Abandonment Situation in which homeowner leaves house with no intention to return.
Abstract A history of all transactions shown in the public records affecting a particular tract of land.
Abstract Continuation (Also known as Abstract Extension and also as Supplemental Abstract.) A partial abstract beginning at the terminal date of an existing abstract and showing instruments recorded between such terminal date and a subsequent date.
Abstract Of Judgment Summary of a judgment in a lawsuit; includes who won, who lost, amount owed, the court making the decisions, date of judgment, and winning attorney. Once recorded (filed with county clerk or recorder), it creates a general lien on judgment debtor's property that's usually discovered by title company in conjunction with property sale. Most title companies require lien be paid as a condition of insuring resale.
Abstract of Title Just a longer name for an abstract.
Abstract Plant Also called "title plant" in some areas. A geographically filed assemblage of title information that helps in expediting title examinations, such as copies of previous attorneys' opinions, abstracts, tax searches and copies or take-offs of the public records.
Abstract Plant There are a hundred different types. Basically it is an index of the recorded instruments in a county or political subdivision geographically grouped according to land description so that all of the instruments affecting a piece of land can be immediately found under the indexed heading of such land. (See also "Title Plant")
Abstracter The person or company engaged in making abstracts.
Abstracter's Certificate A certificate appearing at the end of an abstract in which the abstracter states the time period and scope of the search made for instruments among the public records. In some states it has the effect of limiting the abstracter's liability.
Abstracting The process of making and compiling an abstract.
Abut To touch or border upon. A piece of land bordering on a street or an adjoining piece of property is said to abut such street or property.
Acceleration Clause Provision in a mortgage that allows the lender to demand payment of the entire principal balance if a monthly payment is missed or some other default occurs.
Acceleration Clause Part of trust deed or mortgage that gives lender right to call/demand all money owed as due and payable immediately in the event a specific event (such as a sale) occurs.
Acceptance When seller's or agent's principal agrees to terms of the agreement of sale, approves negotiation on the part of agent, and acknowledges receipt of deposit.
Accretion A natural increase of land along the shores of a body of water.
Accrued interest Interest that is earned but not paid, adding to the amount owed. Same as Negative amortization.
Accrued Items of Expense Incurred expenses not yet payable; seller's accrued expenses credited to purchaser in closing statement.
Acknowledgement (1) Generally, the act of the maker or makers of a real estate instrument in going before a Notary Public or other judicial officer and acknowledging that they signed such instrument without fear or compulsion, and for the purposes expressed in such instrument. The laws making provision for acknowledgments incident to real estate papers were enacted to help prevent forgeries or undue advantage taken over the makers of such instruments. Forms and procedures incident to acknowledgments vary from state to state, some being considered probate procedures in which the probity or authenticity of the instrument is proven. (2) Generally, a form of certificate made by a notary public or judicial officer, appended to deeds, mortgages, leases and other real estate instruments, certifying that the maker or makers of such instruments appeared before the notary or judicial officer and acknowledged that they signed the instrument without compulsion or fear and for the purposes indicated in the instrument.
Additional Principal Payment A way to reduce the remaining balance on the loan by paying more than the scheduled principal amount due.
Adjustable-Rate Mortgage (ARM) A mortgage with an interest rate that changes during the life of the loan according to movements in an index rate. Sometimes called AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages).
Adjusted Basis The cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
Adjustment Date The date that the interest rate changes on an adjustable-rate mortgage (ARM).
Adjustment interval On an ARM, the time between changes in the interest rate or monthly payment. The rate adjustment interval is often displayed in x/y format, where "x" is the period until the first adjustment, and "y" is the adjustment period thereafter. For example, a 5/1 ARM is one on which the initial rate holds for 5 years, after which it is adjusted every year. The rate adjustment interval and the payment adjustment interval are the same on a fully amortizing ARM, but may not be on a negative amortization ARM.
Adjustment Period The period elapsing between adjustment dates for an adjustable-rate mortgage (ARM).
Administor To pay the debts and wind up the business of a deceased person's estate. Also, to handle and dispose of properties of an estate by an executor, administrator or trustee in conformity with legal procedures and provisions of wills or trust instruments.
Adverse Possession The possession, by one person, of land belonging to another in a manner deemed adverse to the interest of the owner. In most states, by operation of law, title to the land becomes vested in such person after a fixed number of years if the owner fails to assert his or her rights.
Affidavit A written statement made under oath before a notary public or other judicial officer.
Affordability Analysis An analysis of a buyers ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that are likely.
Agency An individual or corporation authorized to act for another person or corporation. The scope of an agency depends upon the authority given to the agent.
Agent On who, having received authority from another, acts in such other person's behalf within the scope of such authority.
Agreement A legally binding contract made between two or more persons.
Alienation Transferring property from one person to another.
Alienation/Acceleration/Due on Sale Clause States that on sale or transfer of certain property, a loan is immediately due and payable.
All-Inclusive Deed or Trust Also known as a wraparound contract, a mortgage document that includes amount actually financed as part of a property purchase as well as amounts of any prior deeds of trust.
Allodial Tenure The absolute ownership of real estate which is subject to inheritance by the owner's heirs or to disposition by the owner as he sees fit, as contrasted with the feudal system of ownership. Allodial tenure is characteristic of ownerships in the United States.
Alluvion The increasing of land, especially along river banks, caused by the natural deposit and build-up of sediment. Such sediment is called alluvium.
ALTA (American Land Title Association) The trade association of the title insurance industry, which has adopted certain insurance policy forms to standardize coverage on a national basis.
Amortization The gradual repayment of a mortgage loan, both principal and interest, by installments.
Amortization Mortgage A debt in which periodic repayments reduce the outstanding principal and pay off current interest charges.
Amortization Term The length of time required to amortize the mortgage loan expressed as a number of months. For example, 360 months is the amortization term for a 30-year fixed-rate mortgage.
Annual Percentage Rate (APR) The cost of credit, expressed as a yearly rate including interest, mortgage insurance, and loan origination fees. This allows the buyer to compare loans, however APR should not be confused with the actual note rate.
Annuity Derived from the Latin word "annus" meaning year. The annual or yearly payment of income. Such payments are made to individuals under certain types of insurance policies and sometimes under the provisions of wills and trust estates.
Apportionment Adjustment of income, expenses, or carrying charges on real estate, usually computed to the date of closing of title so seller pays all expenses to that date and buyer assumes all expenses after that.
Appraisal A written analysis prepared by a qualified appraiser and estimating the value of a property.
Appraisal by Comparison Estimate of property value made by comparing sale prices of similar properties in the same area.
Appraise From Latin "appretiare" meaning to set or fix a value. To judge or estimate the value of real estate.
Appraised Value An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
Approved Attorney A practicing lawyer whose examinations of title and title opinions are acceptable to a title insurance company as a basis for the issuance of its title insurance policies.
Appurtenance A right or privilege that is a part of the ownership of property, such as a right of way to a highway across the land of another. Water rights are also an example.
Appurtenant Belonging to, or accessory to, or incident to a principal property.
Arbitration the process by which parties who cannot agree among themselves submit the dispute to the judgment of an impartial party.
ARBS An abbreviation of "arbitraries." A title industry word, used primarily in abstract plants and title plants, which refers to simplified forms of land descriptions arbitrarily used in indexing such plants in lieu of the more involved and complex descriptions contained in deeds, mortgages and other real estate instruments. Arbitrary descriptions are often found in areas where land ownerships are highly irregular and are of all manner of shapes and sizes and are described by metes and bounds. Such tracts are usually laid out on an area map and each tract is given an arbitrary name or number. All instruments affecting a given tract are indexed under the arbitrary name or number.
As Is When a property is sold as is, its seller does not warrant or guarantee the property is free of defects; buyer accepts property in present condition without modification.
Assessed Valuation The estimated value of property for tax purposes, usually fixed by the tax assessor.
Assessed Valuation Value placed on property by public officer or board as basis for taxation.
Assessment (1) The valuation of real estate for purpose of taxes or special improvement charges. (2) The amount of taxes or special improvement charges. Special improvement charges are usually for the costs of streets, sidewalks, sewers, etc.
Assessor Official who has responsibility for determining assessed valuation.
Assessor's Parcel Number Numeral assigned by county tax assessor to identify parcel of real property.
Asset Anything owned of monetary value including real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, etc.).
Assignee For example, the person who receives ownership of a contract or a mortgage by transfer from another.
Assignment (1) The act of transferring an interest, such as a loan secured by a mortgage, from one person to another. (2) The instrument or paper by which one person transfers such ownership to another.
Assignment of Deed of Trust a written document, that transfers the beneficial interest in a note and deed of trust from one to another.
Assignment of Rents Procedure in which borrower gives lender the right to receive rents collected from a tenant in a house owned by borrower.
Assignor For example, the person who transfers ownership of a contract or mortgage to another.
Assumes and Agrees to Pay Clause in deed or related document in which a buyer who takes over payments on a seller's old loan also agrees to pay the old loan; buyer normally receives title and makes payments. Clause is often found in section of document that transfers title from the seller to the buyer; seller may or may not be released from liability.
Assumption A mortgage that allows a new owner to take over payments. The original borrower remains liable on the mortgage note.
Assumption Fee The fee paid to a lender (usually by the purchaser of real property) when an assumption takes place.
Assumption of Mortgage Occurs when person takes title to property and assumes liability for payment of existing note or bond secured by mortgage against the property.
Attach The act of a sheriff or other court officer in taking possession of a person or property under the authority and direction of a writ or order issued by a court.
Attachment A legal remedy to aid collection of a debt, usually incidental to a lawsuit against the debtor wherein the court issues a writ of attachment under the authority and direction of which the sheriff seizes property of the debtor and holds same pending the outcome of the lawsuit, keeping the property available for sale to pay any money judgment entered in such lawsuit.
Attorney's Opinion The written statement of an attorney setting forth what he believes to be the condition of a real estate title.
Auction Process of selling property at public sale to highest bidder.
Authorization to sign as Agent Agreement written document given by a beneficiary authorizing an agent to sign a document on their behalf (such as a notice of default).
Automated underwriting A computer-driven process for informing the loan applicant very quickly, sometimes within a few minutes, whether the applicant will be approved, or whether the application will be forwarded to an underwriter. The quick decision is based on information provided by the applicant, which is subject to later verification, and other information retrieved electronically including information about the borrower's credit history and the subject property.
Automatic Stay Court order when bankruptcy is filed that prevents any creditor from attempting to collect any debt from the person who declared bankruptcy; creditors may not undertake foreclosure, repossession, eviction, or seizure, or even call or write the debtor demanding payment, and instead must join all other creditors and go through bankruptcy court to seek any money owed them.
Avigation Easement An easement over private property which abuts and extends out from the end of airport runways with said easement restricting the graduated height of agricultural crops, bushes, trees and other objects in the take off and landing path of aircraft.
Avulsion A change or shift in a water boundary resulting in loss of land by an owner and the acquiring of such land by another.
Back Title Letter Also called "back title certificate" in some areas, and "starter" in others. When titles previously have been examined up to a certain date by reliable examiners, title companies sometimes give subsequent examiners of such titles a letter that sets forth the condition of the title at the time of the previous examination and authorizes them to begin their subsequent examination with the terminal date of the previous examination.
Back Title Letter Also called "back title certificate" in some areas, and "starter" in others. When titles previously have been examined up to a certain date by reliable examiners, title companies sometimes give subsequent examiners of such titles a letter that sets forth the condition of the title at the time of the previous examination and authorizes them to begin their subsequent examination with the terminal date of the previous examination.
Balance The amount of the original loan remaining to be paid. It is equal to the loan amount less the sum of all prior payments of principal.
Balance Owed on Loan The part of the original loan that remains unpaid by the borrower at a given point in time.
Balance Sheet A financial statement that shows assets, liabilities, and net worth as of a specific date.
Balloon Mortgage A mortgage with level monthly payments that amortizes over a stated term but also requires that a lump sum payment be paid at the end of an earlier specified term.
Balloon Note A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.
Balloon Payment The final lump sum paid at the maturity date of a balloon mortgage.
Balloon Payment Final installment on a loan that pays off debt; larger than previous installments.
Bankruptcy A proceeding in U.S. District Court wherein assets of an insolvent debtor are protected and distributed in an equitable manner.
Bearer Lender in whose hands the promissory note remains until it is paid in full.
Before-tax Income Income before taxes are deducted.
Beneficiary (1) One entitled to the benefit of a trust; (2) one who receives profit from an estate, the title of which is vested in a trustee; (3) lender on a security of a note and deed of trust.
Beneficiary's Statement Also known as a "benny statement", a written statement of conditions and remaining balance on loan secured by a deed of trust.
Bill of Complaint Initial paperwork filed in many states to begin foreclosure; part of the process of filing a lawsuit.
Bill of Sale Document that passes title to personal property from seller to buyer.
Binder Sometimes called "preliminary certificate" or "commitment." (1) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a certain manner when certain conditions are met. (2) A deposit in escrow of a small part of the purchase price of real estate as evidence of good faith and to bind an agreement to purchase.
Biweekly Payment Mortgage A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment required if the loan were a standard 30-year fixed-rate mortgage. The result for the borrower is a substantial savings in interest.
Bond Set sum of money or assets available if needed to pay to court or other named person upon a certain event.
Bridge Loan A second trust that is collateralized by the borrower's present home allowing the proceeds to be used to close on a new house before the present home is sold. Also known as "swing loan."
Broker An individual or company that brings borrowers and lenders together for the purpose of loan origination.
Broker Price Opinion Real estate broker's estimate of property's reasonable selling price; often less than professional appraisal but often more useful because it's a realistic marketing price.
Buydown When the seller, builder or buyer pays an amount of money up front to the lender to reduce monthly payments during the first few years of a mortgage. Buydowns can occur in both fixed and adjustable rate mortgages.
Buydown Arrangement in which seller pays some or all of buyer's loan costs, usually measured by increments (points) of 1 percent of loan; seller pays enough points so that lender can offer loan at reduced interest rate (and lower monthly payment); cost to seller is small, but the reduction in payments to buyer can be substantial; often structured to reduce interest rates (and payments) in early years of loan. In a 3-2-1 buydown, the seller pays enough points to reduce the buyer's interest rate 3 percent the first year, 2 percent the second year and 1 percent the third year; in the fourth year, the loan interest rate and the monthly payments would return to the normal market rate of interest as set initially.
Cap Limits how much the interest rate or the monthly payment can increase, either at each adjustment or during the life of the mortgage. Payment caps don't limit the amount of interest the lender is earning and may cause negative amortization.
Capitol Improvement Permanent structure change that extends useful life and value of a property, such as a new roof.
Certificate of Eligibility A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.
Certificate of Reasonable Value (CRV) A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
Certificate of Sale Document indicating a property has been sold to a buyer at foreclosure sale subject to right of redemption for a set period after the sale; redemption periods vary, but with IRS, it's 180 days; foreclosures often take place without a certificate of sale indicating sale is final or near final, and buyer gets deed instead.
Certificate of Title A certificate issued by a title examiner stating the condition of a title.
Chain In real estate measurements (surveying), a chain is 66 feet long or 100 links, each link being 7.92 inches. The measurement may change when used in fields other than surveying.
Chain of Title The successive ownerships or transfers in the history of title to a tract of land.
Change Frequency The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).
Chapter 13 Chapter in the federal Bankruptcy Code that gives wage earner the right to reduce debt payments through a bankruptcy court order according to the terms of a plan that will allow the debtor to pay much or even all of the original amounts owed.
Chapter 7 Chapter in the federal Bankruptcy Code that calls for liquidation; a debtor's nonexempt assets are gathered together and given up or sold for benefit of creditors in order of their priority; debts are not discharged; secured creditors receive continued payments or the asset as collateral for the loan; unsecured creditors usually get little or nothing.
Chattel Personal property such as household goods or fixtures.
Chattel Mortgage Mortgage on personal property.
Claim An adverse right or interest asserted by one party against another or against an insurer or indemnitor. Claims may arise from unpaid debts or taxes, as well as from hidden title defects such as fraud, forgery, missing heirs, etc.
Clear Title Ownership rights to piece of real estate that are not diminished by liens, leases, or other encumbrances.
Client Principal who employs and compensates a broker.
Closing Costs These are expenses - over and above the price of the property- that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc. Closing costs will vary according to the area country and the lenders used.
Closing Date Date on which buyer takes over the property.
Cloud on the Title Outstanding claim or encumbrance that, if valid, affects or impairs owner's title.
Clouded Title An irregularity, possible claim or encumbrance that, if valid, would adversely affect or impair the title.
Coinsurance Two or more policies of title insurance issued by different insurers, each covering a portion of the same risk, which together provide total coverage of the risk.
Collateral Additional security pledged for payment of debt.
Collections Activity in which lenders or their agents employ various techniques to pressure borrowers to pay what's owed.
Color of Title Apparent invalid title.
Commitment Also called "binder." A document issued by a title insurance company that contains the conditions under which a policy of title insurance will be issued.
Compound Interest Interest paid on the original principal balance and on the accrued and unpaid interest.
Condemnation (1) The taking of private property for a public purpose, with compensation to the owner under the right of eminent domain. Governmental units, railroads and utility companies have the right to condemn and take private property. (2) The destruction by government of private property that imperils the life, health or safety of the public.
Condemnation Acquisition of private property for public use with what's considered fair compensation to the owner.
Conditional Sales Contract Contract for sale of property that calls for seller to deliver property, but title remains vested in the seller until conditions of contract are fulfilled.
Condominium Land ownership arrangement in which one owns an individual unit and a percentage of common area.
Conforming Loans Loans that meet Federal National Mortgage Association (Fannie Mae) standards.
Conservatorship When the Federal Deposit Insurance Corporation takes over and runs a bank or S&L until it can be sold either complete or broken down into its major components. (During the S&L crisis of the 1980s, the Resolution Trust Corporation was also involved in conservatorship.)
Consideration When parties in a contract exchange something of value such as goods, services, or promises.
Constructive Notice Information someone is assumed by law to have because it could be ascertained by proper diligence and inquiry in public records.
Consumer Reporting Agency (or Bureau) An organization that handles the preparation of reports used by lenders to determine a potential borrower's credit history. The agency gets data for these reports from a credit repository and from other sources.
Contingency Fee Employment arrangement commonly used by attorneys in which payment is a percentage of whatever monetary damages are awarded in a lawsuit's final judgment.
Contract for Deed Sales arrangement in which seller holds title until buyer completes payment for property and then receives title/deed; terms of sale and payments are set in written contract signed by buyer and seller.
Conventional Lender Group or individual that makes conventional loans.
Conventional Loan Private loan not insured or guaranteed by any agency of the federal government.
Conversion Exchange of personal real property of one character or use for another.
Conversion Clause A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra.
Conveyance The transfer of title to property from one person to another.
Conveyance Process of transferring title or some interest in real estate to a new owner.
Correlation Final state of the appraisal process in which appraiser reviews data and estimates property's value.
Courtesy A right that a husband has in his wife's property at her death. It does not exist in all states.
Covenant A formal agreement or contract between two parties in which one party gives the other certain promises and assurances, such as covenants of warranty in a warranty deed.
Covenants Agreements written into deeds and other instruments promising performance or nonperformance of certain acts or stipulating certain uses or restrictions on a property.
Coverage Amount of money insurance company will pay in response to a claim.
Cram-down Chapter 13 bankruptcy arrangement in which plan to repay lenders and creditors developed by debtor's attorney is ordered into effect by the court; it's crammed down on sometimes unwilling creditors.
Credit Willingness of borrower to repay loaned money; usually measured by borrower's past record of payments on loans and debts as maintained in a credit report.
Credit Report A report detailing an individual's credit history that is prepared by a credit bureau and used by a lender to determine a loan applicant's creditworthiness.
Credit Risk Score A credit score measures a consumer's credit risk relative to the rest of the U.S. population, based on the individual's credit usage history. The credit score most widely used by lenders is the FICO score, developed by Fair, Issac and Company. This 3-digit number, ranging from 300 to 850, is calculated by a mathematical equation that evaluates many types of information that are on your credit report. Higher FICO scores represents lower credit risks, which typically equate to better loan terms. In general, credit scores are critical in the mortgage loan underwriting process.
Cured Default When borrower's failure to make payments or meet the terms of a loan is corrected to the lender's satisfaction.
Current Value Value of a property at time of appraisal.
Damages Monetary compensation set by court for loss suffered by party to a lawsuit.
Debt Service Annual amount to be paid by debtor for money borrowed.
Decree Final order of a court in many states.
Dedication The setting aside of certain land by the owner and declaring it to be for public use. Examples: streets, sidewalks and parks.
Deed A document through which a conveyance of property is effected.
Deed in Lieu of Foreclosure Borrower deeds property, usually to lender, instead of waiting for lender to force sale of house in foreclosure.
Deed of Reconveyance Instrument that releases and discharges deed of trust.
Deed of Restriction Limits use of land; might include clauses preventing sale of liquor on property or defining size, type, value, or placement of improvements.
Deed of Trust The document used in some states instead of a mortgage. Title is conveyed to a trustee.
Deed of Trust (Trust Deed) Type of mortgage given by property owner to secure performance of an act (such as making payments on a loan).
Default Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
Defeasance Clause Part of a mortgage that permits borrower to redeem his or her property on payment of mortgage obligations.
Defeased To lose ownership; in medieval times ownership rights constituted a fee and to be defeased meant to lose the fee.
Defect A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
Defendant's Original Answer First responsive pleading of a defendant in a lawsuit.
Deficiency Money that a borrower who has lost real estate in foreclosure still owes to the lender because the foreclosure sale failed to generate enough money to pay off the loan. Frequently lenders acquire title to real estate at foreclosures and often only credit fair market value of property against balance due on the loan; any unpaid balance on loan after all just credits are applied generally is amount of deficiency. Many states limit or restrict deficiencies.
Deficiency Judgment A court judgment that the defaulting borrower owes a deficiency.
Delinquency Failure to make mortgage payments on time.
Demand Note A note payable on demand of the holder.
Department of Veterans Affairs Federal government department that guarantees loans and performs other services for veterans; formerly known as Veterans Administration (VA).
Deposit This is a sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.
Depreciation Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.
Devise A gift of real estate made by a will.
Discharge of Indebtedness or Debt Lender informs borrower a loan does not have to be repaid.
Discount In an ARM with an initial rate discount, the lender gives up a number of percentage points in interest to reduce the rate and lower the payments for part of the mortgage term (usually for one year or less). After the discount period, the ARM rate usually increases according to its index rate.
Discovery Phase of lawsuit when parties may ask each other formal written and oral questions, obtain copies of documents, and in general find out facts related to the lawsuit.
Documentary Transfer Tax Applicable to transfers of real property, notice of payment entered on face of the deed or on a separate paper filed with the deed.
Dominant Estate The property for the benefit of which a right-of-way easement exists across another's adjoining piece of land is said to be the dominant estate. The land across which the easement runs is said to be the servient estate.
Double Whammy When lenders refuse to permit loan assumptions while, at the same time, insisting on hefty prepayment penalty when a nonassumable loan is paid off early.
Dower A right that a wife has in her husband's property at the time of his death. Does not exist in all states.
Down Payment Part of the purchase price of a property that is paid in cash and not financed with a mortgage.
Due on Encumbrance Clause in mortgage preventing a borrower from encumbering title to the property with liens, leases, or other encumbrances without the lender's consent.
Due on Sale Mortgage clause demanding that borrower pay off the loan in full if the house is ever sold; lender can't prevent sale but can demand payment in full on the loan balance. Without a due on sale clause, loan is assumable without lender's consent; older FHA and DVA loans are assumable without lender's consent.
Earnest Money A deposit of funds by the purchaser of a piece of real estate as evidence of good faith.
Earnest Money Contract Agreement in which seller agrees to sell and the buyer agrees to buy.
Easement A right to use all or part of the land owned by another for a specific purpose. An easement may, for example, entitle its holder to install and maintain sewer or utility lines.
Effective Gross Income A borrowers normal annual income, including overtime that is regular or guaranteed.Salary is usually the principal source, but other income may qualify if it is significant and stable.
Eminent Domain The right of a government to take privately owned property for public purposes under condemnation proceedings subject to payment of its fair market value.
Encroachment Any building, improvement or structure located on one property (such as a wall, fence or driveway) that intrudes upon the property of another.
Encumbrance Any interest, right, lien or liability attached to a parcel of land (such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden or charge upon the property.
Entry and Possession Method of foreclosure in some states in which lender, who already owns property, reenters it and takes possession away from borrower, either peacefully or by court order.
Equity The amount of financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on the mortgage.
Equity Excess of fair market value over the outstanding loan balance.
Equity Cushion Amount of equity required before lender will make a loan.
Equity Loan Junior (subordinate) loan based on a percentage of the equity.
Equity Right of Redemption Right of property owner to avert foreclosure by paying the debt, interest, and costs.
Equity Skimmer Scam artist who assumes loan, collects money up front, and possibly rents, then refuses to pay the payments on assumed loan while keeping cash paid up front.
Escheat The reversion of property to the state when an owner dies leaving no legal heirs, devisees or claimants.
Escrow An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit of funds or documents into an escrow account to be disbursed upon the closing of a sale of real estate.
Escrow Disbursements The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
Escrow Payment The part of a mortgagor's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.
Estate Degree, quantity, nature, and extent of interest (ownership) that a person has in real property.
Estoppel A legal restraint that stops or prevents a person from contradicting or reneging on his previous position or previous assertions or commitments.
Estoppel Certificate Instrument executed by the mortgagor setting forth status of and balance due on mortgage as of date of certificate execution.
Eviction Legal procedure to forcibly remove a tenant from dwelling.
Examination The study of the instruments and muniments incident to a chain of title to determine their effect and condition in order to reach a conclusion as to the status of the title.
Exception A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.
Exclusive Right to Sell Agreement to give, for a specified period, only one broker the right to sell a property; if sale during term of agreement is made by owner or any other broker, the broker holding exclusive right is entitled to compensation.
Execute To sign a legal instrument. A deed is said to be executed when it is signed, sealed, witnessed and delivered.
Execution Sale Sale of property by a sheriff pursuant to a court order.
Extending Loan Term Giving borrower more time to repay a loan.
Extension Agreement Accord that extends life of a mortgage.
Fair Credit Reporting Act Federal law regulating credit bureaus and credit reports that grants individuals certain rights regarding both.
Fair Market Value Amount a willing and knowledgeable buyer would pay and seller would accept in a property transaction.
Fannie Mae A congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.
FCL Abbreviation for foreclosure, used on borrower's credit record.
Federal Deposit Insurance Corporation (FDIC) Agency set up by the federal government to insure deposits at banks and S&Ls.
Federal Home Loan Mortgage Corporation (Freddie Mac) A government-chartered, privately owned entity that buys mortgages from S&Ls.
Federal Housing Administration (FHA) Federal agency that regulates many aspects of the real estate industry and insures repayment of certain home loans.
Federal National Mortgage Association (Fannie Mae) Government-chartered, privately owned corporation that buys mortgages from mortgage companies.
Federal Savings and Loan Insurance Corporation (FSLIC) Corporation formerly run by the federal government that insured deposits in S&Ls; FDIC took over its function; leftover FSLIC deposit insurance funds were transferred to Savings Association Insurance Fund (SAIF).
Fee Simple Deed The absolute ownership of a parcel of land. The highest degree of ownership that a person can have in real estate, which gives the owner unqualified ownership and full power of disposition.
FHA (Federal Housing Administration) A federal agency that insures first mortgages, enabling lenders to lend a very high percentage of the sale price.
FHA Guidelines Rules specifying income and credit requirements for borrower and condition and value of property to allow an insured loan of a specific amount.
FHA Mortgage A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.
FHA Mortgage Loan insured by Federal Housing Administration.
FHLMC See Federal Home Loan Mortgage Corporation.
FICO Score FICO scores are the most widely used credit score in U.S. mortgage loan underwriting. This 3-digit number, ranging from 300 to 850, is calculated by a mathematical equation that evaluates many types of information that are on your credit report. Higher FICO scores represent lower credit risks, which typically equate to better loan terms.
First Lien Debt recorded first against a property.
First Mortgage The primary lien against a property.
First Mortgage Loan with priority as a lien over all other mortgages; in cases of foreclosure, the first mortgage must be satisfied before other mortgages are paid off.
Fixed Installment The monthly payment due on a mortgage loan including payment of both principal and interest.
Fixed-Rate Mortgage (FRM) A mortgage interest that are fixed throughout the entire term of the loan.
FNMA See Federal National Mortgage Association.
For Sale by Owner (FSBO) A property marketed by its owner without help of a real estate broker.
Forbearance Lender voluntarily accepts lower payments than originally agreed to in loan documents for a specific time period to allow borrower to recover financially; borrower eventually must repay missing or reduced payments and all other remaining payments on loan.
Foreclosure Legal process by which a mortgagor of real property is deprived of his interest in that property due to failure to comply with terms and conditions of the mortgage.
Foreclosure Forced sale of real estate to repay debt.
Fraud Intentional false statements believed and relied on by an individual who suffered a loss as a result.
Freddie Mac See Federal Home Loan Mortgage Corporation.
Freddie Mac (FHLMC) Federal Home Loan Mortgage Corporation. A federal agency that purchases both conventional and federally insured first mortgages from members of the Federal Reserve System and the Federal Home Loan Bank System.
Freeze Order Automatic stay; bankruptcy court order that prevents creditors from attempting to collect debt from individual who declared bankruptcy. Creditors may not undertake foreclosure, repossession, eviction or seizure, or even call or write the debtor demanding payment, and instead must join all other creditors and go through bankruptcy court to seek any money owed them.
FSA Designation for Federal Savings Association.
Full Assumption Arrangement in which buyer takes title to property and takes over payments on seller's old loan with the full permission of lender; new buyer also must prove to lender (qualify) adequate income and creditworthiness.
Fully Amortized ARM An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.
General Warranty Deed a deed containing a covenant whereby the seller agrees to protect the buyer against being dispossessed because of any adverse claim against the land.
Ginnie Mae See Government National Mortgage Association (GNMA).
GNMA A government-owned corporation that assumed responsibility for the special assistance loan program formerly administered by Fannie Mae. Popularly known as Ginnie Mae.
Good Repair Borrower's obligation to maintain condition of mortgaged property.
Government National Mortgage Association Also known as Ginnie Mae (GNMA), arm of federal government that purchases loans.
Grace Period Additional time allowed to perform an act or make payment before a default occurs.
Grant To bestow or confer, with or without compensation, a gift such as land or money by one having control or authority over the gift.>
Grant Term used in deeds of conveyance of land to indicate a transfer.
Grant Deed Conveyance document that implies grantor (seller) is granting an actual interest and has not previously granted such interest to anyone else.
Grantee One to whom a grant is made.
Grantee Party to whom the title to real property is conveyed.
Grantor One who makes a grant.
Grantor Person who conveys real estate by deed; the seller.
Growing-Equity Mortgage (GEM) A fixed-rate mortgage that provides scheduled payment increases over an established period of time. The increased amount of the monthly payment is applied directly toward reducing the remaining balance of the mortgage.
Guarantee Federal Insurance, such as from the Department of Veterans Affairs, agrees to cover loss up to a certain dollar figure on a loan made by a private lender if it goes into default and foreclosure.
Guarantee Mortgage A mortgage that is guaranteed by a third party.
Hearing A proceeding in court.
Hereditaments Any and all kinds of estates, interest and rights in real estate that can be inherited.
Homeowners Insurance Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc., depending on the terms of the policy. Also includes coverage such as personal liability and theft away from home.
Homestead Special legal protection that many states give to an individual's principal residence.
Housing and Urban Development (HUD) Department of federal government that administers housing programs.
Housing Expense Ratio The percentage of gross monthly income budgeted to pay housing expenses.
HUD (Department of Housing and Urban Development) The federal department responsible for the major housing programs in the United States.
HUD-1 statement A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.
Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM) A combination fixed rate and adjustable rate loan - also called 3/1,5/1,7/1 - can offer the best of both worlds. A lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move or refinance, before or shortly after, the adjustment occurs.
Hypothecate To use something as security without giving up possession of it.
Impound Account Account held by lender, used to advance payments of certain expenses or charges incidental to property ownership and that may protect lender's security.
Incumbrance Any right to or interest in property interfering with its use or transfer, or subjecting it to an obligation; with foreclosures, incumbrance likely includes mortgages and unpaid tax claims.
Index The index is the measure of interest rate changes a lender uses to decide the amount an interest rate on an ARM will change over time.The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. Some index rates tend to be higher than others and some more volatile.
Initial Interest Rate This refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). It's also known as "start rate" or "teaser."
Installment The regular periodic payment that a borrower agrees to make to a lender.
Installment Parts of the same debt, payable at successive periods as agreed; payments made to reduce a mortgage.
Instrument Written legal document.
Insurable Title a land title which a title insurance company is willing to insure.
Insured Mortgage A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI).
Interest The fee charged for borrowing money.
Interest Accrual Rate The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.
Interest Rate Buydown Plan An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.
Interest Rate Ceiling For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.
Interest Rate Floor For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.
Internal Revenue Service (IRS) Arm of the U.S. government that collects taxes.
Involuntary Lien Lien imposed against property without consent of owner, such as taxes, and special assessments.
Jeopardy To have property or liberty subjected to a possibly adverse decree of a court or agency.
Joint Tenancy Ownership of property by two or more individuals, each with an undivided interest and right of survivorship.
Joint Tenants persons who are co-owners of interest in the same land. At common law and in some states today, upon the death of a joint tenant, interest automatically passes to the surviving joint tenant(s). This survivorship feature, when it exists, is the principal distinction between a joint tenancy and a tenancy in common.
Judgment The determination of a court regarding the rights of parties in an action. A judgment of debt on a property owner can create a lien on all of that owner's land within a certain jurisdiction.
Judgment Final decision of court.
Judicial Foreclosure Foreclosure action executed by the court.
Junior Lien Holder Holder of a right to force sale of property that is subordinate to another lien holder's right to do the same. A junior lien holder who forces the sale of real estate must either pay off senior lien or make arrangements to make payments on it to prevent it from being foreclosed. Foreclosure of first lien eliminates right of junior lien holder to foreclose, but foreclosure of a junior lien does not affect right of senior lien to foreclose.
Junior Mortgage A mortgage lower in lien priority than another.
Junior Mortgage Mortgage second or subsequent in lien to a previous mortgage.
Land Sale Contract Document transferring ownership rights but not title that may be used to sell property.
Late Charge The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.
Late Payments Set amount that may be paid past its due date in accordance with loan documents.
Lease With Option To Buy Arrangement in which property owner rents to a tenant who has the right to purchase the property on agreed terms.
Lease-Purchase Mortgage Loan An alternative financing option that allows low- and moderate-income home buyers to lease a home with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that accumulates in a savings account for a downpayment.
Leasehold The right to possession and use of land for a fixed period of time. The lease is the agreement that creates the right.
Lender Approval Lender's agreement to allow assumption after review of borrower's creditworthiness and income; can also apply to initial loan.
Lender Liability Holds lenders legally responsible to pay damages for legal misdeeds committed against borrowers in course of making loans.
Lessee A tenant holding a leasehold.
Lessor A landlord; one who gives a leasehold to a lessee.
Liabilities A person's financial obligations. Liabilities include long-term and short-term debt.
Liability Obligation to pay a debt.
License Permission to go upon or use the land of another, the permission being a personal privilege and not constituting an interest in the land.
Lien A monetary charge imposed on a property, usually arising from some debt or obligation.
Lien Right to force sale of property to pay a debt.
Lien Holder Person or institution that controls a lien.
Lien Waver Also called "waiver of liens." A waiver of mechanics' lien rights, signed by contractors or subcontractors.
Life Estate Conveyance of title to property for duration of the life of grantee.
Life Tenant Holder of a life estate.
Lifetime Payment Cap For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the life of the mortgage.
Lifetime Rate Cap For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan. See cap.
Line of Credit An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time.
Liquid Asset A cash asset or an asset that is easily converted into cash.
Liquidating Plan Arrangement in which borrower repays missed payments to lender over time.
Liquidation Appraisal Estimate of property's value in a forced sale (when it's sold quickly); usually less than fair market value.
Lis Penden A legal notice intending to bind third parties of litigation claiming an interest in real estate.
Lis Pendens Recorded notice indicating a lawsuit is in progress that could affect title to a piece of land.
Listing Agreement Accord in which seller hires a real estate broker to sell a property, usually for a commission.
Loan A sum of borrowed money (principal) that is generally repaid with interest.
Loan Balance Amount a borrower owes on a loan.
Loan Modification Procedure in which a loan's terms, such as interest rate, monthly payment, or duration, are altered.
Loan Officer Person who is paid commissions to find and sign up borrowers for loans.
Loan Policy Also called "mortgage policy." A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.
Loan Pool Group of mortgages in which investors own shares.
Loan Processor Person who gathers and prepares paperwork used by lender to determine whether to make loan.
Loan-to-Value (LTV) Percentage The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has an LTV of 80 percent.
Lock-In Period The guarantee of an interest rate for a specified period of time by a lender, including loan term and points, if any, to be paid at closing. Short term locks (under 21 days), are usually available after lender loan approval only. However, many lenders may permit a borrower to lock a loan for 30 days or more prior to submission of the loan application.
Lot Generally, any portion or parcel of real property. Usually refers to a portion of a subdivision.
Lot Book Report Document from title company that identifies encumbrances recorded against a particular property; does not identify liens recorded in the name of the owner that may affect property.
Margin The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.
Market Value The average of the highest price that a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing but not compelled to sell, would accept.
Marketable Title A title which a reasonable purchaser, well informed as to the facts and their legal meaning, would be willing to accept.
Marketable Title Property title considered free from defect by court that will enforce its acceptance by purchaser.
Maturity The date on which the principal balance of a loan becomes due and payable.
Maven (Also Mavin or Mayvin) Regarded by cohorts as a trusted expert in a particular field, and who seeks to pass his or her knowledge on to others.
Mechanic's Lien A lien on real estate, created by operation of law, that secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvements on the real estate.
Mechanic's Lien Claim that secures the price of labor done on and materials furnished for uncompensated improvements.
Metes and Bounds A land description in which boundaries are described by courses, directions, distances and monuments.
Monthly Fixed Installment That portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction and doesn't cover all of the interest. The loan balance therefore increases instead of decreasing.
Mortgage A legal document that pledges a property to the lender as security for payment of a debt.
Mortgage Banker A company that originates mortgages exclusively for resale in the secondary mortgage market.
Mortgage Broker An individual or company that brings borrowers and lenders together for the purpose of loan origination.
Mortgage Insurance A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency.
Mortgage Insurance Premium (MIP) The amount paid by a mortgagor for mortgage insurance.
Mortgage Life Insurance A type of term life insurance In the event that the borrower dies while the policy is in force, the debt is automatically paid by insurance proceeds.
Mortgagee Policy Also called "loan policy." A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.
Mortgagor The borrower in a mortgage agreement.
Multiple Listing The pooling in a central bureau of listings of properties for sale. These listings are held individually by members of a group of real estate brokers, with the agreement that any member of the group may sell the properties and, in the case of a sale, the commission will be divided between the broker making the sale and the broker who filed the listing.
Muniments of Title Written evidence (documents) that an owner possesses to prove his or her title to property.
Negative Amortization Amortization means that monthly payments are large enough to pay the interest and reduce the principal on your mortgage. Negative amortization occurs when the monthly payments do not cover all of the interest cost. The interest cost that isn't covered is added to the unpaid principal balance. This means that even after making many payments, you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments not high enough to cover the interest due.
Net Worth The value of all of a person's assets, including cash.
Non Liquid Asset An asset that cannot easily be converted into cash.
Note A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
Origination Fee A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount.
Owner Financing A property purchase transaction in which the party selling the property provides all or part of the financing.
Owner's Policy A policy of title insurance insuring an owner of real estate against loss occasioned by defects in, liens against or unmarketability of the owner's title.
P.O.C. Paid outside of closing. Sometimes the lender requests this money before settlement. If you pay any charges before settlement they should be written on the settlement sheet. They are written on the proper line outside of your column. They should also be marked P.O.C.
Payment Change Date The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the adjustment date.
Periodic Payment Cap A limit on the amount that payments can increase or decrease during any one adjustment period.
Periodic Rate Cap A limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.
PITI Reserves A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months (usually three).
Planned Unit Development (PUD) a project consisting of individually owned parcels of land together with common areas and facilities that are owned by an association of which the owners of all the parcels are members.
Plat Also called "plat map." A map dividing a parcel of land into lots, as in a subdivision. A plat book contains the plat maps for a given area.
PMI Private mortgage insurance.
PMM Purchase money mortgage. A mortgage given by the seller simultaneously with the purchase of real estate to secure the unpaid balance of the purchase price.
Points A point is equal to one percent of the principal amount of your mortgage. For example, if you get a mortgage for $165,000 one point means $1,650 to the lender.Points usually are collected at closing and may be paid by the borrower or the home seller, or may be split between them.
Power of Attorney An instrument authorizing another to act on one's behalf as his agent or attorney.
Pre-Approval The process of determining how much money you will be eligible to borrow before you apply for a loan.
Premium The amount payable for an insurance policy.
Prepayment Penalty A fee that may be charged to a borrower who pays off a loan before it is due.
Prescriptive Easement A right to use another's property that is not inconsistent with the owner's rights and that is acquired by an open, notorious, adverse and continuous use for the statutory period, for example 20 years.
Prime Rate The interest rate that banks charge to their preferred customers.Changes in the prime rate influence changes in other rates, including mortgage interest rates.
Principal The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
Principal Balance The outstanding balance of principal on a mortgage not including interest or any other charges.
Principal, Interest, Taxes, and Insurance (PITI) The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the monthly cost of property taxes and homeowners insurance, whether these amounts that are paid into an escrow account each month or not.
Private Mortgage Insurance (PMI) Mortgage insurance provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
Promisory Note A promise to pay. The promisory note document gives the mortgage company "in personam" jurisdiction over the mortgagor.
Purchase Money Mortgage A mortgage given by a purchaser to a seller on the subject property to secure payment of a part of the purchase price
Purchase Money Mortgage A mortgage given by a purchaser to a seller on the subject property to secure payment of a part of the purchase price
Qualifying Ratios Calculations used to determine if a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.
Quit Claim Deed A deed that does not imply that the grantor holds title, but that surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property
Rate Lock A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.
Real Estate Also called "real property." (1) Land and anything permanently affixed to the land, such as building, fences and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items that would be personal property if not attached. (2) May refer to rights in real property as well as the property itself.
Real Estate Agent A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
Real Estate Settlement Procedures Act (RESPA) A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
Realtor A real estate broker or an associate who is an active member in a local real estate board that is affiliated with the National Association of Realtors.
Reconveyance A reconveyance (also referred as a deed of reconveyance) is most commonly used upon payment in full of a deed of trust. This instrument transfers title from the trustee to the equitable owner when a property is has been released as collateral for a debt.
Recording The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
Refinance Paying off one loan with the proceeds from a new loan using the same property as security.
Reissue Rate A reduced rate of title insurance premium applicable in cases where the owner of the land has been previously insured in an owner's policy by the insurer within a certain time.
RESPA The Real Estate Settlement Procedures Act (12 USC 2601) which, together with Regulation X promulgated pursuant to the Act, regulate real estate transfers involving a federally related mortgage loan by requiring, among other things, certain disclosures to borrowers.
Revolving Liability A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services.
Riparian Rights The rights of owners of lands bordering watercourses which relate to the water and its use.
Sale Agreement A contract entered into between a buyer and seller, setting forth the terms, provisions and conditions of a sale of real estate.
Sale and Leaseback The sale of an asset to a buyer who immediately leases it back to the seller.
Secondary Mortgage Market Where existing mortgages are bought and sold.
Security The property that will be pledged as collateral for a loan.
Seller Carry back An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing.
Servicer An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
Settlement Statements also known as a HUD-1, this is the final breakdown of costs associated with the purchase of real property. It includes the agreed upon terms of the contract as well as lender fees, recording fees, etc.
Specific Performance A lawsuit in which the court compels one of the parties to perform or carry out the provisions of a contract into which he has entered.
Speculative Builder One who constructs buildings for sale without having firm purchase commitments. Speculative building is quite common in residential housing developments and in condominiums.
Squatter One who settles upon unoccupied land without legal claim or authority. (See Adverse Possession.)
Standard Payment Calculation The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.
Statute Of Limitations A statute setting a time limit on the enforcement of a right or on the collection of a debt in certain cases.
Step-Rate Mortgage A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.
Subdivison An area of land laid out and divided into lots, blocks, and building sites, and in which public facilities are laid out, such as streets, alleys, parks, and easements for public utilities.
Subjacent A term applied to land or property lying contiguous to, but at a lower level than, another piece of property.
Sublet To rent property which one holds by lease, to another.
Subordination Giving a lien or interest an inferior status. For example, an existing mortgage may be subordinated to the lien of a new construction loan mortgage in which case the construction loan mortgage becomes a prior lien.
Subrogation The legal doctrine under which the law substitutes one creditor or claimant for another. When a title insurance company pays a claim under a title insurance policy, it is entitled to step into the shoes of the insured with respect to any rights the insured may have against parties who warranted the title to him.
Suit Usually meaning a lawsuit
Surety (1) A person who agrees to be responsible for a debt or obligation of another. (2) The pledge or agreement by which one undertakes responsibility for the debt or obligation of another.
Survey the attorney or settlement services provider will obtain the services of a local surveyor to determine the boundary lines of the lot you are purchasing and any improvements (homes) located on the lot. You will receive a certified survey at settlement. Under certain circumstances, you can save the expense of a survey by obtaining a copy of the seller's survey along with an affidavit from the seller stating that there have been no changes.
Tacking on Beginning a subsequent title examination, in point of time, at the end of a previous title examination. (See Back Title Letter.)
Take-Off An abbreviated copy of the principal features of recorded instruments, required for the purposes of indexation in an abstract plant or for purposes of making abstracts or examining titles.
Take-Out A written commitment or agreement given by a permanent mortgage lender to a temporary mortgage lender under which the permanent lender agrees to purchase mortgages made by the temporary lender.
Tax Lien The lien which is imposed upon real estate by operation of law which secures the payment of real estate taxes.
Tenant (1) Usually one who holds possession of real estate under a lease. (2) In a broader sense, one who holds or possesses lands and tenements by any kind of title.
Tenant As Sufferance One who continues to hold possession of real estate after his authorized term of occupancy has expired.
Tenant At Will A tenant whose occupancy of real estate is subject to the will of the owner.
Tenants In Common Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property. Each owner may sell or encumber his respective interest or dispose of it by will, and if he dies without leaving a will, his heirs inherit his undivided interest.
Tenement (1) A building or complex of buildings containing residential rental units. (2) A run- down, low-rental apartment or flat building or rooming house. (3) Real property helby a person under a right or authority conferred by an owner.
Testament Commonly used in the phrase "last will and testament" and generally considered synonymous with will. Technically speaking, it is a document providing for the disposition of one's personal property upon his death.
Testate Having made a legally valid will and leaving it at death.
Third Party A term usually applied to persons who are not principal parties to a contract or other instrument, but who have some right, interest or duty which such contract or instrument affects. For example, where a sale contract between buyer and seller of real estate provides that the money and documents involved in the transaction will be deposited with a title company pending the closing of the deal, the title company becomes a third party to the transaction.
Third-party Origination When a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.
Title(1) A combination of all the elements that constitute the highest legal right to own, possess, use, control, enjoy and dispose of real estate or an inheritable right or interest therein. (2) The rights of ownership recognized and protected by the law.
Title Assurance Assurance of title afforded by abstracts, attorneys' opinions, title insurance, and surveys.
Title Covenants Covenants ordinarily inserted in conveyances and in transfers of title to real estate for the purpose of giving protection to the purchaser against possible insufficiency of the title received. A group of such covenants known as "common law covenants" includes: covenants against encumbrances; covenants for further assurance (in other words, to do whatever is necessary to rectify title deficiencies); covenants of good right and authority to convey; covenants of quiet enjoyment; covenants of seisin; covenants of warranty. (See Warranty or Covenant.)
Title Defect (1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.
Title Insurance Policy A contract of title insurance under which the insurer, in keeping with the terms of the policy, agrees to indemnify the insured against loss arising from claims against the insured interest.
Title Plant Also called "abstract plant" in some areas. A geographically filed assemblage of title information that helps in expediting title examinations, such as copies of previous attorneys' opinions, abstracts, tax searches and copies or take-offs of the public records.
Tombstone Title A title, the validity of which relies upon information gleaned from one or more tombstones, such s the fact of an owner's death, the name of his surviving wife, the date of his death, and sometimes the identity of a deceased owner in cases where a person of the same name claims title.
Torrens A system wherein public officials by statute promulgate a system of land registration and title certification. The system incorporates a provision for court action to perfect titles if necessary.
Total Expense Ratio Total obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts.
Transfer Taxes Money paid to the county and or state when property is sold.
Treasury Index An index used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. Based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.
Trust Deed An instrument in the nature of a mortgage which secures the payment of a debt. Distinguished from a mortgage in that the title is transferred to, and held by a trustee for the benefit of the holder of the debt.
Truth-in-Lending A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
Two-step Mortgage An adjustable-rate mortgage (ARM) with one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.
Underwriter An insurance company which issues insurance policies either to the public or to another insurer.
Underwriting The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.
Usury Any premium, profit, bonus, fee, or charge which is demanded, required, or extracted by a lender in excess of legal interest on money loaned.
VA Mortgage A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.
Variable Interest Rate Also called "flexible interest rate." An interest rate that fluctuates as the prevailing rate moves up or down. In mortgages, there are usually maximums as to the frequency and amount of fluctuation.
Vendee The purchaser under a sale contract of real estate.
Vendor The seller under a sale contract of real estate.
Veterans Administration (VA) Loans Housing loans to veterans by banks, savings and loans, or other lenders that are guaranteed by the Veterans Administration, enabling veterans to buy a residence with little or no down payment.
Void Binding on no-one, kaput, constituting a nullity. Something which is conclusively of no effect, the defect of which is not subject to being waived, revitalized or cured by confirmation or ratification.
Voidable Sufficiently defective to make void, the deficiency, however, being curable by confirmation or ratification.
Waiver The voluntary and intentional relinquishment of a known right, claim or privilege.
Warranty In a broad sense, an agreement or undertaking by a seller to be responsible for present or future losses of the purchaser occasioned by deficiency or defect in the quality, condition or quantity of the thing sold. In a stricter sense, the provision or provisions in a deed, lease or other instrument conveying or transferring an estate or interest in real estate under which the seller becomes liable to the purchaser for defects in or encumbrances on the title. (See Title Covenants.)>
Way of Necessitty Generally, an easement for a roadway which the owner of a landlocked tract is entitled to acquire across adjoining land in order to provide a means of ingress and egress with respect to the landlocked property.
Will A testamentary disposition of property, usually in a form prescribed by law, that takes effect upon death.
Wrap Around Mortgage A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the "Wrap Around" mortgagee, who then forwards the payments on the first mortgage to the first mortgagee. These mortgages may not be allowed by the first mortgage holder, and if discovered, could be subject to a demand for full payment.
Writ A formal legal document issued by a court ordering or prohibiting the performance of some action. There are at least a hundred different kinds of writs each covering a different action or subject. In most writs, an officer of the court, such as a sheriff, is directed to serve the writ or carry out its directions
Zoning Laws passed by local governments regulating the size, type, structure, nature and use of land or buildings.
Zoning ordinances Laws passed by local governments regulating the size, type, structure, nature and use of buildings. Zoning ordinances, often referred to as zoning laws and zoning regulations, are divided into two classes: (1) those which regulate the height or bulk of buildings within certain designated zones or districts, in other words, those which relate to structural and architectural design, and (2) those which prescribe the type of buildings which may be constructed, and the use to which buildings within certain designated zones or districts may be put.