higher prices favoring the
seller. Opposite of buyer's market.
seller-servicer -- an organization approved by the Federal Home Loan
Mortgage Corporation (Freddie Mac) that sells mortgages into the secondary
market and services mortgages by collecting and forwarding monthly payments,
maintaining records and performing any other functions needed to keep the
mortgage loans current.
Selling group -- a syndicate of securities dealers that
participates in selling an issue of securities to the public.
Selling price -- the cash price that a buyer must pay for purchased
goods or services.
Selling short -- a technique employed by an investor who believes
the market price of a security will drop. The investor borrows stock, which he
then sells (even though he doesn't own it). If the price of the stock drops,
the investor can buy the same stock for less than what he originally sold it
for, and make a profit, after paying the brokerage commission for borrowing the
stock. The investor must return a like number of shares of the borrowed stock
to the stock lender.
Senior mortgage -- a first mortgage.
Senior securities -- preferred securities and bonds that receive higher
priority for payment than common stock when a company is liquidated.
Serial bond --
a bond issue in which a portion of the bonds are scheduled to be retired at
regular intervals over a period of years. Serial bonds are issued when the
underlying security for the bonds depreciates through use or obsolescence. The
maturities of the bonds are scheduled so that at any time, the bonds still
outstanding will not exceed the declining value of the security.
Service bureau -- a business that rents computer time or sells
data-processing services to savings institutions and other users.
Service charge -- a fee imposed by a financial institution for a
service, such as triggering an overdraft loan provision in a checking account.
Service Corporation -- a corporation wholly owned by one or more savings
institutions that engages in business activities reasonably related to a
savings institution. All activities must be approved by the Office of Thrift
Supervision, and can include some activities that the parent thrift may not
engage in directly. Typical service corporation activities include:
originating, holding, selling and servicing mortgages; performing appraisal,
brokerage, clerical, escrow, and research services; and acquiring, developing,
renovating or holding real estate for investment purposes. See operating
subsidiary.
Service life -- the anticipated duration of an asset's usefulness.
Servicing -- see loan
servicing.
Servicing contract -- a document
used in secondary mortgage market transactions that details servicing
requirements and legally binds the institution servicing the mortgage to carry
out the requirements.
Setback lines -- lines on a plot drawing that delineate how close
to the edges of the property a structure may be built. A structure may not
extend past the setback lines, thus may be no closer to the perimeter of the
property than the setback lines. Setback lines are defined in building codes,
deed restrictions, and zoning regulations.
Settlement --
the conclusion of a transaction when that which was bought is delivered to the
buyer and payment is made to the seller.
Settlement costs -- money paid
by borrowers and/or sellers to effect the closing of a mortgage loan. This
normally includes an origination fee, discount points, title insurance premium,
survey costs, attorney's fees, and prepaid items such as insurance and tax
payments to the escrow account.
Settlement day -- the deadline by which the seller must deliver and
the purchaser must pay for that which has been bought.
Settling -- (1) the process of balancing in-coming drafts that are accepted, as
well as returned checks that an institution receives and making payment for the
drafts within the check-collection system. (2) the process of delivering and
paying for items previously purchased. (3) an agreement reached between two or
more parties in contention. (4) a property arrangement to satisfy a dispute, as between a husband and wife. (5)
the winding up and final distribution of an estate.
Settlor -- a person who makes a settlement or creates a trust of property.
Also called a grantor.
Severally -- separately,
singly. For example, severally owned property is property owned by one person.
Being severally responsible for debt means a person or organization is solely
responsible for repayment of the obligation.
Share -- a unit of stock of
a corporation. Each share is equal to and has the same value as any other share
of the same stock. Each share is a portion of ownership of the corporation.
Shared-appreciation mortgage (SAM) -- a mortgage which gives the lender a portion of any
future increase in the value of the mortgaged property when sold in return for
a lower rate of interest to the borrower.
Shared equity loan -- a loan in which the lender shares in the equity of
the mortgaged property in return for a lower interest rate to the borrower.
Shareholder -- someone who owns or holds shares of stock in a
corporation such as a stock savings and loan association.
Shares outstanding -- all shares of stock issued by a corporation,
excluding treasury stock.
Shave --
(1) to cut a price by a small margin. (2) Reducing the amount a seller receives
by raising the charge for handing the sale of a low quality financial
instrument.
shelf registration -- the marketing procedure in which a company
registers a large amount of securities with the Securities and Exchange
Commission (SEC) at one time, and then sells them "off the shelf" in
smaller batches as market conditions warrant.
Sheriff’s deed -- a deed given by court order to convey title to
property that has been sold to satisfy a judgment of delinquent taxes.
Short -- the activity of
selling something prior to owning it. In securities markets, selling short
means a trader sells a futures contract or makes a forward contract for the
sale of a cash commodity or instrument without owning what is sold. The trader
must then buy an identical amount in order to deliver what has been sold. The
trader will make a profit in a market with declining
prices, since he will buy for a price less than the previous price at which he
sold. See long.
Short covering -- the buying of stock to use as a replacement for
identical stock that was previously
borrowed and sold. The purchased stock may be used to repay the original stock
lender.
Short position -- the status of a transaction in which an investor
has sold stock that he or she borrowed but did not own at the time of sale. The
position remains short until the investor actually buys stock in sufficient
quantity in order to return the same amount of stock that was borrowed to the
stock lender. See selling short.
Short-term deposits -- deposits with a maturity of less than one year.
sight draft -- a customer's order to a financial institution
holding the customer's funds to pay all or part of them to another institution
in which the customer has another account. The draft is payable upon delivery
to the first institution, or "upon sight." Also called a customer
draft.
Signature card -- a form signed by a depositor upon opening an
account at a financial institution. The card establishes the type of account
ownership and sets forth the account terms and the obligations of the customer
and the institution. Signature cards are used for subsequent identification of the customer by comparing the
customer's signature with the signature on the card.
Silver certificate -- a form of U. S.
Simple interest -- interest that is calculated on the outstanding
principal balance and not on any interest previously earned. See compound
interest.
Single entry --
a method of bookkeeping in which each transaction is entered only once on the
account books. See double entry.
Single-family dwelling -- a detached housing unit with open space on all
sides.
Sinking fund -- a fund used to accumulate the cash needed to pay
off bonds or other debt instruments, or to pay for future replacement of plant
and equipment.
Site value -- the worth of raw land, without improvements.
Situs -- Latin for a place
or situation where a thing is located. For example, a home is the situs of the
owner's personal property.
Skip
-- (1) to move with no forwarding address leaving a debt unpaid. (2) a person
who skips.
Skiptracing -- the work of collectors in developing information to
locate delinquent debtors and collect payment.
Skip-payment clause -- a provision of some mortgage contracts that allows
the borrower to skip monthly payments up
to the amount of payments that have previously been paid ahead of schedule.
Sky lease -- a lease of air rights, or the right to build a structure that,
except for its supports, is constructed above a plane over a specified
property.
slow consumer credit -- Office of Thrift Supervision regulations define
slow consumer credit as closed-end consumer credit accounts 90 to 119 days
delinquent, and open-end consumer credit accounts delinquent 90 to 179 days.
Slow loan -- a loan for which payments have fallen behind schedule. Such
delinquent loans must be reported to federal regulators. Office of Thrift
Supervision regulations spell out what constitutes a slow loan in terms of the
loan's age and how long it has been delinquent. Loans less than one year old
are slow when 60 days delinquent; those between one and seven years old are
slow when 90 days delinquent, etc.
Small Business Administration (SBA) -- a federal government agency that makes, guarantees
and purchases participations in loan to
small wholesale, retail, service and manufacturing businesses.
Small saver certificate -- a general term for a fixed-rate savings account
with a minimum maturity of 18 months, but no minimum deposit. New issues have
an interest rate tied to the average yield on comparable Treasury securities.
Solvency -- the condition that exists when liabilities amount to less than
total assets, thus providing the ability to pay debts.
Solvent -- the state of being able to meet expenses and pay debts.
Source document -- the original record of a transaction or an event.
Sources and uses of funds statement -- a thrift industry statement that shows the cash
flow between balance sheet accounts in a given reporting period.
Special assessment -- a property tax levied for a specified improvement only
on those properties directly benefiting from the improvement. Special
assessments are used to pay for such improvements as sewers, water systems,
street repairs and street lights. Also called an improvement lien.
Special assessment district --
any geographic area over which a governing authority has power to levy taxes
for specific public uses. Examples include: school districts, water and sewer
districts and lighting districts.
special mention -- a designation used by OTS examiners for thrift
institution assets that do not currently expose the institution to enough risk
to warrant adverse classification, but do possess credit deficiencies or
potential weaknesses deserving management's close attention. Special mention
assets have a potential weakness or pose an unwarranted financial risk that, if
not corrected, could weaken the asset and increase risk in the future. See
criticized assets.
Special series program -- a program of the Federal Home Loan Banks in which
an advance to one member thrift institution is matched in amount and term to a
certificate of deposit placed with the Bank by another member institution.
Specie --
coined money.
Specific valuation allowance -- a reserve held against specific assets classified
as loss. See general valuation allowance and valuation allowance.
Specification code -- see prescriptive code.
Speculation -- the act of knowingly investing funds in a venture
carrying higher-than-average risks in the hope of making above-average profits.
Speculators expect to make a profit because of price changes.
Spendthrift provision -- conditions written into a trust instrument that are
designed to prevent the beneficiary from spending income from the trust
extravagantly or wastefully. Spendthrift provisions limit the right of the
beneficiary in disposing of his or her interest in the trust, such as by
assignment, and limit the right of creditors to reach it, such as by
attachment.
Spin off -- the separation of a subsidiary or division of a corporation from
its parent by making it a new corporate entity and by issuing shares in the new
entity. Shareholders in the parent receive shares in the new entity in
proportion to their original holding and the total value remains approximately
the same.
Split-rate account -- a savings
account that pays higher rates of interest for higher account balances.
Spot delivery -- immediate delivery.
Spot market -- see cash market.
Spot zoning -- zoning that does not fit any predetermined pattern
of land use.
Spousal IRA --
an Individual Retirement Account (IRA) established by a working spouse for his
or her non-working spouse. Spousal IRAs were created by the Tax Reform Act of
1976.
Spread -- (1) the difference
between the interest rate at which money can be lent (the return on
investments), and the rate at which money can be borrowed (the cost of funds).
(2) the difference between two related prices. (3) the difference between the
bid and asked prices of securities.
Squatter -- someone who
illegally occupies another's property.
Stale-dated check -- a check payable on demand that remains uncashed
for an unreasonable length of time after its issue.
Standard Metropolitan Statistical Area
(SMSA) -- one or more cities or
counties designated by the Department of Commerce as an integrated economic and
social unit with a large population nucleus.
Standard program -- a program in which the Federal Home Mortgage
Corporation purchases mortgages for cash.
Standby commitment -- a promise by a lender to lend a specified amount
of money at specified terms at a future date. The borrower has the right to
cancel the loan. In the secondary mortgage market, the term refers to a promise
to purchase a loan or loans under specified terms, with the seller retaining
the option to cancel.
standby letter of credit -- a guaranty issued by a Federal Home Loan Bank on
behalf of a member thrift institution wishing to enter into an interest rate
swap agreement on its own. If the member institution defaults on its swap
contract, the standby letter of credit obligates the District Bank either to
pay a stated amount to the counterparty or to assume the swap obligation of the
member institution.
Starts --
residential units on which construction has begun. See housing start.
State-chartered association -- a savings institution that has received its
operating charter from a state regulatory authority.
Statement -- a written record
prepared by a financial institution, usually once a month, listing all
transactions for an account, including deposits, withdrawals, checks,
electronic transfers, fees and other
charges, and interest credited or earned. The statement is usually mailed to
the customer.
Statement of changes in financial position -- a financial statement that outlines the sources and
uses of funds and explains any changes in cash or working capital.
Statement of condition -- a statement of the amount and type of assets and
liabilities of an organization at the close of business on a given date; also
called a balance sheet.
Statement of financial accounting standards
(SFAS) -- an accounting rule or
procedure issued by the Financial Accounting Standards Board.
Statement of operations -- a summary of an organization's financial
operations during a specified period, showing income and its allocation to
operating expenses, payment of earnings, and additions to reserves.
Statement savings -- a type of savings account in which the customer's
record of account activity is contained in statements mailed to the customer
each month (or at some other stated interval). The statement lists all account
action -- deposits, withdrawals, interest postings and fees -- occurring within
a specified period.
Statute -- a law enacted by a
legislature.
step-up bond -- a bond that pays the investor an initial
above-market yield for a short, noncall period and then, if not called, steps
up to a predetermined higher coupon rate. The bond may include a series of
step-up rates and is callable at every step-up date. For example, the initial
rate may be 5 percent, increasing to 6 percent after two years, and 7 percent
after four years. The bond is designed to protect the issuer against falling
market interest rates. If interest rates fall, the issuer can call the bond. If
interest rates rise to levels equal to or higher than the step-up rate, the
issuer would likely not call the bond. A step-up bond is a type of structured
note.
Stock -- (1) shares of
ownership in a corporation. (2) the capital raised by the sale of shares. (3) a
certificate that shows ownership of a stated number of shares.
Stock association -- a savings and loan association that sells stock to
raise capital. It is owned by those who buy its stock, called shareholders, and
they may share in profits earned by the association. See mutual association.
Stockbroker -- a person who serves as a middleman and, for a fee,
facilitates the transactions between buyers and sellers of stock.
Stock certificate -- a document that constitutes written evidence of
ownership of a company's shares. The certificate lists the number of shares
registered in the name of the owner, the corporation issuing the shares, and
whether the stock is sold at par value or at market prices.
Stock dividend -- a portion of the net earnings of a corporation paid
to the corporation's stockholders of
record, with the payment consisting of additional shares of stock rather than
cash.
Stock exchange -- an organization that provides a market for trading
stocks and bonds.
Stockholder -- the owner of one or more shares of stock
representing some degree of ownership of a corporation.
Stock split -- see split.
Stock split-down -- the reverse of a stock split. The total number of
shares outstanding is lowered by issuing a new stock share to replace each of
two or more shares presently in circulation, thus increasing the market value
of the new shares. Also called a reverse stock split.
Stop payment order -- an order by a customer instructing a financial
institution to refuse payment when presented with a specific draft or check
written by the customer.
Story -- the part of a building included between two floors.
Straight-line depreciation -- the amortization of an asset's cost into uniform,
periodic amounts of expense during the asset's useful life.
Striking price -- the fixed price at which a security can be
purchased in a call contract or sold in a put contract. Also called the
exercise price.
Stripped mortgage-backed securities -- mortgage pass-through securities in which the cash
flow from the underlying mortgages is separated. All principal is diverted into
securities that pay only principal back to the investors, while all interest is
diverted into securities that pay only interest. The interest-only (IO) and
principal-only (PO ) securities are used as
hedging tools to provide greater stability for mortgage portfolios during periods
of fluctuating interest rates.
Structured notes -- debt securities which have many of the same
characteristics as derivatives but which are generally not backed by mortgages
or other collateral. They take various forms and often contain complex rate-adjustment
formulas and embedded options including calls, caps, and collars. The notes are
often customized to meet the needs of a particular investor. Types of
structured notes include: step-up bonds, index amortizing notes, dual index
notes, de-leveraged bonds, range bonds and inverse floaters. Structured notes
are issued by corporations and government sponsored entities such as the
Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation and the Federal Home Loan Banks.
Student Loan Marketing Association (Sallie
Mae) -- a federal
government-sponsored private corporation created to increase the flow of funds
into student loans by facilitating the purchase of student loans in the
secondary market. It is commonly called Sallie Mae.
Subcontractor -- a person or company under contract to perform work
for a developer or a general contractor.
Subdivision -- land divided into several parcels, usually intended
for development and individual resale.
Sublease -- a lease executed by a leasee to a third person granting use of the
leased property for the payment of rent for a period of time no longer than the
original lease.
Subordinated debt -- borrowing in the form of an unsecured note,
debenture, or other debt instrument, which in the event of the debtor's
bankruptcy, has a lesser claim to the assets of the debtor than other classes
of debt.
Subordination clause -- a mortgage clause that makes other debts or rights
in the collateral real estate secondary to the claim of the mortgage lender.
Subrogation --
the substitution of one person for another in reference to a debt, claim or
right.
Subscribe -- (1) to buy or pledge to buy an investment, such as stock or a
deposit, in a savings institution. (2) to sign or mark a document to signify
approval of its contents.
Subscriber -- a
person who promises in writing to purchase a certain number of shares of stock
of a specified corporation, or to deposit a certain amount of funds in a mutual
savings institution.
Subscription -- a written agreement to purchase that which is
offered.
Subsidiary --
an organization controlled by another organization or company.
Subsidize -- to furnish financial aid for a specific purpose. The government
subsidizes housing in a number of ways including low-interest loans, rent
assistance payments and the income tax deduction for mortgage interest
payments.
Substandard --
one of the categories of classified assets. See classification of assets.
Suburb -- a residential area
near a city; the area has an identifiable character and name, but is not
necessarily incorporated.
Sum-of-the-digits depreciation -- a method of calculating the depreciation of
residential property authorized by the 1969 Tax Reform Act. For example,
assuming a structure has 20 useful years, its number of useful life-years would
be calculated by adding: 1+2+3+4+5+6+7+8+9+10+11+12+13+14+15+16+17+18+19+20=210
years. This becomes the denominator in the calculation of the depreciation
value in any given year. The numerator is the number of years remaining in the
useful life of the property; in the first year this would be 20, in the second
year 19, etc. Thus, the formula for establishing the deprecation value in the
first year would be 20/210 times the depreciation base.
Sunset -- termination of an
entity or activity at the end of a stated period of time.
Sunshine Act -- a 1976 federal law called Government in the
Sunshine Act that requires (1) most meetings of most federal agencies shall be
open to the public and (2) the fullest practical disclosure to the public of
the government decision making process.
Superstructure -- the portion of a building above the ground or above
its foundation.
Super NOW account -- a variation of the negotiable order of withdrawal
(NOW) account. With a Super NOW account the offering financial institution sets
a higher interest rate if the account balance is maintained above a specified
minimum. If the balance drops below the minimum, the account earns the same
rate as the institution pays on regular NOW accounts.
Supervised lender -- a Veterans Administration classification meaning
any lender subject to examination and supervision by a state or federal agency.
Supervisory agent -- a title no longer officially in use. Prior to the
regulatory reorganization of October 1989, the title referred to an official at
one of the Federal Home Loan Banks who had lawful authority delegated by the
former Federal Home Loan Bank Board to carry out the enforcement of laws and
regulations dealing with the operation of savings institutions. The president
of each District Bank was traditionally designated the district's principal
supervisory agent. In October 1989, the supervisory agents became employees of
the Office of Thrift Supervision and now have various titles including
assistant deputy district director, assistant director, and supervisory
examiner.
Supervisory agreement -- a formal, written agreement between the board of
directors of a savings institution and the Office of Thrift Supervision. The
provisions of the agreement may require the institution to cease any statutory
or regulatory violations or unsafe or unsound practice, and the agreement may
require affirmative corrective action by the institution to correct any
existing violations, management or operational deficiencies, or other unsound
practices. Violation of a supervisory agreement is cause for the Office of
Thrift Supervision to initiate cease and desist proceedings against the institution
or against an officer, board member or employee of the institution. See consent
merger agreement.
Supervisory conversion -- the conversion of a savings institution from a
mutual form of ownership to stock ownership, with the conversion arranged by
the Office of Thrift Supervision. A supervisory conversion is normally used
when OTS, as the thrift's supervisor, has arranged the sale of a troubled
institution to new owners. Unlike a normal conversion, a supervisory conversion
does not require that the new capital stock be first offered for sale to the
institutions depositors and borrowers. All of the new stock is acquired by the
thrift's new owners.
Supervisory goodwill -- goodwill that is created when the purchase of a
savings institution is arranged by its federal regulator. See goodwill.
Supervisory merger -- a
consolidation of savings institutions arranged by the Office of Thrift
Supervision in which a weak institution that is at or close to insolvency is
merged into a strong institution.
Surcharge -- an additional charge imposed for a specific service, product or
purpose.
Surety bond -- a guarantee by which a third party (the guarantor)
is bound to assume responsibility for the completion of a project or the
performance of contracted acts if the second party (the contractor) defaults.
Surplus -- (1) that which is
over and above, or in addition to the required amount. (2) a mutual savings
institution's retained earnings after payments to savers and additions to
reserves. In a stock institution, these funds are called undivided profits.
Survey -- (1) a detailed inspection or investigation. (2) the act of making a
comprehensive inspection. (3) a map-like document that shows the exact
boundaries of a property, including lot lines and placement of roads, buildings
and other improvements on the property.
Survey of savings capital -- a report on savings accounts, generally grouped by
the rate of interest paid, or by type of account.
Swap -- (1) a technique of the
Federal Home Loan Mortgage Corporation by which original lenders exchange the
mortgages they have made for Freddie Mac Participation Certificates (PCs),
which provide the lender with ownership interests in the same mortgages. Freddie
Mac refers to the transaction as the Guarantor Program, because the corporation
adds its own guarantees to the safety of the mortgage investment. (2) a
financial transaction in which two counterparties agree to exchange streams of
payments over a period of time according to a predetermined rule. For example,
the counterparties may swap interest payments, with each paying the other's
interest on the same amount of principal. Usually a fixed rate interest
obligation is swapped for a floating rate interest obligation, so that both
parties can match the form of interest they owe on their debts with the form of
interest income they expect to receive on their assets -- fixed with fixed, or
floating with floating. Or, the counterparties may swap payments in one
denomination of currency for payments in another country's currency. Both
interest rate swaps and currency swaps are designed to lessen market exposure
of paying off debt in an environment of potentially changing interest rates.
Sweat equity -- the investment of labor, in lieu of cash, by the
owner-occupant of a property. Such labor creates improvements that increase the
market value of the property, and thus the owner-occupant's equity.
Sweep -- an arrangement to
maximize the interest earned by a customer who has both a high-interest rate
account and a low- or no-interest account at the same financial institution.
Funds not being immediately used in the low-interest account are automatically
transferred (swept) to the high-interest account, where they remain until the
balance in the low-interest account drops below a certain minimum and the funds
are transferred back to the first account. The funds may be swept to the
high-interest account overnight, or for longer periods of time.
Syndicate -- (1) a temporary association of two or more persons formed to carry
out some specific business venture, such as the development of large-scale real
estate projects. (2) a group of securities dealers who work together to
distribute a new issue of securities.
Syndicated loan -- a loan advanced jointly by two or more financial
institutions.
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