Finance Inportant definition

Takedown -- the actual transfer of money from a lender to a borrower under a loan agreement, loan commitment, or line of credit.

Takeout commitment -- a promise by a lender to provide a long-term mortgage loan upon satisfactory completion of construction.

Takeout loan -- a permanent loan on real property, which takes out the interim, construction loan.

Tandem plan -- a program in which the Government National Mortgage Association (GNMA) buys certain mortgages at a subsidized price for subsequent resale at market prices to the Federal Home Loan Mortgage Corporation (FHLMC) or the Federal National Mortgage Association (FNMA).

Tangible assets -- physical and material assets that have shape and form, and can be touched. Examples are cash, land, and buildings.

Tangible capital -- OTS defines a thrift institution's tangible capital as outstanding stock plus retained earnings. In 1989, OTS set the minimum tangible capital requirement for savings institutions at 1.5 percent of assets. See core capital and risk-based capital.

Tangible equity -- the amount of a savings association's core capital plus the amount of outstanding cumulative perpetual preferred stock minus all intangible assets not previously deducted except purchased mortgage servicing rights that may be included in core capital and qualifying supervisory goodwill that can be counted as core capital.

Tangible net worth -- same as tangible capital. See tangible capital.

Targeted examination -- an examination that focuses on specific areas of a financial institution's operations.

Tax abatement -- a reduction of taxes or an exemption from taxes granted by a local government on a piece of real property for a specified length of time.

Taxable year -- the 12-month period used as the basis for calculating federal tax on income received during that time period. Also called the tax year.

Tax deed -- a deed on property issued when the property is purchased at a public sale for nonpayment of taxes.

Tax-deferred annuity -- an investment vehicle generally used to create income for retirement. Pretax dollars are invested by an employer for an employee to provide a future stream of income to the employee for either a fixed number of years, or for life. Federal income tax on the pretax dollars invested and on the interest they earn is postponed until the retirement income is received.

Tax-deferred income -- income which is subject to tax when earned, but for which the actual tax payment is postponed until a later time.

Tax-deferred investment -- an investment that is subject to tax, but on which the actual tax payment is postponed until a later time. Normally, the payment is delayed until a person is in a lower tax bracket, thus reducing the tax liability.

Tax escalation clause -- a provision in a lease for the tenant to pay for any increase in real estate taxes imposed on the leased property.

Tax-exempt -- the state of an investment that produces income not subject to federal and/or state income tax. For example, tax-exempt bonds are sold by local governments to finance such public projects as sewers, school construction and parks.

Tax lien -- a government claim against real property for unpaid taxes.

Tax participation clause -- a provision in a lease stipulating that the tenant will pay all or part of the real estate taxes on the leased property. Also called a tax stop clause.

Tax sale -- the sale of property by a taxing authority or an officer of the court acting on a judgment to satisfy the payment of delinquent taxes.

Tax-sheltered income -- all income which is exempt from taxation or on which taxes are deferred.

Tax sheltering -- any legal means of postponing or reducing the amount of tax due.

Tax stop clause -- see tax participation clause.

Teaser rate -- an initial, below-market interest rate offered on loans. After the initial time period, the permanent rate takes effect.

Teller -- an employee of a depository institution who waits on customers, usually from behind a counter or some other partition. Tellers accept deposits, provide cash or checks for withdrawals, and perform most other routine customer services involving transfers of funds.

Teller’s check -- a check drawn by a depository institution on an account maintained at a second depository institution and signed by a teller at the originating institution. Teller's checks are often used in payment of withdrawal orders.

Tenancy -- the holding of property (including real estate and deposit accounts) either by ownership or by lease.

Tenancy at will -- the lease of real estate that may be canceled at the will of either the landlord or the tenant, usually with notice.

Tenancy by the entirety -- a form of ownership by a husband and wife, recognized in some states, in which one may not act without the other's consent in matters affecting property. When one dies, the rights of the deceased spouse automatically pass to the survivor. See tenancy in common, and joint tenancy.

Tenancy in common -- a form of ownership in which two or more parties own property, with each owning a separate interest. When one owner dies, that owner's share passes to his or her heirs and not to the remaining owners. When ownership of a deposit account is established as tenancy in common, the signatures of all owners are necessary for a withdrawal. See joint tenancy and tenancy by the entirety.

Tenant -- a person or organization that has the temporary use and right of occupancy of real property owned by another.

Tender offer -- a public offer to buy shares of stock from existing stockholders of one public corporation by another company or other organization under specified terms good for a stated time period. The offer is for stockholders to "tender" (surrender) their holdings for a stated price, usually at a premium above the current market price. The offer is made subject to the buyer being able to obtain at least a minimum number and no more than a maximum number of shares.

Term -- the period of time established to repay a loan or redeem a security.

Term deposit -- funds deposited in a savings account, the terms of which impose a financial penalty if funds are withdrawn before a specified date.

Term loan -- a loan with a maturity of usually three to five years, during which time interest is paid, but no payments to reduce principal are made. The entire principal is due and payable at the end of the loan term.

Term mortgage -- a mortgage loan with a fixed time period, usually five years or less, during which only interest is paid. At the end of the term, the entire principal is due and payable.

Terms -- the details, specifications, obligations, requirements, and conditions of an agreement, or contract.

Testament -- the written declaration of an individual citing how he or she wishes his or her property to be disposed following his or her death.

Testamentary account -- deposited funds owned and controlled by an individual and invested in a revocable trust account, tentative or Totten trust account, payable-on-death account, or a similar account for which there is evidence of the intention that deposited funds will be paid to a named party at the time of the account owner's death.

Testate -- the status of having signed and left a legal will at the time of death.

Testator -- a male who has set forth in a will his desires and bequests for the distribution of his property when he dies.

Testatrix -- a female who has set forth in a will her desires and bequests for the distribution of her property when she dies.

Three-flat -- a three-story walk up apartment building in which each dwelling unit occupies one story and all share a common main entrance.

Thrift -- another term for a thrift institutions.

Thrift Administration Review Program (TARP) -- an OTS program to help savings associations improve their books, records and loan files and to implement better internal controls.

Thrift bulletin -- a directive issued by the Office of Thrift Supervision to thrift institutions providing clarification of regulations or laws and/or specifying guidelines and procedures. The thrift bulletin series and the regulatory bulletin series are successors to the previous R, T, SP, and AB memoranda issued by the former Federal Home Loan Bank Board.

Thrift Depositor Protection Oversight Board (TDPOB) -- a government agency that provides guidance to the Resolution Trust Corporation (RTC). The TDPOB was formerly the Resolution Trust Corporation Oversight Board. It was renamed and reorganized by the Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991.

Thrift financial report (TFR) -- the report that savings institutions must file each quarter with the Office of Thrift Supervision. The report includes detailed information about the institution's operations and financial condition. The thrift financial report for savings institutions is similar to the call report required of commercial banks.

Thrift industry -- all of the operating financial institutions that primarily accept deposits from individual savers and loan funds for home mortgages. These include savings and loan associations, savings banks and credit unions.

Thrift Information Exchange System (TIES) -- a computer data base used by Office of Thrift Supervision staff to access information on individual savings associations and various segments of the thrift industry.

Thrift institution -- the general term for savings banks, savings and loan associations, and credit unions.

Tick -- a small fluctuation in price, either up or down.

Tier 1 capital -- as defined by OTS' Prompt Corrective Action regulation, tier 1 capital is the same as core capital.

Tier 1 risk-based capital ratio -- the ratio of tier 1 capital to risk-weighted assets.

Time Activity Reporting System (TARS) -- the agency-wide computer program used to keep track of hours worked by OTS employees.

Time deposit -- a deposit of funds in a savings institution under an agreement stipulating that (a) the funds must be kept on deposit for a stated period of time, or (b) the institution may require a minimum period of notification before a withdrawal is made.

Time sharing -- a form of real property ownership that grants each of several owners the exclusive right to occupy a housing unit during a specified time period each year.

Title -- (1) the ownership right to property, including the right of possession. (2) the document or instrument constituting evidence of such an ownership right. See abstract of title.

Title binder -- a written evidence of temporary title insurance coverage in force for a limited period of time, which is to be replaced by a permanent policy.

Title Company -- a business firm that examines real property titles, reports its findings as to the legal status of such titles, and issues insurance policies to indemnify the owner and lender against financial loss resulting from unknown title defects or prior claims against the property.

Title defect -- any fact, circumstance or lawful right that could successfully claim all or part of a property or could challenge the ownership of the property.

Title insurance -- the insurance that protects both the lender and the homeowner (borrower) against loss resulting from any defects in the title or claims against a property that were not uncovered in the title search, and that are not specifically listed as exemptions to the coverage on the title insurance policy.

Title report -- a written statement by a title guarantee company that sets forth the condition of title to a specified piece of real estate as of a certain date.

Title search -- a review of public records to determine whether there are any claims or defects in the current owner's title to real estate.

torrens system -- a method of registration of title to land with the appropriate public office, by which an official certificate at the office always shows the condition of the title and the person in whom it is vested.

Tort -- a wrongful act committed against another person or against another person's property, for which the injured party is entitled to compensation.

Tortfeasor -- a person who commits a tort.

Totten trust account -- a trust account established without a written trust agreement. The trustee deposits his or her own money into the account. The trustee retains ownership of the account, but holds it in a revocable trust for a named beneficiary. Upon the death of the trustee/depositor, the balance in the account may be claimed by the beneficiary.

Town house -- a low-rise, single-family dwelling, attached to one or more similar dwellings by common walls, and having a separate entrance.

Township -- a legal description of land established by the government survey system, six miles square, containing 36 sections or 36 square miles or 23,040 acres.

Tract -- an area of land designated for a specified purpose or a specified development.

tract house -- a house located in a subdivision in which style, floor plan, color, design, and price are repeated in various structures within the development.

Trade -- the consummation of the purchase or sale of a security.

Trade date -- the date a security transaction is executed.

Trader -- an individual who buys and sells securities for his or her own account for short-term profit (loss). The term also refers to an employee of a broker, dealer or financial institution who buys and sells securities for the firm or its clients.

Trading account -- a group of securities that are purchased with the express intent of selling them prior to their maturity.

Tranche -- one of the classes, portions or segments of a bond or mortgage-backed security, such as a Collateralized Mortgage Obligation (CMO). Each tranche normally offers different terms, usually involving the length of time it takes for principal to be repaid to investors. With this type of security, all payments of principal from the underlying mortgages are diverted initially to the first tranche. When all principal has been repaid in the first tranche, payments of principal begin to the second tranche and, after the second tranche is retired, the payments continue in turn to the rest of the tranches, like a series of steps, until investors in the last tranche have been repaid. By selecting a particular tranche, investors choose whether they want their funds repaid quickly or whether they want to lock in their investment for a longer period of time. In another meaning, tranche also refers to a portion of a bond that is distributed in another geographic area, such as a foreign country.

Transaction -- (1) any agreement between two or more parties that establishes a legal obligation. (2) the act of carrying out such an obligation. (3) all activities that effect a deposit account that are performed at the request of the account holder. (4) All events that cause some change in the assets, liabilities or net worth of a business.

Transaction account -- any account from which funds may be transferred to a third party on demand of the account holder. Included are demand deposit (checking) accounts, negotiable order of withdrawal (NOW) accounts, automatic transfer (bill paying) accounts, and credit union share draft accounts,

Transfer agent -- a company that issues, registers, and redeems securities on behalf of the security issuer.

Transfer and stamp taxes -- the taxes paid to a local or state government in connection with the execution or recording of mortgages or other financial instruments.

Transit number -- see ABA number.

Traveler’s check -- a type of check designed especially for business or vacation travelers. The traveler pays for the checks in advance. Thus the check is an order from the issuing company to pay on demand. Traveler's checks are issued in various fixed denominations, may be cashed almost anywhere in the world, and are insured against loss, theft, or destruction.

Treasury bill (T-bill) -- a short-term debt obligation issued by the U. S. Treasury at a discount under competitive bidding, with a maturity of up to one year. The bills are issued payable to the bearer only, and are sold at a minimum face value of $10,000.

Treasury bond -- a federal government debt obligation, ordinarily payable to the bearer, that is issued at par, with maturities of more than five years, and with interest payable semiannually.

Treasury certificate -- a U. S. Treasury security usually issued at par with a specified rate of interest and a maturity of one year or less. It is issued payable to the bearer and sold in minimum amounts of $l, OO0.

Treasury note -- a debt obligation of the U. S. Treasury, usually issued payable to the bearer with a fixed maturity of not less than one year nor more than seven years. It is issued at par, with a specific interest return payable semiannually.

Treasury securities -- interest-bearing debt obligations of the U. S. government that are issued by the Treasury as a means of borrowing money to meet government expenditures not covered by tax revenues. Marketable Treasury securities include bills, notes, and bonds. See Treasury bill, Treasury note, and Treasury bond.

Treasury stock -- shares of stock previously issued by a corporation that have been reacquired by that corporation by purchase, gift, donation, inheritance or other means.

Tri-party agreement -- see buy-sell agreement

Triplex -- a low-rise building comprised of three dwelling units, each with a separate entrance and yard, but sharing some common walls.

Truncation -- the arrangement under which a financial institution does not return canceled checks or drafts to the account holder. Instead, the checks or drafts are microfilmed and the microfilm becomes the record if the customer requests a copy of the check or draft.

Trust -- a legal entity created to manage property for the benefit of a specific person or persons. A trust is funded when the owner (the grantor) transfers ownership of property to another (the trustee) for the immediate or eventual benefit of a third person, (the beneficiary). The person who creates a trust is called a grantor, settlor or trustor. The person designated to receive assets at the end of the trust term is called a remainderman.

Trust account -- (1) a savings account, established under a trust agreement, containing funds administered by a trustee for the benefit of another person or persons. (2) an escrow account.

Trust agreement -- a written agreement under which a grantor transfers legal ownership of property to another person or organization charged with administering the property for the benefit of a third person or persons. See deed of trust.

Trust deed -- see deed of trust.

Trustee -- (1) a person to whom the title of property has been conveyed for the immediate or eventual benefit of another. (2) the legal title holder and controller of funds in a trust account established under a trust agreement for the benefit of another.

Trust fund -- an amount of capital which a person (the trustor) places in custody of a trustee to be administered for the benefit of another (the beneficiary).

Trust indenture -- see deed of trust.

Trustor -- an individual who establishes a trust by giving property to a trustee for the benefit of another. Also called a settlor.

Truth-In-Lending -- the popular name for the Consumer Credit Protection Act (Regulation Z), which requires lenders to disclose to borrowers the cost of financing during the life of the loan.

Turnkey project -- a project in which a builder/developer contracts to construct a completed facility that includes all items necessary for use and occupancy. All that is required of the buyer to begin using the facility is to turn a key in the new door lock and enter.