Glossary of Terms A  B  C  D  E  F  H  I  J  K  L  M  N  O  P  Q  R  S  T  V  W  Y  Z   Top AAA Tenant A prime tenant who has the highest credit rating. Top abandonment The intentional relinquishment of claim or title to real or personal property. abatement A decrease or reduction to the assessed valuation of real property taxes. accrued interest Interest earned for the period of time elapsed since interest was last paid. adjustable rate mortgage A mortgage loan or deed of trust which allows the lender to adjust the interest rate in accordance with a specified index periodically and as agreed to at the inception of the loan. amortization repayment of a mortgage debt with periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time. Top back-to-back escrow An escrow set up to facilitate the simultaneous purchase of one property and the sale of another property by the same party. backup offer A secondary offer to buy property although the first offer has been accepted, useful in case the first offer fails. balance sheet A report of the financial position of a business at a specific point in time, showing its assets, liabilities, and owner's equity. balloon mortgage A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date, usually at the end of the term. blanket mortgage A mortgage that covers more than one parcel of real estate owned by the mortgagor. Top ca-call A "call-on-call" compound option. Top CAFMV See COMMISIONER'S ADJUSTED FAIR MARKET VALUE Call Option A counteract granting the right, but not the obligation, to purchase a security at a specified strike price on a particular date. Top caps Consumer safeguards on an adjustable-rate mortgage which limit the interest may change per year and over the life of the loan. closing In real estate, the delivery of a deed, financial adjustments, the signing of note, and the disbursement of funds necessary to consummate a sale or loan transaction. cooperative In real estate, a form of multiple ownership in which a corporation or business trust entity holds title to a property, an grants occupancy rights to shareholder tenants through proprietary leases. Also called a co-op. Top daily price limits The maximum number of points a contract is allowed to rise above or fall below the previous day's settlement price at which point all trading stops for the day. Top DCF See DISCOUNTED CASH-FLOW ANALYSIS. DE See DIRECT ENDORSEMENT Top deed-in-lieu A deed given by a mortgagor to a mortgagee to satisfy a debt and avoid foreclosure. delinquency Failure of a borrower to make timely payments under a loan agreement. due date Date which the borrower must pay the principal and interest due on his or her mortgage, as stated in the note, as well any escrow payment. Top early occupancy Situation in which a buyer is permitted to take possession of real property before closing. equity Net ownership, the difference between fair market value and current indebtness, sometimes called owner's interest. escrow A item of value, money or documents, deposited with a third party to be delivered upon fulfillment of a condition. escrow account The segregated trust account in which escrow funds are held. escrow analysis The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due. Top face value: Par value or the actual selling price of a security; the amount the issuer contracts to repay. fair market rent An amount determined by HUD to be the cost of modest, non-luxury rental units in a specific market area. fair market value The price at which property is transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent facts and neither being under any compulsion to buy or sell. federal housing administration A federal agency within the Department of Housing and Urban Development (HUD) that provides mortgage insurance for residential mortgage standards for construction and underwriting. first mortgage A mortgage that gives the mortgagee a security right over all other mortgages of the mortgaged property. Top home equity loan A revolving line of credit based on the equity in the mortgagor's house. The property is the security for the loan, which is usable for any purpose. home improvement loan Mortgage to finance an addition to or rehabilitation of a residence. Top index A published interest rate, such as the prime rate. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns. interest Consideration in the form of money paid for the use of money, usually expressed as an annual percentage. involuntary lien A lien imposed against property without the consent of the owner. Top joint and several note Note signed by two or more persons, each of whom is liable for the full amount of the debt. joint venture An association formed for a specific purpose and duration between two or more parties to own and/or develop real estate. A joint venture may take a variety of legal forms including partnership, tenancy in common, or corporation. judgement lien Lien upon the property of a debtor resulting from a decree of the court. judgment Final determination by a court of the rights and claims of the parties to an action. judicial foreclosure Type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court. jumbo loan A loan that exceeds the statutory size limit eligible for purchase or securitization by federal agencies. junior mortgage A mortgage that is subordinate to their claims of a prior lien or mortgage. Top kicker Term describing any benefit to a lender above ordinary fixed-interest payments. It may be an equity position in a property or a percentage of participation in the income stream. Top late charge An additional charge that a borrower is required to pay as a penalty for failure to pay a regular installment when due. lender Person or entity that invests in or originates mortgage loans, such as a mortgage banker, credit union, commercial bank, or savings and loan. In single-family property usage, the lender is generally whosever name the loan is closed in. letter of credit A letter authorizing a person or company to draw on a bank, or stating that the bank will honor their credit up to the stated amount. lien A legal hold or claim of a creditor on the property of another as security for a debt. Liens are always against property, usually real property. liquidity The ability to readily convert assets or investments to cash. loan administration A mortgage banking function which includes the receipt of payments, customer service, escrow administration, investor accounting, collections, and foreclosures. Also called servicing. loan-to-value ratio (LTV) The ratio of amount borrowed to appraised value or sales price of real property expressed as a percentage. lockbox A postal address, maintained by the firm's bank, that is used solely for the purpose of collecting checks. A major goal of a lockbox is to reduce collection float, since the receipts are immediately credited to the firms bank account. long-term financing A mortgage or deed of trust with a term of 10 years or more. loss draft Insurance payments in settlement of a claim for damage to mortgaged property. Drafts are generally made out to both the mortgagee and mortgagor. lot A measured parcel of land having fixed boundaries as shown on the recorded plat. Top margin In an adjustable rate mortgage, the spread between the index and the mortgage interest rate. master deed The basic condominium document that must be registered by the originating property owner prior to conveyance of the first unit sold. master servicer Contractually responsible servicer of a mortgage or pool of mortgages that is included in a subservicing arrangement. maturity The date on which an agreement expires; termination of a mortgage note. military indulgence The protection enacted and provided by the Soldier's and Sailor's Civil Relief Act to a mortgagor who is about to enter or is in the military and whose ability to keep a loan current has been materially affected by military service. mortgage A pledge of property, especially real property, as security for a debt. By extension, the document evidencing the pledge. The document may contain the terms of repayment of the debt. By further extension, "mortgage" is used to describe both the mortgage proper and the separate promissory note evidencing the debt and providing the terms of the debt's repayment. mortgage commitment An agreement between lender and borrower detailing the terms of a mortgage loan such as interest rate, loan type, term, and amount. mortgage note A written promise to pay a sum of money at a stated interest rate during a specified term. A mortgage note is secured by a mortgage. mortgage servicing rights The contractual obligations undertaken by one party to provide servicing for mortgage loans owned by another party, typically for a fee. mortgagee The lender in a mortgage transaction. mortgagee clause A clause that may be attached to an insurance policy stipulating that the lender will receive a portion of insurance proceeds sufficient to satisfy the unpaid amount of a loan in the event of a loss. mortgagor The borrower in a mortgage transaction who pledges property as a security for a debt. Top negative amortization The unpaid interest which is added to the mortgage principal in a loan where the principal balance increases rather then decreases because the mortgage payments do not cover the full amount of interest due. nominal interest rate The stated rate of interest in a loan agreement. nonjudicial foreclosure Power to sell property at foreclosure without court procedure. This foreclosure proceeding can be used by a trustee named in a deed of trust. note A general term for any kind of paper or document signed by a borrower that is an acknowledgment of debt, and is, by inference, a promise to pay. Top offer The price asked by a seller of securities. origination Securing a completed mortgage application from a commercial or residential borrower. origination date Date of the mortgage note. Top partial payment In loan collection, receipt of less than the full payment due. payoff figures The unpaid principal balance and escrow amounts to be used for payment in full of the mortgage or for closing sale of the property. prepayment The payment of all or part of a mortgage debt before it is due. prepayment penalty A charge the mortgagor pays the mortgagee for the privilege to prepay the loan. principal The original balance of money lent, excluding interest. Also, the remaining balance of a loan, excluding interest. private mortgage insurance Insurance written by a private company protecting the mortgage lender against financial loss occasioned by a borrower defaulting on the mortgage. purchase agreement A written agreement between a buyer and seller of real property, setting forth the price and terms of sale. Top quitclaim deed A deed relinquishing all interest, title, or claim an owner has in a property. A quitclaim deed implies no warranty. Top reconveyance An instrument used to transfer title from a trustee to the equitable owner of real estate, used when the performance of debt is satisfied under the terms of a deed of trust. refinancing The repayment of a debt from the proceeds of a new loan using the same property as security. release of lein An instrument discharging secured property from a lien. Top RESPA A federal statute and regulation promulgated by HUD governing real estate lending practices and disclosures. Its main features pertain to the provision of a good faith estimate of loan settlement costs and the provision of the HUD settlement booklet within three days of making a loan application. Top satisfaction of mortgage The recorded instrument the lender provides to evidence payment of in full of the mortgage debt. second mortgage A mortgage that has rights subordinate to a first mortgage. settlement The closing of a mortgage loan. Also, the delivery of a loan or security to a buyer. subservicer Lender that performs the on-going servicing activities for the mortgage or pool under an agreement with the contractually responsible servicer. Top tax lien A claim against property for unpaid taxes. tax sale The sale of property by a taxing authority or an officer of the court acting on a judgment to satisfy the payment of delinquent taxes. title Written evidence of the right to or ownership in property. In the case of real estate, the documentary evidence of ownership is the title deed that specifies in whom the legal estate is vested and the history of ownership and transfers. title search An examination of public records, laws, and court decisions to ensure that no one except the seller has a valid claim to the property, and to disclose past and current facts regarding ownership of the subject property. Top VA loan Mortgage loan made by an approved lender and guaranteed by the Department of Veteran Affairs. VA loans are made to eligible veterans and those currently serving in the military, and can have a lower down payment than other types of loans. Top verification of mortgage Form that requests and secures verification of payments made on an applicant's current or past mortgage. Top wraparound mortgage A refinancing technique involving the creation of a second mortgage which includes the balance due on any existing mortgages, plus the amount of the new secondary or junior lien. Top yield The ratio of investment income to the total amount invested over a given period of time. Top zoning The creation of districts by local governments in which specific types of property uses are authorized.