Glossary
A.L.T.A.: American Land Title Association. (Protects lender)
ABSORPTION RATE: The rate at which a real estate market can absorb properties of a given kind.
ABSTRACT OF JUDGMENT: A summary of the essential provisions of a court judgment, which when recorded in the county's recorder's office, creates a lien upon the property of the defendant in that county, both presently owned or after acquired,
ACCEPTANCE: When the seller or agent's principal agrees to the terms of the Agreement of Sale, approves the negotiation on the part of the agent, and acknowledges receipt of the deposit in subscribing to the Agreement of Sale.
ACCRUED DEPRECIATION: The difference between the cost of replacing a building and its present market value.
ACTUAL AGE: The actual number of years since a structure was built; the chronological age.
ADJUSTABLE-RATE MORTGAGE (ARM): A mortgage whose interest rate changes over
time based on an index.
ADJUSTMENTS: The changes in the selling price of a property that are made to reflect the apportionment of taxes, utilities, rents, etc., calculated at the time of the closing (settlement) and reported on a settlement statement.
ADVERSE ACTION: Denial, or counter offer or credit, or the offer of credit on terms less favorable than terms requested by a credit applicant.
AGENT: One who represents another from whom he has derived authority.
AGREEMENT OF SALE: A written agreement or contract between seller and purchaser in which they reach a meeting of minds on the terms and conditions of the sale.
AMENITY: Something other than the construction materials, which increases the enjoyment, derived from a property such as good design, superior view, etc.
AMORTIZE: To reduce a debt by regular payments of both principal and interest, as opposed to interest only payments.
APPLlCATION: A request for extension of credit ev;d(;~nced by supplying written personal and financial information and agreement to and assistance with verification of such information.
APPRAISAL: A supported estimate of a defined value made by a person knowledgeable about the type of property being appraised.
APPRAISAL REPORT: A written report of the appraiser's estimation of the value of the property as well as other data concerning the property and evidence to support the evaluation opinion.
APPRAISED VALUE: An estimation of the value of a property based on a systematic analysis of location, improvements, market conditions, etc.
APPRAISER: One qualified by education, training and experience who is hired to estimate the value of rear and personal property based on experience, judgment, facts, and use of formal appraisal process.
APPRECIATION: An increase in the property value of a house due to changes In market conditions or other causes, such as reproduction cost, elimination of negative factors, greater demand, community growth, improvement, etc.
ARM'S LENGTH: Legal slang meaning there existed no special relationship between the parties involved in any matter, which would taint the resu1t.
ASSETS: Anything owned by a company or an individual, which can be sold 10 repay debts.
ASSIGNMENT: A transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein.
ASSUMABLE MORTGAGE: A mortgage that can be taken over ("assumed") by the buyer when a home is sold.
ASSUMPTION: The transfer of the seller's existing mortgage to the buyer.
ASSUMPTION OF MORTGAGE: The taking of title to property by the grantee, wherein s/he assumes liability for payment of any existing note secured by a mortgage or deed of trust against the property; becoming a co-guarantor for the payment of a mortgage or deed of trust note.
BALLOON NOTE: A note requiring a series of periodic payments that do not fully pay the
loan and a large principal (balloon) payment at the end of the term.
BANKRUPTCY: A procedure of federal law to seize the property of a debtor and divide it among creditors.
BASE AND MERIDIAN: Imaginary line used by surveyors to find and describe the location of private or public land.
BENEFICIARY: One who benefits (receives money, etc.) from the actions of another such as the creation of a trust; the lender involved in a note or deed of trust.
BINDER: A notation of coverage on an insurance policy, issued by an agent, and given to the insured prior to issuing of the policy.
BRIDGE LOAN: A short-term mortgage given on one property in order to purchase another
without contingencies; funds from the sale of the first property must be used to pay-off the loan; may also be converted to a second mortgage on the property purchased.
BUILDING CODES: The set of governmental regulations that specify minimum construction standards. Often there are separate codes for the electrical and plumbing systems.
BUILDING PERMIT: Authorization given by local governments for construction.
"C" CORPORATIONS: A state chartered business owned by stockholders. The stockholders are not personally responsible for the debts of the corporation.
C.L.T.A.: California Land Title Association. (Protects owners-may be substituted by new policy ALTA-R).
CASH OUT REFINANCE: Transaction in which the amount of money received from the new loan is greater than what is required to satisfy the existing liens plus closing costs.
CASH RESERVE: Cash remaining after closing, a requirement of some lenders that buyers have sufficient money to make the first two mortgage payments.
CC&Rs: (Covenants, Conditions & Restrictions) - Limitations placed on property to assure uniformity in use.
CERTIFICA TE OF COMPLETION: A document signed by homeowners affirming their satisfaction with the labor and materials of their home and authorizing the lender to pay the builder.
CERTIFICATE OF ELIGIBILITY: A certificate of eligibility for a VA loan issued by The Veterans Affairs.
CERTIFICATE OF OCCUPANCY: A document issued to a builder by a local building department, which certifies that a building is free of building code violations and fit for occupancy.
CERTIFICATE OF REASONABLE VALUE (CRV): The Veterans Affairs appraisal commitment of property value.
CERTIFIED APPRAISER: As specified in the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), an appraiser who has been certified by the appropriate state to value general property..
CHAIN OF TITLE: The chronological order of conveying a parcel of land, from the original owner (usually the owner) to the present owner.
CLEAR TITLE: A title that is free of liens and .legal questions as to ownership of the property.
CLOSING: The occasion where a sale is finalized; the buyer signs the mortgage, and closing costs are paid. Also called "settlement".
CLOSING COSTS: Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Also called "settlement costs."
CLOSING STATEMENT (SETTLEMENT STATEMENT OR HUD.; 1): A final, detailed account prepared by an escrow agent, lender or other closing agent of all cash received, charges and credits involved in closing a real estate transaction which lists the final settlement between buyer and seller.
COLLATERAL: Real property accompanying a mortgage as its security.
COMMISSION: An agent's compensation for performing the duties of his agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc.
COMMITMENT: A statement in writing made by a lender to a borrower that it will loan a certain amount of money at a particular rate of interest; a statement contained in a preliminary title report that indicates a title insurance company is willing to Insure title to real property.
COMMUNITY PROPERTY: Property accumulated through joint efforts of husband and wife.
COMPARABLE SALE: Sales, which have similar characteristics as the subject property and are used for analysis in the appraisal process.
COMPARABLES: An appraisal term for properties that are similar in value for a particular property and are used to indicate fair market value for that property.
COMPARATIVE METHOD: A technique used by appraisers to compare one property with another. Often the comparison is done on the basis of a common unit such as square feet or cubic feet.
CONDITIONAL COMMITMENT: FHA commitment of a definite loan amount for some future unknown purchaser of satisfactory credit standing.
CONDOMINIUM: A form of property ownership in which the homeowner holds title to an individual dwelling unit combined with joint ownership of common areas of the structure and the land.
CONDOMINIUM CONVERSION: The changing of rental units to condominium units and common area.
CONFORMITY, PRINCIPLE OF: An Appraisal principle, which holds that uniformity of properties in a neighborhood, produces maximum value.
CONSTRUCTION COST: The total cost of constructing a building including the price of land, labor, materials and profit.
CONTIGUOUS: A property that is touching, bordering, or very near to another property, also used in foundations, meaning touching or connected to property.
CONTINGENCY: A condition that must be met before a contract is legally binding.
CONTRACT: An agreement, either written or oral, to do or not to do certain things,
CONVENTIONAL MORTGAGE: Any mortgage that is not insured or guaranteed by the federal government.
COOPERATIVE: A form of ownership in which each owner shares in a corporation that owns an entire property and has the exclusive right to occupy part of the property. The corporation is run by directors, who are elected by the corporation stockholders.
COST APPROACH TO VALUE: One of the three traditional approaches to value used by real estate appraisers, based on the theory that the value of property is the sum of the value of the land plus the reproduction cost of all the improvements, less depreciation from all causes.
COST APPROACH: One of three methods in the appraisal process. An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting for the estimated accrued depreciation, then adding the market value of the land.
COVENANTS, CONDITIONS, & RESTRICTIONS: (CC&Rs) - Limitations placed on property to assure uniformity in use.
CREDIT REPORT: A report of an individual's credit history prepared by a credit bureau and used by a lender ii-' determining a loan applicant's credit worthiness.
CREDITS: Generally, reduction of money due a seller to compensate a buyer for actual or potential expenses associated with deficient property condition or expense of property acquisition.
DEBTS COVERAGE RATIO (DCR): The ratio of annual net operating income divided by the annual debt service used on income producing property. Lenders usually specify a minimum OCR that they require the property to meet during the first year of a loan term. For example, if a property is estimated to have a NOI (Net Operating Income) of $12,000 for a given year and debt service (principal and interest) during that year of $1 0,000, then the DCR is $12,000/$10,000 or 1.2.
DECLARATION OF CONDOMINIUM: A document required by state statute to be filed as part of the process of establishing a condominium form of ownership for a property. 1t usually contains a description of the property, a description of the common elements, and designations of the individually owned units..
DEED: The legal document conveying title to a property.
DEED OF TRUST OR MORTGAGE (SECURITY INSTRUMENT): The instrument used to secure real property in the name of a lender until ~ loan is fully paid.
DEFAULT: Failure to make mortgage payments on a timely basis or to comply with other conditions of a mortgage.
DEFECTIVE TITLE: Title, which has been transferred under false pretenses or does not contain all the necessary elements to make a contract binding.
DEFERRED MAINTENANCE: Repairs that need to be done to rehabilitate a property but. which have not yet been done.
DELINQUENCY: A loan in which a payment is overdue but not yet .in default.
DEMINIMIS PUD: A term used by the Federal Home Loan Mortgage Corporation to describe a PUD in which the common property has a relatively insignificant influence upon the enjoyment of the premises or has little or no effect upon the value of the property. See also Planned Unit Development.
DEPOSIT: Cash paid to the seller when a formal sales contract is signed
DEPRECIATION: The difference between there production cost of improvements and their value. It is the loss in value suffered by improvements to property and personal property caused by physical deterioration, functional obsolescence, and economic obsolescence. Appraisers tend to use still different methods when they use the cost approach.
DEPRECIATION RATE: The rate of percentage at which a property depreciates {is used up).
DEPRECIA TION: Loss of value in real property brought about by age, physical deterioration
or functional or economic obsolescence. Broadly speaking, this is a loss in value from any cause.
DEVELOPER: Someone who readies raw land for construction and then either sells it to a builder or acts as a builder and proceeds to construct improvements on the property.
DISCOUNT: An amount deducted in advance from the principal before the borrower is given the use of the principal (refer to lesson book discount points).
DONEE: A person to whom a gift is given,
DONOR: A person who makes a gift.
DOWN PAYMENT: The part of the purchase price, which the buyer pays in cash and does not finance with a mortgage.
DUE-ON-SALE CLAUSE: A provision in a mortgage allowing the tender to demand repayment in full if the borrower sells the property securing the mortgage.
DUPLEX: A building having two dwelling units either side by side, with a common wall and roof, or one above the other.
E.C.O.A: Equal Credit Opportunity Act.
EARNEST MONEY: Money deposited as a partial down payment on real property to demonstrate an earnest desire to purchase it.
EASEMENT: A liberty, privilege, or right one has 10 use land for a specific purpose distinct from ownership of the soil, such as the right to cross "X" to get to "Y". Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which one party has in the land of another (example: telephone poles).
ECONOMIC LIFE: The length of time improvements can be profitably utilized. It is the length of time the improvements contribute value for the property. When the improvements no longer contribute any value, they have reached the end of their economic life.
ECONOMIC LIFE: The period over which a property will yield a return on the investment, over and above the economic or ground rent due to land.
ECONOMIC OBSOLESCENCE: A decrease in desirability or value resulting from economic forces off the property, such as a change in zoning, in traffic patterns, or in supply/demand relationships.
EFFECTIVE AGE: The age improvement appears to be, as compared to other improvements in the market, considering its condition and design. The effective age is often different from the actual age.
ENCROACHMENT: An intrusion of one person's property upon the property of another. It may be a wall, a fence, or a cornice or casement window that extends upon adjoining property.
ENCUMBRANCE: A voluntary or involuntary lien or liability placed on real property as security for a debt.
ENDORSEMENT: A provision, which supplements a standard title insurance policy to provide protection against potential risks.
EQUITY: The difference between the market value of a property and the homeowner's outstanding mortgage balance.
EQUITY CREDIT OPPORTUNITY ACT (ECOA): A federal law that prohibits lenders from denying mortgages on the basis of the borrower's race, color, religion, national origin, age, sex, martial status, or receipt of income from public assistance programs.
EQUITY LOAN: A loan based on the borrower's equity in his or her home.
EQUITY: The interest or value which an owner has in real estate over and above the liens against it; branch of remedial justice by and through which relief is afforded to suitors in courts of equity.
ESCROW: An account held by the lender into which a homeowner pays money for taxes and insurance.
ESCROW: The deposit of instruments and funds with instructions to a third neutral party to carry out the provisions of an agreement or contract. When everything is deposited to enable carrying out the instruction, it is called a complete or perfect escrow.
ESTATE: As applied to the real estate practice, the term signifies the quantity of interest, share, right, equity, of which riches or fortune may consist, in real property. The degree, quantity, nature, and extent of interest, which a person has in real property.
ESTIMATE: To form a preliminary opinion of value.
ESTIMA TED REMAINING LIFE: The period of time (years) it takes for the improvements to become valueless.
EXCHANGE: The concurrent and reciprocal transfer of Real Property for the purpose of deferring taxes owned on gain; to qualify as a tax-free (1031) exchange, certain guidelines must be followed.
F.I.C.O.: Fair, Issac and Company
FAIR CREDIT REPORTING ACT: A consumer protection law that sets up a procedure for correcting mistakes on one's credit record.
FEE SIMPLE: Real Estate, which can be bought, sold, and transferred without restrictions. In modern estates, the terms "Fee" and "Fee Simple" are substantially synonymous.
FEDERAL HOME LOAN MORTGAGE CORPORATION: (FHLMC or FREDDIE MAC) Federal Home Loan Mortgage Corporation; a GSA (government sponsor agency), which buys first mortgages from conventionally or federally insured financial institutions.
FEDERAL NATIONAL MORTGAGE ASSOCIATION: (FNMA or FANNIE MAE) Federal National Mortgage Association, a GSA (government sponsor agency), which buys first and second mortgages from conventionally or federally insured financial institutions as well as FHA insured and VA guarantee mortgages.
FINAL RECONCILIATION: An appraisal term for the process of choosing the most appropriate data and selecting from among alternative -conclusions developed in the approached to value to estimate a final. value for the property being appraised.
FINAL VALUE ESTIMATE: An opinion made by an appraiser after alt of the steps of the appraisal process and after the final reconciliation as to what the appraiser feels the value of a property is.
FIRST MORTGAGE: A mortgage on property whose rights are superior to all others,
FIXED-RATE MORTGAGE: A mortgage in which the interest late does not change during the entire term of the loan.
FLOOD INSURANCE: Insurance required for properties federally designated flood areas.
FORBEARANCE: The lender' postponement of foreclosure to give the borrower time to catch up on overdue payments.
FORECLOSURE: Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.
FRAUD: The intentional and successful employment of any cunning, deception, collusion, artifice, used to circumvent, cheat or deceive another person, whereby that person acts upon it to the loss of his/her property and to his/her legal injury.
FRONT FOOT: Property measurement for sale or valuation purposes. The property measures by the front foot on its street line; each front foot extending the depth of the lot.
FROTAGE: Land bordering a street.
FUNCTIONAL OBSOLESCENCE: Impairment or defects in functional capacity or efficiency. It is all the items, including the design, quality of construction, condition. etc. on a property that detract from the property value.
FUNCTIONAL UTILITY: The total of a property's attractiveness and usefulness.
GENERAL PARTNERSHIP: A partnership consisting of one or more partners who have equal rights, shares, and equal power in governing the partnership. Additionally, each partner is personally liable for the debts of the whole business.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (G.N.M.A. or Ginnie Mae) a government agency, which buys only FHA insured and VA guarantee mortgages.
GRANT DEED BARGAIN DEED: Written instruments which, when properly executed and delivered, conveys title.
GROSS INCOME MULTIPLIER: A figure which, when multiplied by a property's annual gross income, will produce an estimate of the value of that property.
GROSS INCOME: Total income before any expenses are deducted.
GROSS LIVING AREA: A system of measuring the size of a house that is widely used by appraisers. It calls for measuring around the outside of the house above the foundation. If there are multiple stories, each story is included. Areas that are classified as garages, porches; basements, or attics are excluded from the calculations.
HAZARD INSURANCE: Insurance to protect the homeowner and the lender against physical damage to a property from fire, wind, vandalism, or other hazards.
HIGHEST AND BEST USE: The utilization of a property to its best and most profitable use.
HOLD BACK: A portion of a mortgage loan that is withheld by the lender from the borrower at the time of the closing to be disbursed later, after the borrower has met specified conditions set forth in the mortgage document. Typical conditions are the construction, improvement, and repair of the property and the renting of it to a pre-specified level of occupancy.
HOME OWNER'S EXEMPTION: An exemption offered in some states as an incentive to encourage owner occupancy, by reducing the value of a property for taxation purposes. In other words, a tax credit, thereby lowering the tax on the property (i.e. in California the exemption is equal to $7000.00).
HOMEOWNER'S ASSOCIATION: An association, which is formed as part of the process of establishing the ownership of a property such as a condominium or planned unit development. The association is responsible for the regulation and maintenance of the commonly owned property.
HOMEOWNER'S INSURANCE: An insurance policy that combines liability coverage and hazard insurance.
HOUSING DEBT RATIO: The proportion of total housing costs to total gross monthly income expressed as a percentage.
IMPOUND/RESERVE ACCOUNT: An amount of money set aside to pay future expenses, such as property taxes, insurance, etc.
IMPOUNDS/ESCROW ACCOUNTS: A trust-type account established by lenders for the accumulation of funds to meet taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums required to protect their security. Usually collected with the payment.
IMPROVED LAND: Land that has been improved by the creation of some structure.
IMPROVEMENTS: Structures, buildings or facilities placed on or in land, including streets sewers, waste lines, etc.
INCOME APPROACH: One of the three approaches to value used by real estate appraisers to estimate the value of property being appraised. It is based on the theory that the present value of a property is equal to the present value of its future capacity to produce income including the proceeds of a sale at a future date.
INGRESS AND EGRESS: Access to and from land.
INSTALLMENT DEBTS: A debt, which is repaid, usually in equal payments, over a period of time, rather than in one lump sum.
INTEREST: The fee charged for borrowing money.
INTEREST RATE: The percentage of sum of money charged for its use.
JOINT NOTE: A note signed by two or more persons who have equal liability for payment.
JOINT TENANCY: Joint ownership by two or more persons with right of survivorship; all joint tenants own equal interest and have equal rights in the property.
JUDGMENT: The final determination of a court of competent jurisdiction of a matter presented to It; money judgments provide for the payment of claims presented to the court, or are awarded as damages, etc; an automatic lien on real property.
L.A.P.P.: Lender Appraisal Processing Procedure
LAND CONTRACT: A contract ordinarily used, in connection with the sale of property in cases where the seller does not wish to convey title until all of a certain part of the purchase price is paid by the buyer; often used when property is sold with a small down payment.
LATE CHARGE: The penalty a borrower must pay when a payment is made after the due date.
LEASE: A contract between owner r:1nd tenant, setting forth condition upon which the tenant may occupy and use the property, and the term of the occupancy.
LEASEHOLD: The interest in a property of a tenant (lessee) created by a lease. It is usually the right to occupy and use the property for a stipulated period of time in exchange for the payment of rent.
LEASE-PURCHASE MORTGAGE LOAN: An alternative financing option that allows low- and moderate-income home buyers to lease a home from a non-profit organization with an option to buy, and with each month's rent payments consisting of PITI payments on the first mortgage, plus an extra amount that is earmarked .for a sav1ngs account in which money for a down payment accumulates.
LEGAL DESCRIPTION: A legally accepted method of identifying property, such as lot, block and subdivision or a metes and bounds description.
LESSEE: One who contracts to rent property under a lease contract.
LESSOR: An owner who enters into a lease with a tenant.
LIABILITY: Debt or obligation.
LIEN: A form of encumbrance, which usually makes property security for the payment of a debt or discharge of an obligation (example: judgments, taxes, mortgages, deeds of trust, etc.
LIMITED PARTNERSHIP: A partnership consisting of one or more partners who have limited decision-making ability and their liability is limited to the amount they invest.
LIS PENDENS: A legal notice recorded to show pending litigation relating to real property and giving notice that anyone acquiring an interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation.
LISTING: An employment contract between principal and agent authorizing the agent to perform services for the principal involving the latter's property; listing contracts are entered into for the purpose of securing persons to buy, lease or rent property. Employment of an agent by a prospective purchaser or lessee to locate property for purchase of lease may be considered a listing.
LITIGATION: A criminal or civil action to establish culpability and/or money damages.
LOAN APPLICATION: The loan application is a source of information on which the lender bases his decision to make the loan, defines the terms of the loan contract; gives the name of the borrower, place of employment, salary, bank accounts, and credit references, and describes the real estate that is to be mortgaged. It also stipulates the amount of loan being applied for, and repayment terms.
LOAN CLOSING: When all conditions have been met, the funder authorizes the recording of the trust deed or mortgage. The disbursal procedure of funds is similar to the closing of a real estate sales escrow. The borrower can expect to receive less than the amount of the loan. as title, recording, service, and other fees may be withheld, or s/he can expect to deposit the cost of these items into the loan escrow. This process is sometimes called "funding" the loan.
LOAN SERVICING: The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
LOAN-to-V ALUE RATIO (LTV): The relationship between the amount of a mortgage and the total value of the property.
LOT: A parcel of land that is distinctly designated.
MAI: Member of the Appraisal Institute. Designates a person who is a member.
MANUFACTURED HOUSING: Off site built housing, moved and permanently attached to a fixed site. Formerly referred to as mobile homes or trailers.
MARKET AREA: The geographic territory within which a product being marketed can reasonably expect to find a buyer.
MARKET DATA APPROACH: One of the three methods in the appraisal process. A means of comparing similar type residential properties, which have recently sold, to the subject property.
MARKET PRICE: The price paid regardless of pressures, motives or intelligence.
MARKET VALUE: (1) The price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure; (2) as defined by the courts, is the highest price estimated in terms of money which a property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser with knowledge of property's use and capabilities for use.
MARKETABILITY: The salability of a property at a specific time and price.
MASTER CERTIFICATE OF REASONABLE VALUE (MCRV): VA-established reasonable value for projects involving the proposed construction of five or more similar properties. (VA form 26-1843a)
MATURITY: The date on which the final balance of a note, mortgage, etc. falls due.
MECHANIC'S LIEN: A special lien created by state statues to protect those who work on real estate and provide material and labor for construction, improvement and repairs. In many states, mechanic's liens have priority over other liens and mortgages even when they are recorded after these prior liens. Many state statutes give the mechanics a specified time after the work is performed to record a mechanic's lien. This creates the possibility of a potential lien exiting at the time of a sale that does not show on the land records.
MERIDIANS: Imaginary nor1h-south lines, which intersect baselinest6 form astar1ing point for the measurement of land.
METES AND BOUNDS: A term used in describing the boundary lines of land, setting forth all the boundary lines together with their terminal points and angles.
MINORS: All persons under 18 years of age..
MODULAR CONSTRUCTION: Prefabricated rooms that are built in a factory and shipped to their eventual location.
MODULAR HOUSE: See Prefabricated House.
An association of property owners in a residential area formed for the purpose of improving the area both physically and socially.
MORTGAGE: The instrument, which secures real property in the name of a tender until a loan is fully paid (see Deed of Trust).
MORTGAGE BANKER: An individual or company, which funds loans and then sells them
MORTGAGE BROKER: An individual or company, which originates a roan and may process the loan.
MORTGAGE BROKER WITH AN EAGLE: Refer to Lesson in Chapter 1
MORTGAGE DIFFERENTIAL: Employer who subsidizes an employee's mortgage payments by paying all or part of the differential between the present and proposed housing payment.
MORTGAGE GUARANTY INSURANCE: Insurance against financial loss available to mortgage lenders from a private company.
MORTGAGE INSURANCE: Insurance, which protects the mortgage lender against loss, incurred by mortgage default.
MORTGAGE NOTE: A legal document obligating a borrower to repay a loan at a stated interest rate during a specific period of time; the agreement is secured by a mortgage.
MORTGAGE: An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation; procedure for foreclosure in event of default is established by statute.
MORTGAGEE: The party lending the money and receiving the mortgage - the lender.
MORTGAGOR: The party who borrows the money and gives the mortgage - the borrower
MULTIPLE LISTING SERVICE (MLS): A system where a group of brokers agree to work together and cooperate to sell each other’s listings.
NEGATIVE AMORTIZATION: A condition created when a loan payment is less than interest alone. Even though payments are made on time, the amount owing increases.
NEGATIVE CASH FLOW: When the income from an investment property does not equal the usual expenses. The owner must come up with cash each month to meet these expenses.
NON-ARMS LENGTH TRANSACTION: Transaction whereby the buyer and seller have a pre-established relationship (i.e., family member sells to family member; developer sells a newly constructed property to a company employee).
NONCONFORMING USE: A property whose current use does not reflect current zoning
NON-OWNER OCCUPIED: Anyone to four unit property that is not occupied by the owner and its sole purpose is for investment.
NON-RESIDENT ALIEN: Individual who is in the country on a work or diplomatic visa
NOTARY PUBLIC: One who is authorized by the state or federal government, to administer oaths, and to attest to the authenticity of signatures. A federal authorization may extend the authority to attest to the authenticity of certain documents, and to act as a notary in foreign countries.
NOTE: A signed written instrument acknowledging a debt and promising payment.
NOTICE OF COMPLETION: A recorded notice that a construction job is finished.
NOTICE OF DEFAULT: A formal written notice to a borrower that a default has occurred and that legal action may be taken.
OBSOLESCENCE: Forms of depreciation that are caused by things other than physical deterioration.
ORAL CONTRACT: A verbal agreement; one which IS not. reduced to writing
ORIGINATION FEE: Lender fee to buyer for handling the loan transaction.
OVER IMPROVEMENT: An improvement that is not the highest and best use for a property; an improvement that is excessive in cost of size to the land value.
OWNER FINANCING: A purchase in which the seller provides all or part of the financing.
OWNER OF RECORD: An owner whose title is recorded in county records.
P.I.Q.: Property in question.
