Washington State Department of Financial Institutions

Glossary of Terms

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Bait-and-switch schemes - the lender may promise one type of loan or interest rate, but switch you to a different one. Sometimes a higher (and unaffordable) interest rate doesn't kick in until months after you have begun to pay on your loan.

Balloon Mortgage - a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, a "balloon" or lump sum payment is due at the end of the term. Balloon mortgages frequently contain a provision to refinance when the balloon payment is due.

Balloon Payment - any payment that is more than twice the amount of any other regularly scheduled equal payment.

Bankrupt - a debtor who is judged legally insolvent and whose remaining property is administered for distribution among his creditors.

Bankruptcy - a federal law Whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.

Basis Point - a unit of measure for the change in interest rates that is equal to .01 percent (for example- 100 basis points equal 1%).

Bear Market - a period when the stock market in general declines.

Bearer - the person actually holding a legal instrument, such as a check, payable to "bearer" or endorsed in blank.

Beneficiary - a person who is entitled to the balance in an account upon the death of the owner (trustee) of the account.

Beneficiary - the holder of the instrument or document evidencing the obligations secured by the deed of trust, excluding persons holding the same as security for a different obligation. RCW 61.24.005(2).

Beta - a measurement of a stock’s performance calculated from past price patterns indicating how much a stock price can be expected to move in relation to a change in the market as a whole.

Blanket Mortgage - a mortgage covering at least two pieces of real estate as security for the same mortgage.

Bond -

  1. An interest-bearing certificate of debt, usually issued by a government or corporation, by which the issuer obligates itself to pay the principal amount at a specified time and to pay interest periodically.

  2. A legal contract by which an insurance company agrees to pay, within stated limits, for financial loss caused by the default or dishonest acts of a third party.

Bond Rating - a judgment about the ability of a bond issuer to fulfill its obligation to pay interest and repay the principal when it is due.

Borrower - a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Broker - a member of a stock exchange firm or an exchange member who handles orders to buy and sell securities and commodities for a commission.

Budget - a detailed record of all income earned and spent during a specific period of time.

Building Code - based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.

Bull Market - a period when the stock market in general increases.

Bylaws - the 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 corporate functions are to be operated.