An obligation or money owed to someone


A document or contract of legal bearing with evidence of title to property

Deed of trust

In some states a deed is used instead of a mortgage to secure payment and the title is conveyed to a trustee.


This is the title given to the lender when the borrower wants to avoid foreclosure due to default of loan. The lender retains the right to stop the foreclosure activities if the borrower asks to provide for this document. In such a case the deed-in-lieu will preclude the inclusion of documents related to the foreclosure from appearing in the credit hisotry of the borrower and being a matter of public record. However, irrespective of whether the lender accepts the deed-in-lieu or not, the non-repayment of debt will show on the credit history of the borrower.


When the borrower fails to meet the promise of monthly mortgage repayment as per the legally binding contract within a specified time it is known as default.


This is the failure to pay monthly motgage on due dates. Even if late fees are not charged, the late payment is called loan deliquent and beyond the stipulated 30 days, lenders have the right to report the late payment to credit bureaus.


A certain amount of money paid in advance in anticipation and assurance of receipt of a larger sum in the future. It is also termed 'earnest money deposit' in real estate terminology.


A decrease in the value of property or assets. It is used in accounting to show an expense to reduce taxable income. Since it is not an actual expense, only a representation of the decreasing montary value of a asset in use, lender will add back the depreciation expense for self employed borrowers and take it as income.

Down payment

The initial and part cash payment towards the price of the property which is not financed by the mortgage.

Days on the market

The time between the property being listed and either the sale of the property or the property being taken off the market.

Debt consolidation

Taking all of your multiple loans and bringing them together to form one single loan. This usually creates a lower monthly payment but extends the length of the loan. Sometimes referred to as a consolidation loan, and commonly used by student loan agencies.

Debt security

A security underlining a loan given by an investor or lender to a recipient. In return for the loan, the recipient agrees to pay interest and to repay the debt by a specified date.

Debt to available credit ratio

The combined amount of money a person has in outstanding debt, compared to the amount of credit available on all of the individual's credit cards. The higher a person's debt to available credit ratio, the higher risk that person poses to a lender.

Debt to income ratio

A percentage of pre-tax earnings that are used to pay off loans (auto loans, student loans and credit card balances). There are two ratios that lenders use to determine there decisions: The front-end ratio is the percentage of monthly before-tax earnings that are used for house payments (including principal, interest, taxes and insurance). In the back-end ratio, the borrower's other debts are factored in.


A postponement of loan repayment, often allowed by the lender during the duration of a student's education and for certain post-college programs such as the Peace Corps. Students may also request a deferment post graduation in times of financial hardship; this can change the terms of loan, however.

Deferred Interest

A deferred interest loan is when a loan payment stays the same while the interest rate increases. A deferred interest loan will let you choose to pay only the minimum payment--a payment less than the entire interest owed for that month. The unpaid interest is then added to your loan amount to be paid at a later date.

Delinquent mortgage

When a borrower fails to make their mortgage payments on time according to the terms of the loan.

Demand deposit

A deposit that can be withdrawn at any time without advance notice. A checking account is a demand deposit account.


A conditional instrument used by market participants which derives its value from an underlying security or notional amount. There are two types of derivatives: options/futures and swaps. The main use of derivatives is either to remove risk or task risk on depending if one were a hedger or a speculator.

Dimension plans

A diagram which outlines the location of a building on a lot but does not have the intricate details of a blueprint.

Direct financing

When a buyer sets up his or her own financing through an outside financial lender or institution as opposed to setting it up through the dealer.

Direct Loan

Refers to the William D. Ford Federal Direct Loan program. This lender provides student loans to students and parents directly through the U.S. Department of Education rather than a bank or lender.


The release of information which is relevant to the matter at hand. A statement identifying potential defects to a property, such as the existence of lead paint or chemicals known to cause cancer. Disclosure also refers to the act of the lender informing the borrower of all of the terms of the loan at the time of signing, including interest rates and other pertinent information.

Discount loan

A discount loan is a mortgage where the buyer has been given a reduced rate on a home loan when paying extra cash at closing. By purchasing mortgage points at closing, where each point equals one percent of your total loan amount, you can receive a discount loan.

Discount point

An amount or fee a borrower pays to a lender which will help decrease the interest rate on a mortgage loan. One point is equal to one percent.

Disposition fee

A fee imposed onto the lessee by some lessors at the end of a lease. The sum, spelled out in the lease, charges consumers for the privilege of giving back the vehicles they had leased from the dealer. This fee helps defray the cost for the dealer of preparing and selling the car after your lease is completed.

Distressed property

A piece of property that is in poor condition. This may also apply to the owner of the property if he or she is in poor financial condition.


A taxable distribution or payment of earnings to shareholders as declared by a company's board of directors. In credit unions, a dividend is the money paid to members for deposits. This is similar to the interest banks pay to their customers for their deposits.

Document needs list

An inventory of papers which a lender needs available to underwrite a loan. This list may include paycheck stubs, bank statements and tax returns.


A periodic payment made to a construction contractor or subcontractor as the project progresses. A draw is part of a construction loan.

Draw period

The period of time when a borrower may withdraw funds or obtain advances from the available line of credit. The time periods depend on the terms of your loan. At the end of the draw period, the borrow may renew the credit line or be required to pay the outstanding balance in full or in monthly payments.

Dry rot

A fungus who feeds on lumber causing it to crumble and rot away.

Dual agency

When a real estate agent or broker represents both the buyer and the seller in a transaction.

Due on sale clause

An agreement in the loan contract that demands the loan be paid off when the property is sold.


Two separate houses under one roof.

Date of maturity

Date of maturity is the date on which final payment is due for a loan or obligation.


Dating, in lending, is the practice of liberally extending credit to a borrower, beyond what would be offered in normal practice.

Day loan

A day loan is a type of funding offered to brokers for the purchase of securities. Funds are advanced with the promise that the broker will deliver the purchased securities to the bank later that same day. Once the securities are received, they become collateral, and the loan is converted to a broker's loan.

Dear money

Dear money is an economic term describing a situation where money is in short supply. Individuals and borrowers are generally unable to secure loans at affordable rates during a dear money period.

Death tax

Death tax is an informal term for estate or inheritance tax. Taxes are payable on the fair market value of the estate's property, net of liabilities, at the time of the decedent's death.


A debenture is an unsecured debt security, such as a Treasury bond or Treasury bill. Governments and highly-rated corporations can issue debentures to raise capital. Because there's no collateral supporting the debenture, investors must feel confident in the creditworthiness of the issuer.

Debit balance

Debit balance is an amount owed. In investing, for example, the debit balance reflects the amount of cash funding that a customer's margin account requires for settlement of a transaction.

Debit bureau

A debit bureau is an organization that tracks customers' checking account activities. Information tracked includes check writing and overdraft history. Banks use debit bureau information to identify potentially risky customers, i.e., those that have had a history of mishandling their cash accounts.

Debit card

A debit card is a plastic payment card that's linked to a deposit account. Debit cards are accepted for purchase transactions at participating businesses. When the card is presented and approved for payment, the transaction amount is almost immediately deducted from the account balance. Debit cards can also be used at the ATM for funds withdrawals, deposits, and transfers.

Debt deflation

Debt deflation occurs when the collateral supporting a loan declines in value. This scenario greatly increases risk for the lender and borrower. Consider a mortgage loan that financed 100 percent of the purchase amount: If the home declines in value, the lender's collateral will be worth less than the amount the borrower owes. If the borrower needs to sell the property, he would have to pay cash out of his pocket to cover the difference between the selling price of the home and the amount owed on the mortgage.

Debt instrument

A debt instrument is a document that defines or substantiates a borrower's obligation to repay an obligation or balance due.

Debt retirement

Debt retirement is the repayment of money owed. When a debt is completely paid off, it's said to be retired.

Debt service

Debt service is the total of required principal and interest payments for a given loan over a certain time period.


A debtor is an individual or entity that owes money. Debtors owing money to a bank or lender are called borrowers, and debtors owing money to investors (who have purchased the debtor's bonds or debentures), are called issuers.


A debtor-in-possession is an individual or entity that has petitioned for bankruptcy protection, but still holds property in which creditors have a security interest. A business in Chapter 11 bankruptcy can continue to operate, using the assets that are secured by creditors to generate income. A business in this situation is a debtor-in-possession.

Debtor-in-possession financing

Debtor-in-possession financing, or DIP financing, is a debt facility made to a company in Chapter 11 bankruptcy. DIP financing usually takes priority over other debts. The debt is subject to strict covenants, and the company must fulfill its ongoing reorganization obligations.

Debt-to-available-credit ratio

Debt-to-available-credit ratio is the quotient of an individual's outstanding debt obligations divided by that individual's total amount of approved credit. If a person has only one credit account of $5000 and owes $2500 under that account, the debt-to-available-credit ratio is 50 percent. From a lender's perspective, a higher ratio indicates greater risk.

Debt-to-income ratio

Debt-to-income ratio, or DTI, is the quotient of a borrower's minimum debt payments divided by that borrower's gross income for the same time period. DTI is used by lenders as one factor in the evaluation of risk associated with a debt request. From the lender's perspective, a higher ratio indicates greater risk.

Debt-to-income ratio - DTI

Debt-to-income ratio, or DTI, is the quotient of a borrower's minimum debt payments divided by that borrower's gross income for the same time period. DTI is used by lenders as one factor in the evaluation of risk associated with a debt request. From the lender's perspective, a higher ratio indicates greater risk.

Deceased alert

A deceased alert is a security notification indicating that a person has died, and should therefore not be issued credit. The alert prevents fraudulent parties from taking out credit in the decedent's name, or pursuing other, similar identity theft activities. Relatives of the deceased must request the issuance of a deceased alert from the credit bureaus.


A decedent is a deceased person.

Decreasing term insurance

Decreasing term insurance is a life insurance policy under which the death benefit amount payable declines over time. If the insured's death event occurs in the first month the policy is in force, the beneficiaries will receive the maximum death benefit. In each subsequent period, the death benefit will be lowered by a specified amount or percentage. Decreasing term insurance addresses circumstances where the insured has higher liabilities and lesser assets in the earliest years of the policy.

Deed in lieu of foreclosure

A deed in lieu of foreclosure is an exchange of outstanding (and usually past-due) mortgage debt in return for full ownership rights to the mortgaged property. A property owner in distress can sometimes avoid foreclosure by negotiating this arrangement with the lender.

Deed of release

A deed of release is legal documentation that a claim on a property has been removed. Once a mortgage debt is completely satisfied, either through regular payments or refinance, a deed of release is issued to indicate that the lender no longer holds a security interest in that property.


Deeds are legal documents that confer some privilege, such as property ownership, on the holder. A deed for a vehicle, for example, gives the holder the right to possess and use that vehicle. Deeds are most commonly associated with real estate property ownership.

Default premium

Default premium is the extra charge that a bad credit borrower must pay for borrowed funds. Financial institutions charge higher rates when lending money to individuals and corporate debtors with poor credit histories, because these borrowers present a higher risk of default.

Default probability

Default probability is a value representing the chances that a borrower will violate the terms of a loan contract. If a borrower fails to make payments as specified in the loan documentation, that borrower is said to be in default. Lenders use default probability as one factor in approving and setting terms for loan requests.

Default risk

Default risk describes the likelihood that a borrower will fail to make debt repayments as promised, or fail to meet other covenants of a loan agreement. Lenders assess a borrower's default risk when deciding whether to make a loan offer and what the terms of the offer should be.

Deferred account

A deferred account is a savings vehicle, such as an IRA, that postpones income tax liabilities until some future date. In regular IRAs, for example, earnings are not taxed until funds are withdrawn.

Deferred annuity

A deferred annuity is a savings program that postpones income payments and income tax liability until some future date. The annuity is structured with a savings phase, during which the accountholder makes contributions, and an income phase, during which the saved funds are paid out in installments.

Deferred compensation

Deferred compensation is the portion of an employee's income that's set aside for use at some future date. Most commonly, the deferred compensation is funneled into a retirement account or pension plan. Income tax on these funds is usually postponed until the money is accessed by the employee.

Deferred payment

Deferred payment is a form of short-term credit, where an amount due is to be paid back at some future date.

Deferred Profit Sharing Plan - DPSP

A Deferred Profit Sharing Plan, or DPSP, is a profit-sharing and pension arrangement available in Canada. Qualified DPSPs are registered with the Canada Revenue Agency and sponsored by employers. The employer deposits a portion of profits into the plan, and employees are not liable for income taxes until funds are withdrawn.

Defined-benefit plan

A defined-benefit plan is a type of retirement or pension arrangement. Under a defined-benefit plan, retirement payouts are calculated based on a specific formula; common factors include the employee's length of employment, and salary history. The employer manages the funding portfolio and is responsible for keeping it adequately capitalized to support future benefit obligations.

Defined-contribution plan

Defined-contribution plan is a retirement savings vehicle, where an employee voluntarily deposits a portion of her salary into the account, and is responsible for managing the investment portfolio. These include 401(k) and 403(b) plans.


Deflation is an economic condition where prices drop throughout a region or economy. Deflation, which is the opposite of inflation, can result from a tightening of the money supply.

Demand draft

A demand draft is an order that a bank transfer money from one account to another. Demand drafts, which are used in lieu of paper checks, are created by the recipient of the money using the customer's account number and bank routing number.

Demand loan

A demand loan is a debt that's repaid at the lender's request, rather than on a stated maturity date.

Dependency ratio

Dependency ratio is the percentage of a population that's below age 15, or above age 64. These age groups are considered dependents because they're either too old or too young to maintain regular employment. A high dependency ratio presents greater risk to an economy, because the burden of supporting the population is spread out over a relatively smaller number of people.


A dependent is one who relies on another person for financial support. Qualified dependents (usually children) are often claimed on the tax returns of the supporting party in exchange for a reduction in tax liability.

Dependent care credit

Dependent care credit is a tax reduction available to those who incur expenses associated with the care of a child, parent, or disabled spouse.

Designated agency

A designated agency is an arrangement where a buyer and seller in a transaction are both represented by agents within the same brokerage. Under designated agency, each agent separately represents only the interest of his client.

Destination charge

A destination charge is the fee associated with delivering a vehicle from the manufacturer to the dealership. The destination charge is added to the price of the vehicle and passed on to the buyer.

Digital wallet

A digital wallet is an electronic account set up by a consumer to facilitate payments for online purchases. The "wallet" allows a consumer to provide credit card and identification information to merchants without having to type it in manually.

Direct check printers

Direct check printers are service providers that offer check printing at a lower cost than is available through a bank or credit union. To process an order, the customer must provide a voided check and/or deposit slip. The printer verifies the account and identification information with the bank before printing the checks.

Direct deposit

Direct deposit is an electronic transfer of funds into a bank or credit union account. Direct deposit is most commonly associated with wages; in lieu of paper payroll checks, an employer automatically deposits wages into the employees' personal accounts. The IRS also offers direct deposit of tax refunds.

Direct lease

A direct lease is a type of financing, usually for equipment. The lessor buys the property or equipment from the manufacturer and then leases it to another party (the lessee) at a profit.

Direct participation program - DPP

A direct participation program, or DPP, is a business entity that operates as a passive investment vehicle. The entity makes investments, often in real estate, and then passes the resulting cash flows to investors.

Direct tax

Direct tax describes a tax that's paid directly to the taxing authority. For example, property taxes are paid to the tax assessor, and income taxes are paid to the IRS. Sales tax, however, is paid to a merchant first ,before being forwarded to the state. Direct tax can also refer to a tax that's related to property ownership, as opposed to a tax that's assessed upon the occurrence of some event.

Directors' indemnities

Directors' indemnities are promises by a company that the members of the board of directors won't be held liable for losses associated with the company's actions. Such indemnities would specify how the directors are protected.

Disaster loss

Disaster loss is the occurrence of damages associated with an unavoidable destructive force, such as a hurricane or forest fire. The parties who suffer disaster losses may qualify for special tax privileges.


Discharge is a synonym for release. In lending, discharge means to retire or write-off a debt.

Discharge of bankruptcy

Discharge of bankruptcy is a court order that ends a bankruptcy case, and clears the bankrupt debtor from the obligation of repaying creditors.

Discharge of lien

A discharge of lien is the release or elimination of a lien, usually following the repayment of debt, or satisfaction of a claim.


To disclaim is to deny or give up a right, ownership interest, or obligation. The action of disclaiming is usually done in writing, and it may or may not be enforceable.

Disclaimer trust

A disclaimer trust is a legal entity that holds assets for the purposes of passing them on to a beneficiary or beneficiaries at some future date. A surviving spouse can renounce ownership of assets and have them passed into the disclaimer trust without incurring the usual estate tax liabilities. The trust can then make regular payments to the beneficiaries.

Disclosed dual agency

Disclosed dual agency is a situation where a real estate broker represents both buyer and seller in a transaction; both parties are informed of the dual representation, and are made aware of the limitations of the situation. Limitations include the inability to represent the interests of both buyer and seller at the same time.

Disclosure statement

A disclosure statement is any document that spells out the terms of a debt arrangement, or other type of contractual relationship. Financial institutions must provide IRA applicants with a disclosure statement that clearly states the rules of the IRA. Lenders must provide a prospective borrower with a disclosure statement prior to loan funding, so that the borrower has a written explanation of the proposed loan terms.

Discount rate

The discount rate, in banking, is the interest rate charged to financial institutions when they borrow short-term funds directly from the Federal Reserve Bank. In finance, the discount rate is a factor in the relationship between the present and future values of cash. For example, a bond that's purchased for $60 now, and pays $100 in one year, has a discount rate of 40 percent; in other words, the future payment of $100 can be purchased now for $60, i.e., at a discount of 40 percent.

Discrete compounding

Discrete compounding is a method of calculating interest on a deposit, where accrued interest is rolled into the interest-earning balance at regular intervals. These intervals might be daily, monthly, or quarterly. Discrete compounding is an alternative to continuous compounding, where accrued interest is added to the interest-earning balance at infinitely small intervals.

Discretionary ARM

A discretionary ARM is a type of mortgage loan that gives the lender the option of changing the borrower's interest rate without limitation. Usually, the lender must only provide a certain notice to the borrower before implementing a rate change, and the rate can change in any amount. Discretionary ARMs are not offered in the U.S.

Discretionary income

Discretionary income is the amount of one's earnings that's available for voluntary spending after covering the cost of food, shelter, clothing, taxes, and other essentials.


To dishonor is to deny or refuse an obligation, such as failing to perform a promise made in a contract.

Disposable income

Disposable income, also known as disposable personal income or DPI, is the amount of one's income remaining after taxes have been paid. This amount represents what's available to the individual for spending and saving. DPI is monitored as an economic indicator.


A distribution is a payment or allocation. The term is most commonly associated with withdrawals from retirement or other tax-advantaged savings accounts, dividend or capital gain payments made from a mutual fund to its investors, or cash or stock payments made from a company to its shareholders.


Diversification is a tenet of conservative investing. It calls for spreading out investment funds among different classes of assets, different industries, and/or different companies, in order to reduce risk.


Divestiture is the act of selling off all or part of an investment. When a company sells off a business unit, for example, it's said to be divesting that unit. Divestiture is also known as divestment, i.e., the opposite of investment.

Do Not Call Registry

The Do Not Call Registry is a list of telephone numbers that telemarketers are not allowed to call. The Registry is maintained by the U.S. Federal Trade Commission; numbers are registered upon request and without charge.

Doctrine of utmost good faith

Doctrine of utmost good faith is the principle that both parties entering into a contract are acting honestly towards one another. In a lending transaction, for example, the applicant must honestly disclose all financial and employment information. The lender must also act in good faith, by providing the applicant with a full list of terms and conditions.


Domicile is a legal term referring to the place which governs an individual, usually the person's permanent residence. In the U.S., citizens have a state domicile, because state governments have their own laws about marriage, contracts, etc. Where the laws are different from state to state, an individual is held accountable for following the laws of his state domicile.

Domini 400 Social Index

The Domini 400 Social Index is a stock market index representing the weighted average of market capitalizations for companies that have demonstrated social and environmental excellence. The index is published by KLD Research & Analytics.

Donor advised fund

A donor advised fund, or DAF, is an entity that's created to facilitate the giving of charitable donations on behalf of an individual, family, or other entity. DAFs are easier to set up and maintain than foundations, and the donor is able to retain significant control over how the funds are managed.

Dormancy fees

Dormancy fees are charges assessed for the non-use of gift cards. Generally, a gift card is free from dormancy fees for a certain time period, such as one year. After that period expires, a monthly fee (the dormancy fee) is charged against the card balance until it is reduced to zero.

Double net lease

A double net lease places the responsibility for property taxes and insurance on the tenant or lessee. Repair and maintenance expenses are paid by the property owner/lessor.


Downshifting is the voluntary lowering of one's standard of living. Most commonly, downshifting involves the trade-off of lesser financial wealth in return for the hope of greater personal fulfillment. For example, a busy executive might give up a six-figure salary to spend more time with family.

Drip feed

A drip feed is a series of small investments made over a period of time. Start-up companies can receive drip feeds from investors in lieu of lump sum capital investments. Individual investors can make drip feed investments by contributing $100 per month (for example) to their retirement plans.


A drop, in investing, is the lowering of a numeric value, usually pertaining to indices, interest rates, and the prices of securities.


Drywall is a construction material used to finish interior walls and ceilings. It's made of gypsum plaster wrapped in a paper coating. Drywall is sold in panels, and can be purchased at any home improvement warehouse.

Dual apper

Dual apper is a slang term for a mortgage borrower who completes mortgage loan applications with more than one lender. Borrowers do this to keep their options open and protect themselves from last-minute rate and fee changes.

Dual Income, No Kids - DINKS

Dual Income, No Kids, or DINKS, describes a childless household supported by two streams of income. DINKS are significant to producers of high-end, luxury items, because they generally have large discretionary incomes.

Dual index mortgage

A dual index mortgage, or DIM, is a real estate property loan that uses an interest rate index to accrue interest expense, and a wage and salary index to calculate the monthly payment. If the payment doesn't cover the monthly accrued interest, the difference is added into the loan balance. DIMs are not available in the U.S., but they're popular in some Latin American countries.

Dually Employed With Kids - DEWKS

Dually Employed With Kids, or DEWKS, describes a household with children that's supported by two streams of income. DEWKS are an important demographic for companies that provide products and services related to children, such as toys, clothes, learning tools, etc.

Due date

The due date is the date on which a payment must be made. If the required payment isn't made on or before the due date, it's considered past due.

DUNS number

A DUNS number is an nine-digit identifier that's assigned to businesses by Dun & Bradstreet (D&B). D&B collects and maintains information on businesses' credit and payment history, and the DUNS number is used to locate a business' information within D&B's database. DUNS stands for data universal numbering system.


Durables are consumer goods that aren't consumed. Examples include furniture, consumer electronics, kitchen appliances, etc. Food is an example of a non-durable good.

Duration gap

Duration gap refers to the difference between the lifespan of a company's assets, and the lifespan of its liabilities. Analysis of duration gap is done to quantify the level of interest rate risk a company has. Duration gap is positive when assets have a longer duration than corresponding liabilities. This means that a company will benefit from falling interest rates, because the cost of liabilities will decrease faster than the value of the assets.

Dutch Tulip Bulb Market Bubble

The Dutch tulip bulb market bubble occurred in the early-1600s. Tulips became a status symbol among the upper classes of Holland; strong demand drove market speculation, which sent the prices of tulips bulbs to unsustainable levels. Bulbs were traded on stock exchanges, and novice investors were selling off personal assets to participate in tulip investment. In 1637, prices dropped, and tulip bulbs were sold off in a panic. Many investors lost everything as a result