The following definitions are provided for your convenience. These are terms that you may encounter when dealing in real estate.

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- A -

AAHSA - American Association of Homes and Services for the Aging.

AARP - American Association of Retired Persons.

ABANDONMENT - The voluntary surrender or relinquishment of possession of real property with the intention of terminating one's possession or interest, but without vesting this interest in any other person.

ABATEMENT - A reduction or decrease in amount, degree, intensity or worth.

ABSORPTION BED - A leaching bed constructed on or above the existing terrain as part of a waste disposal system through the use of imported soil and/or special filters.

ABSORPTION RATE - An estimate of the rate at which a particular classification of space - such as new office space, new housing, new condominium units and the like - will be sold or occupied each year.

ABSTRACT BOOK - (also referenced as an Abstract Index) represents the central reference source within the Land Registry system.

ABSTRACT OF TITLE - A concise, summarized history of the title to a specific parcel of real property, together with a statement of all liens and encumbrances affecting the property. The abstract of title does not guarantee or assure the validity of the title of the property. It merely discloses those items about the property which are of public record, and thus does not reveal such things as encroachments, forgeries, and the like.

abutting - Bordering upon or next to; the joining or touching of adjoining land; sharing a common boundary.

ACCELERATED DEPRECIATION - A method of calculating the depreciation of certain property (that property which is used in a trade or business, or which is held for the production of income) at a faster rate than would be achieved from using the straight-line method of depreciation.

ACCELERATION CLAUSE - A clause in a promissory note, agreement of sale, or mortgage which gives the lender the right to call all sums due and payable in advance of the fixed payment date upon the occurrence of a specified event, such as a sale, default, assignment or further encumbrance of the property.

ACCEPTANCE - The expression of the intention of the person receiving an offer (offeree, usually the seller) to be bound by the terms of the offer.

ACCESS - A general or specific right ingress and egress to a particular property.

Accessible route - Unobstructed path that connects accessible elements and spaces in a building or facility and complies with the space and reach requirements prescribed by the Uniform Federal Accessibility Standards (UFAS). An accessible route that serves only accessible units occupied by persons with hearing or vision impairments need not comply with those requirements intended to affect accessibility for persons with mobility requirements.

According to Value - Also called 'Ad Valorem' which refers to the value of your home and property that your property taxes are based on.

accretion - An addition to or expansion of land through natural causes. An increase of land along the shore of a body of water through water-borne sediment.

ACCRUED - That which has accumulated over a period of time such as accrued depreciation, accrued interest or accrued expenses.

ACE-Automated Certificate of Eligibility - This system is used by VA approved lenders in order to help veterans get the Certificate of Eligibility they need to take part in the VA Home Loan Guarantee Program.

ACKNOWLEDGMENT - A formal declaration made before a duly authorized officer, usually a Notary Public, by a person who has signed a document.

Acquisition - Acquisition of standard housing (at a minimum, meeting HUD Section 8 Housing Quality Standards) only, with no expectation of other listed activities ( Table 3A, Column C) being carried out in conjunction with the acquisition.

ACRE - A measure of land equaling 43,560 square feet; 4,840 square yards; 160 square rods.

ACREAGE - The amount of land that is being purchased as an empty lot or with a home pre-existing on the property. One acre is equal to 43,560 square feet.

ACTUAL AGE - The number of years which has elapsed since an original structure was built. This is sometimes referred to as historical or chronological.

ADA - Americans with Disabilities Act (42 U.S.C. 12101 et seq.).

ADAAG - Americans with Disabilities Act Accessibility Guidelines.

additional principal payment - Monies paid by the borrower in addition to the principal amount due, usually monthly. If you have extra money occasional months, it's a good idea to make additional principal payments in order to more quickly reduce your remaining balance.

ADHESION CONTRACT - A contract, which is very one-sided and favors the party who drafted the document.

ADJACENT - Lying near to, but not necessarily abutting, the property.

Adjustable Rate Mortgage (ARM) - A mortgage in which you have a specified amount of time at the beginning of the loan where the rate of interest is fixed, usually 2 or 3 years, and after that time period is over the interest rate fluctuates with the current. This type of mortgage is usually only a good idea if you plan to only live in the home during the fixed interest rate period of time.

adjusted basis - Original cost of the property plus capital expenditures for improvements minus depreciation.

ADJUSTMENTS- Refers to those terms requiring apportionment as of the date of closing.

Adjustment Date - The dates at which your adjustable rate mortgage interest rate can change. After the initial fixed rate period is over the interest rate can usually be adjusted every 6 months.

Administrative Costs - Reasonable and necessary costs, as described in OMB Circular A-87, incurred by the participating jurisdiction in carrying out its eligible program activities in accordance with prescribed regulations.

Advance - A term that describes a secured loan made to a member.  Advances are offered at fixed or floating rates with specific maturities or with embedded options for early redemption. 

ADVERSE POSSESSION - The acquiring of title to real property owned by someone else, by means of open, notorious and continuous possession for the statutory period of time.

ad valorem -  In proportion to the value, according to value.

AEROBIC TREATMENT - A system of treating waste which involves the pumping of quantities of air into the sewage to accelerate its breakdown.

AFFIDAVIT - A sworn statement reduced to writing and made under oath before a Notary Public or other official authorized by law to administer an oath.

Affordable Housing - Housing where the occupant is paying no more than 30 percent (of gross income for gross housing costs, including utility costs. Housing that is for purchase (with or without rehabilitation) qualifies as affordable housing if it (1) is purchased by a low-income, first-time home buyer who will make the housing his or her principal residence; and (2) has a sale price that does not exceed the mortgages limit for type of single family housing for the area under HUD's single family insuring authority under the National Housing Act.

affordability analysis - A detailed analysis of the borrower's ability to buy a home, made up of factors such as: income, holdings, debts, the type of mortgage that will be used, the location of the home, and closing costs.

AGENCY - A relationship created when one person, the "principal," delegates to another, the "agent," the right to act on the principal's behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations and high standards of good faith and loyalty.

Designated Agency - A relationship in which one or more industry members, licensed with the same brokerage, are designated in writing by the brokerage to act as sole agents for the buyer or a seller with respect to the same trade.

Dual - Agency - Occurs when the same agent has an agency relationship with more than one party to the same real estate transaction, and both parties must give their informed consent to this form of representation. The agent must advise the seller and the purchaser of the dual aspect of representation and must provide full and timely disclosure to all parties of all pertinent information.

Single - Agency - Either with the seller or buyer, is that relationship between the seller or buyer and an agent wherein the agent is considered in law to represent only the principal.

Sub-Agency - That relationship whereby an individual is empowered by an agent to act on his/her behalf.

Transaction Brokerage - A relationship in which a brokerage or industry member provides facilitation services to the buyers and the seller in the same trade.

Undisclosed Dual Agency - This situation arises when a professional is found to be acting in an agency role for conflicting interests without prior understanding, approval and agreement of the parties.

AGENT - One who is authorized to represent and to act on behalf of another person (called the principal). A real estate broker is the agent of his client, be it the seller or buyer, to whom he owes a fiduciary obligation. A salesman is the agent of his broker and does not have a direct personal contractual relationship with either the seller or buyer.

AGGREGATE RENT - The total or gross amount for a lease term.

AGREEMENT OF PURCHASE AND SALE - An agreement between the seller (seller) and buyer (purchaser) for the purchase of real property.

AIR RIGHTS - The rights to use space above the physical surface of the land while the surface can be used for some other purpose.

ALIENATION CLAUSE - A clause in a promissory note or mortgage which provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the sale or transfer of the property by the mortgagor.

AMA -  Acquired member assets.

AMENDMENT TO AGREEMENT - Formalizes any mutual agreement between purchaser and seller that affects an original contract, and which is acceptable to both parties.

AMENITIES - Features, both tangible and intangible, which enhance and add to the desirability of real estate.

AMFI - Area Median Family Income.

AMORTIZATION - The gradual repayment of a debt by means of systematic payments of principal and interest over a set period, where at the end of the period there is a zero balance.

AMORTIZATION PERIOD - The time period required to completely retire the debt through scheduled payments of principal and interest.

Amortization Schedule - The statement from your mortgage lender that shows you exactly what your monthly mortgage payment is, how much is going towards your principal loan amount, how much is going towards interest, how much is going into your escrow account and your escrow account balance if applicable, and the remaining balance of your loan.

ANAEROBIC TREATMENT - The use of bacteria which can survive without oxygen in the breakdown of sewage within a waste disposal system.

Ancestry - A person's self-identified origin, descent, lineage, nationality group, or country in which the person or person's parents or ancestors were born before their arrival in the United States. This designation does not include religious affiliations. See also "Race."

ANNEXATION - Refers to the attachment or incorporation of one parcel of land within an adjacent municipality.

annual percentage rate (A.P.R.) -The actual interest rate, taking into account points and other finance charges, for the projected life of a mortgage. Disclosure of APR is required by the Truth-in-Lending Law and allows borrowers to compare the actual costs of different mortgage loans.

appraisal - An estimate of a property's value as of a given date, determined by a qualified professional appraiser. The value may be based on replacement cost, the sales of comparable properties or the property's income-producing ability.

Appraisal Foundation - The Appraisal Foundation as formed in 1987 by eight major appraisal organizations  to help regulate the appraisal profession within the Unites States of America. It is composed of two separate and independent boards:

The Appraisal Standards Board (ASB) establishes the generally accepted standards of the valuation profession which is known as the Uniform Standards of Professional Appraisal Practice (USPAP).

The Appraiser Qualifications Board (AQB) establishes the minimum education, experience and examination criteria for appraisers which is known as Appraiser Qualification Criteria (AQC).

In addition, the Foundation is also responsible for administering and distributing information on USPAP and AQC to the appraisal profession, state and federal government agencies, users of appraisal services (such as banks and S&Ls) and the general public.

Appraisal Institute - The Appraisal Institute is an international association of professional real estate appraisers headquartered in Chicago, Illinois. It was founded in January 1991 when the American Institute of Real Estate Appraisers (AIREA) and the Society of Real Estate Appraisers (Society) merged together.  As of February 2007, it has more than 21,000 members and 99 chapters throughout the United States, Canada and overseas

APPRAISAL REPORT - A written summary estimating the value of property and the conditions and limitations at the time of the appraisal.

APPRECIATION - An increase in the worth or value of property due to economic or related causes, which may prove to be either temporary or permanent.

APPURTENANCE - Rights that go with a property. Something, which is outside the real property itself, but belongs to the land and is joined thereto and adds to greater enjoyment of the land.

APPURTENANT - Belonging to; adjunct; appended or annexed.

APR - annual percentage rate -The actual interest rate, taking into account points and other finance charges, for the projected life of a mortgage. Disclosure of APR is required by the Truth-in-Lending Law and allows borrowers to compare the actual costs of different mortgage loans.

ARBITRATION - The non-judicial submission of a controversy to selected third parties for their determination in the manner provided by agreement or by law.

ARM-Adjustable Rate Mortgage - A mortgage in which you have a specified amount of time at the beginning of the loan where the rate of interest is fixed, usually 2 or 3 years, and after that time period is over the interest rate fluctuates with the current. This type of mortgage is usually only a good idea if you plan to only live in the home during the fixed interest rate period of time.

ARM'S LENGTH - A transaction freely arrived at in the open market, unaffected by abnormal pressure or by factors limiting competitive negotiations.

ARREARS - The circumstance of being behind in payments, commonly used with respect to delinquent payments under a mortgage document.

ASSEMBLAGE - The combining of two or more abutting parcels of land into one ownership or use.

ASSESSED VALUATION (TAX ASSESSMENT) - The value of real property as established by the government for purposes of computing real property taxes.

ASSESSMENT - A specific levy for a definite purpose, such as adding curbs or sewers in a neighborhood. Individual condominium owners are subject to special assessments benefiting the project as a whole and not funded through regular maintenance charges.

Assets - Anything you own that has value.

Asset-to-Debt Ratio - The value of the assets you own minus the amount of debt you have.

Asset Swap - A package of a cash credit instrument and a corresponding swap that transforms the cash flows of an asset (typically a fixed rate bond or loan) into a floating interest rate instrument, typically indexed to LIBOR.

ASSIGNMENT - The transfer of the right, title and interest in the property of one person, the assignor, to another, the assignee. In real estate, there are assignments of mortgages, contracts, agreements of sale, leases, and options, among others.

ASSIGNOR - An individual or firm who transfers or assigns rights or title to another.

Assumable Mortgage - A mortgage loan that can be taken over by the buyer rather than a new mortgage contract being written to purchase the home. In most cases the seller of the home would still be liable to the mortgage company in the case that the buyer missed a payment. In some cases the seller can allow the buyer to assume the mortgage without continuing to be liable.

assumption - An agreement between a buyer and a seller, requiring lender approval, where the buyer takes over the payments for a mortgage and accepts the liability. Assuming a loan can be advantageous for a buyer because there are no closing costs and the loan's interest rate may be lower than current market rates. Depending on what is in the mortgage or deed of trust, the lender may raise the interest rate, require the buyer to qualify for the mortgage, or not permit the buyer to assume the loan at all.

At - The - Money - An option whose strike is set at the same level as the prevailing market pr10ice of the underlying forward contract.

ATTACHMENT - The legal process of seizing the real or personal property of a defendant in a lawsuit, by levy or judicial order, and holding it in the custody of the courts as security for satisfaction of the judgment which the plaintiff may recover in any action upon a contract, express or implied.

ATTORNEY- IN - FACT - One who is authorized by another to act in his place under a power of attorney.

ATTORNMENT - The act of a tenant formally agreeing to become the tenant of a successor landlord; as in attorning to a mortgagee who has foreclosed on the leased premises.

AUCTIONEER - An individual who conducts a public sale of property and/or goods to the highest bidder subject, in some cases, to restrictions established by the seller.

AUTHORITY - The legal power or right given by a principal and accepted by the agent to act on the principal's behalf in business transactions with a third party, such as a listing agreement.

Automated Certificate of Eligibility (ACE) - This system is used by VA approved lenders in order to help veterans get the Certificate of Eligibility they need to take part in the VA Home Loan Guarantee Program.

AUTOMATIC RENEWAL CLAUSE - A commercial lease provision that automatically ensures renewal of the lease unless either the tenant or the landlord notifies the other party of a desire to terminate the agreement.

- B -

back - end ratio, or debt ratio - The amount you pay in monthly debt (car payments, credit cards, student loans, etc.) divided by your gross monthly income.

Balloon Mortgage - When a buyer acquires this type of mortgage they are required to make payments for a certain amount of time and then after this specified period of time they have to pay the mortgage loan in full. The time period is usually for 5 to 10 years and this type of mortgage is good for buyers who do not plan to live in the home for the full term of the loan or plan to refinance the loan before the balloon payment is due.

BALLOON PAYMENT - The final payment of a note or obligation, which is substantially larger than the previous installment payments, and which repays the debt in full; the remaining balance which is due at the maturity of a note or obligation.

bankers acceptance - Bankers acceptances are negotiable time drafts, or bills of exchange, that have been accepted by a bank which, by accepting, assumes the obligation to pay the holder of the draft the face amount of the instrument on the maturity date specified. They are used primarily to finance the export, import, shipment or storage of goods.

Bankruptcy -  The act of claiming you do not have the means or any way to acquire the means to pay off your current debt. This is a legal court proceeding in which you turn in all of your asset and debt information to the court and they rule to the effect of if they think you are capable of paying your creditors or not. In the case that you have no or very few assets Chapter 7 is bankruptcy is usually filed. In the case you have assets you want to keep, like a home, Chapter 13 bankruptcy is usually filed. In this case you are required to make payments to the court, which the court determines how much you can afford, and the court will then distribute the money to your creditors. These payments last over the span of a few years, and you usually end up repaying close to half of your debt before you are relieved from further payments.

bank wire - An electronic communications network owned by an association of banks and used to transfer messages between subscribing banks. Bank wire also offers a clearing service called Cash wire that includes a settlement facility.

BASE LEASE - A contract stating the minimum established tenancy requirements that are applicable to all tenants and are used in both residential and IC & I properties.

BASE LINE AND MERIDIAN - An imaginary set of lines used by surveyors to locate and describe land under the Rectangular Survey Method of property description used in most mainland states.

Basis Point (bp) -  1/100th of 1% (0.01%).

BASE RENT - The minimum rent payable by the tenant under a commercial tenancy agreement, often referenced as net/net/net rent or alternatively a triple net lease.

Basis Swap -  An interest rate swap in which two streams of floating rate payments are exchanged.  For example, two counter parties may exchange 1 month LIBOR for 3 month LIBOR payments.

Batts - Type of insulation, usually made of fiberglass or rock wool, made to fit between the studs in the walls or between the joists of the ceilings or floors.

BENCH MARK - A mark affixed to a permanent reference or monument, such as an iron post or a brass marker (usually embedded in a cement sidewalk), used to establish elevations and altitudes over a surveyed area.

BENEFICIARY - A person who receives the benefits from the gifts or acts of another, such as one who is designated to receive the proceeds from a will, insurance policy or trust.

BERM - Contoured landscapes areas, normally surrounding commercial or industrial properties, which act as a buffer within the overall site plan for that particular enterprise.

betterment - An improvement (such as renovations and additions) that increases a property's value, different from routine home maintenance and repairs.

BHIF: Type of insulation, usually made of fiberglass or rock wool, made to fit between the studs in the walls or between the joists of the ceilings or floors.

BILATERAL CONTRACT - A contract in which each party promises to perform an act in exchange for the other party's promise to perform.

Bilateral Netting -  An agreement between two counter parties whereby the value of all in-the-money contracts is offset by the value of all out-of-the-money contracts, resulting in a single net exposure amount owed by one counter party to the other.

BILL OF SALE - A written agreement by which one person sells, assigns or transfers his right to, or interest in, personal property to another.

Binder - Once earnest money is put down toward the purchase of a home this agreement holds the home while the proper inspections and appraisals are conducted.

biweekly mortgage - A loan requiring payments of principal and interest at two-week intervals. This type of loan amortizes much faster than monthly payment loans. The payment for a biweekly mortgage is half what a monthly payment would be.

Blanket Lien -  An agreement pledging all eligible collateral (otherwise not specifically pledged to a third party) to secure all outstanding advances.

BLANKET MORTGAGE - A mortgage, which is secured by several structures or a number of lots. A blanket mortgage is often used to finance proposed subdivisions or development projects, especially cooperatives.

BLENDED PAYMENT - The method of repayment where periodic payments of principal and interest are made in such a way that the payments remain constant in amount, although the portions attributed to principal and interest will vary with each payment.

bona fide - Authentic; made or carried out in good faith; real; sincere; genuine.

bond - A certificate serving as security for payment of a debt. Bonds backed by mortgage loans are pooled together and sold in the secoundary market.

Book Value -  The value at which an asset is carried on a balance sheet.

borrower (mortgager) - One that mortgages property; a person who applies for and receives a mortgage loan.

BOUNDARIES - The perimeters or limits of a parcel of land as fixed by legal description, which is usually a metes and bounds description.

breach - To break or violate an agreement.

BREACH OF CONTRACT - Violation of any of the terms or conditions of a contract without legal excuse; default, non-performance, such as failure to make payment when due.

BRICK MASONRY WALL - Is a load-bearing component of the building that transfers the weight of the roof and the floors down to the foundation and are typically constructed of brick, stone, concrete block, cinder block, clay tile or glass block.

BRICK VENEER WALL - A wood frame wall with an exterior single layer of brick and transmits the roof and floor loads down to the foundation.

BRIDGE LOAN - A form of interim financing, which in residential sales, can occur when a purchaser is committed to completing the purchase of a property on a specific date, but will not have sufficient funds until a later time.

BRIDGING/BRACING - Acts to restrain the joists from twisting and helps to transmit loads from one joist to the next thereby reducing the springiness of the floor.

BROKER - One who acts as an intermediary between parties to a transaction. A real estate broker is a properly licensed person who, for a valuable consideration, serves as an agent to others to facilitate the sale or lease of real property.

BROKERAGE - That aspect of the real estate business which is concerned with bringing together the parties and completing a real estate transaction. Brokerage involves exchanges, rentals, trade-ins, and management of property, as well as sales. Brokerage is also a name given to a company licensed to trade in real estate.

Brownfields -  Abandoned, idled, or underused industrial and commercial properties where expansion or redevelopment is complicated by real or perceived contamination.  These areas are eligible for the Brownfields Tax Incentive Deduction.

BUFFER ZONE - A strip of land separating one parcel from another.

BUILD TO SUIT - An agreement between a landlord and tenant whereby the landlord assumes the obligation of fitting up the demised space to the tenant's specification within the constraints of building standards.

BUILDING CODES - Regulations established by local governments providing for minimum acceptable structural standards for buildings.

Building Envelope - Includes everything that provides a barrier between the interior of a home and the outside elements.

BUILDING LINE - A line fixed at a certain distance from the front and/or sides of a lot, beyond which no building can project.

BUILDING PERMIT - A written permission granted by the Municipal Building Department and required prior to beginning the construction of a new building or other improvement (including fences, fence walls, retaining walls and swimming pools).

BUILDING RESIDUAL TECHNIQUE - A method of determining the value of an improvement normally used in appraising income property.

BUILT-UP ROOF - Commonly referenced as a tar and gravel roof and is very popular in industrial buildings. It usually consists of two, three, four or even five plies of roofing felts with a mopping of asphalt between layers. A flood coat of asphalt is then applied over the top and covered with gravel to reflect ultraviolet light and protect the roof from mechanical damage. Some roofers use roll roofing rather than gravel to protect the membrane.

Bullet Rates -  A fixed rate and fixed term, non-amortizing advance whose principal is due at maturity, interest paid monthly.

BUNDLE OF RIGHTS - An ownership concept describing all those legal rights which attach to the ownership of real property, including the right to sell, lease, encumber, use, enjoy, exclude, will, etc.

BUSINESS - Any undertaking for the purpose of profit, including any interest in any such undertaking.

BUSINESS CYCLES - Is a consequence of supply and demand factors combined with a host of intrusive elements from both private and public sectors, associated with three major phases: prosperity with high employment, consumer confidence and intense market activity; recession with rising unemployment, waning consumer confidence and no real growth; and recovery denoted by economic corrections and improvement in key growth indicators.

BUSINESS DAYS - Days of week excluding Saturdays, Sundays, and holidays; normal working days.

BUSINESS OPPORTUNITIES - Any type of business which is for sale.

BUSINESS TAXES - Taxes levied and due to the appropriate municipality for the operation of a business as defined by, and located within, that municipality.

buy-down - A type of mortgage which requires the buyer to pay additional discount points or make a substantial down payment in return for a below market interest rate. Another form of a buy-down is one in which the seller offers 3-2-1 interest payment plans or pays closing costs such as the origination fee. During times of high interest rates buy-downs may induce buyers to purchase property they might otherwise not have purchased.

- C -

call option - A clause in the mortgage that gives the lender the right to "call" the mortgage due and payable at the end of a given length of time, for whatever reason.

Callable - Bonds that may be redeemed by the issuer before their scheduled maturity.   The first dates when an issuer may call bonds are specified in the prospectus of every issue that has a call provision in its indenture.

Callable Advance -  An advance containing an option that grants the right to cancel the advance at some specified future date.

Callable Swap - An interest rate swap in which the fixed-rate payer has the right to terminate the swap after a certain time if rates fall.  Often done in conjunction with callable debt issues where an issuer is more concerned with the cost of the debt than the maturity.

CAMELS -  The components of FDIC ratings, which stands for:  capital adequacy, asset quality, management, earnings, liquidity and sensitivity. 

CANCELLATION CLAUSE - A provision, commonly found in industrial or commercial leases, that confers upon one or both of the parties to a lease the right to terminate the lease upon the occurrence of the condition or contingency set forth in the said clause.

CANTILEVER - A projecting beam or overhanging portion supported at one end only.

Cap - With an adjustable rate mortgage this is the limit for how much the interest rate can rise.

Cap rate (Capitalization Rate ) - The percentage selected for use in the income approach to valuation of improved property . The cap rate is designed to reflect the recapture of the original investment over the economic life of the improvement, to give to the investor an acceptable rate of return (yield) on the original investment, and to provide for the return on borrowed capital.

Capacity Building - Educational and organizational support assistance to promote the ability of community housing development organizations and nonprofit organizations to maintain, rehabilitate and construct housing for low and very low-income person and families.

capital - In banking, the funds invested in a bank that are available to absorb loan losses or other problems and therefore protect depositors. Capital includes all equity and some types of debt. Bank regulators have developed two definitions of capital for supervisory purposes: tier 1 capital, which can absorb losses while a bank continues operating, and tier 2 capital, which may be of limited life and may carry an interest obligation or other characteristics of a debt obligation, and therefore provides less protection to depositors than tier 1 capital.

CAPITAL COST ALLOWANCE (CCA) - Capital assets, though durable, have a limited lifetime and at some point will be replaced. CCA is the maximum rate set, under the Income Tax Act, which the taxpayer can claim for depreciation.

capital expenditure -The cost of an improvement made either to extend the life of a property or to increase its value.

CAPITAL GAIN - The taxable profit derived from the sale of a capitol asset.

CAPITAL IMPROVEMENT - Any structure which is erected as a permanent improvement to real property; any improvement which is made to extend the useful life of a property, or to add to the value of the property.

CAPITALIZATION - A mathematical process for converting net income into an indication of value, commonly used in the income approach to appraisal.

Capped Floater - A floating-rate note, which pays a coupon only up to a specified maximum level of the reference note.  This is done by embedding a cap in a vanilla note where the investor effectively sells the issuer a cap.

caps (interest) - Limits on the amount that the interest rate on an ARM can change per year and/or during the life of the loan. Payment caps limit the amount that monthly payments for an ARM may change.

CASEMENT WINDOWS - Hinged at one side and can open either inwardly or outwardly. Materials may include wood, metal, vinyl, or a combination thereof.

CASH FLOW - The net operating income of a property less its debt service.

Cash Reserve - In order to get a mortgage loan some lenders require that the borrower have money in savings or in easily liquefiable assets.

CAVEAT EMPTOR - (Let the buyer beware) A long standing legal principle based on the concept the purchaser is buying at his/her own risk. This places a responsibility on the purchaser to inspect and establish the terms for what is being purchased. The seller cannot be held responsible for the quality of a product unless express warranties have been given.

certificate of deposit (CD) - A form of time deposit at a bank or savings institution which cannot be withdrawn before a specified maturity date without being subject to an interest penalty for early withdrawal. Small-denomination CDs are often purchased by individuals. Large CDs of $100,000 or more are often in negotiable form, meaning they can be sold or transferred among holders before maturity.

Certificate of Eligibility - You need this in order to prove your entitlement to participate in the VA Home Loan Guarantee Program. In order to get a Certificate of Eligibility you should contact a VA approved lender who in most cases can use the ACE system on the internet to prove eligibility in minutes.

certificate of veteran status - The document given to veterans or reservists who have served 90 days of continuous active duty (including training time). This document enables veterans to obtain lower down payments on certain FHA-insured loans.

CERTIFICATE OF INSURANCE - Issued by an insurance company or its agent, verifying that a specific insurance policy is in effect for stated amounts and coverages, and sets out the names of those insured.

Certificate of Reasonable Value (CRV) - Once the home is appraised this certifies the fair market value of the property.

certificate of title - A document which confirms that the title to a property is legally held by the current owner.

CERTIFICATION - To attest to something as being certain, the truth or fact.

CERTIFIED CHEQUE - A cheque which the bank guarantees to be good, and against which a stop payment is ineffective.

CERTIFIED PROPERTY MANAGER (CPM) - A professional property manager who has qualified for membership in and is a member of the Institute of Real Estate Management, and is designated a CPM.

CFR - Code of Federal Regulations.

CHAIN OF TITLE - The recorded history of matters which affect the title to a specific parcel of real property, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title.

Champion Community -  Communities that applied for, but were not awarded ED (Economic Development) or EZ (Empowerment Zone) status.  These communities received financial and technical assistance from the USDA.

change frequency - The frequency of payment and/or interest rate changes in an ARM, usually expressed in months.

CHANGE ORDER - An order issued any time there is a change in the specifications, price, or time set forth in the building contract as authorized by the owner, architect, and/or engineer.

CHARGE - An encumbrance on land by way of a mortgage as registered in the Land Titles System.

CHATTEL - Personal property which is tangible and moveable.

CHATTEL MORTGAGE - A mortgage given on moveable possessions (e.g., automobiles, boats, trailers, mobile homes) or personal property (e.g., appliances, televisions, and stereos), that may be removed without injury to the freehold estate.

CILP - Capital Improvement Loan Program.

CLEAR TITLE - Title to property that is free from liens, defects or other encumbrances, except those which the buyer has agreed to accept, such as mortgage to be assumed, the ground lease of record, and the like; established title; title without clouds.

CLIENT - A person who has an agency relationship with a brokerage.

CLIENT TRUST ACCOUNT - A Trust Account set up by a broker to keep a client's monies segregated from the broker's main Trust Account.

closed-end credit - An agreement in which advanced credit plus any finance charges are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed-end agreements.

CLOSED MORTGAGE - A mortgage that does not provide for any prepayment of principal during the term.

CLOSING - The final stage of consummating a real estate transaction when the seller delivers title to the buyer, in exchange for the purchase price.

CLOSING COSTS - Expenses of the sale which must be paid in addition to the purchase price (in case of the buyer's expense), or be deduced from the proceeds of the sale (in the case of the seller's expenses).

CLOSING DATE - The date set for the completion of a transaction in an Agreement of Purchase and Sale.

CLOSING STATEMENTS - A detailed cash accounting of a real estate transaction prepared by a lawyer or other person designated to process the mechanics of the sale, showing all cash that was received, all charges and credits which were made, and all cash that was paid out in the transaction; also called a settlement statement.

CLOUD ON TITLE - Any document, claim, unreleased lien or encumbrance which many impair or injure the title to property or make the title doubtful because of its apparent or possible validity.

CLUSTER DEVELOPMENT - The grouping of housing units on less than normal size homesites, with remaining land being devoted to common areas.

CODE OF ETHICS - A written system of standards of ethical conduct.

COLLAR TIES - Laterally placed wood members that are installed between opposing rafters approximately halfway up to the attic space.

COLLATERAL - Something of value given or pledged as security for a debt or obligation. The collateral for a real estate mortgage loan is the mortgaged property itself, which has been hypothecated.

COLLATERAL MORTGAGE - A loan backed by a promissory note and then further secured by means of a mortgage on real property.

COLLATERAL SECURITY - An additional form of security, pledged to reduce the risk to a mortgagee, which can be used to recover all or part of the debt.

collection - Forcing a borrower to pay what he owes on a loan.

Colonia -  An identifiable unincorporated area located within one hundred and fifty (150) miles of the Texas-Mexico border that lacks infrastructure and decent housing.

COMMISSION (FEE) - Remuneration paid to a Brokerage on the sale or lease of property, usually as a percentage of the sale amount involved, but is sometimes a fixed amount.

Committee on Uniform Securities Identification Procedures (CUSIP) -   A committee that assigns identifying numbers and codes for all securities.  The CUSIP numbers and symbols are used when recording all buy and sell orders.

commitment - A promise by a lender to make a loan to a borrower or builder, or a promise by an investor to purchase mortgages from a lender.

Commitment Letter - The letter given from a lender to a potential borrower that specifies the terms being offered for a mortgage loan.

Committed - Generally means there has been a legally binding commitment of funds to a specific project to undertake specific activities.

COMMON EXPENSES - The costs of operating, managing, maintaining, and repairing a condominium's common elements and administering the Condominium Corporation.

COMMON LAW - That part of the law, formulated, developed and administered by the common law courts, mostly unwritten and founded originally on common customs.

Community Adjustment and Investment Program (CAIP) - Defined under 22 U.S.C. 290m-2 as areas with a significant number of lost jobs as a result of NAFTA.  These communities receive financial and technical assistance from USDA and SBA.

Community Housing Development Organization (CHDO) - A private nonprofit organization with a 501(c) federal tax exemption, a CHDO must also include providing decent, affordable housing to low-income households as its purpose in its charter, articles of incorporation, or by-laws.  It must serve a specific, delineated geographic area; a neighborhood, several neighborhoods, or the entire community.  Merely serving certain population groups (by ethnicity, race, age, or gender) does not qualify.

Community Reinvestment Act (CRA) -  Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. 

comparative advantage - A situation in which a country, individual, company or region can produce a good at a lower opportunity cost than that of a competitor.

COMPENSATION - Payment or reward for performance of service.

competitive bidders - One of two categories of bidders on Treasury securities: competitive and noncompetitive. Competitive bidders are usually financial institutions.

COMPETITION ACT - (formerly known as the Combines Investigation Act) is a federal statute addressing many forms of competition.

COMPOUND INTEREST - Interest charged on the initial principal for monies borrowed, and also on interest amounts accrued from previous periods, and are charged at specified intervals (e.g., monthly, daily, quarterly).

comps, comparables - Comparable properties; properties in close proximity which have sold recently that are about the same size with similar amenities, used to determine value of a property by comparison.

CONCURRENT OWNERSHIP - When two or more persons have a right of ownership at the same time.

Condemnation - The inherent power of the state to seize a citizen's private property, expropriate property, or rights in property, without the owner's consent. The property is taken either for government use or by delegation to third parties who will devote it to "public use or civic" or in some cases, economic development. The most common uses of property taken by condemnation are public utilities, highways, and railroads. Some states require that the government body offer to purchase the property before resorting to the use of condemnation.

 CONDITION PRECEDENT - A condition in a contract, which calls for the happening of some event, or performance of some act, before the offer becomes binding on the parties.

CONDITION SUBSEQUENT - A condition in a contract referring to a future event upon the happening of which the Agreement becomes no longer binding on the parties.

CONDITIONAL SALES CONTRACT - A contract, usually involving the sale of goods, in which the property remains in the seller's name until all installments set out in the contract have been paid by the buyer.

Condominium - A type of home where you own the specific unit you buy that may be attached to other units owned by many different people. There may be specific associations involved that include monthly or annual fees, owner rules, and common areas in the community.

CONDOMINIUM ASSOCIATION - A governing body, without share capital, arising from the registration of a declaration and description for a condominium, (whose members are the owners) to manage the property and assets of the corporation.

CONSIDERATION - Something of value given or promised to make an agreement legally binding.

Consolidated Plan - A document submitted to the U.S. Department of Housing and Urban Development (HUD) containing housing needs assessments and strategic plans for the state.

Consolidated Mortgage Obligation (CMO) -  A security backed by a pool of pass through rates, structured so that there are several classes of bondholders with varying maturities, called tranches.  The principal payments from the underlying pool of pass-through securities are used to retire the bonds on a priority basis as specified in the prospectus.

Constant Maturity Treasury Derivative (CMT) - A form of over-the-counter swaps and options that use longer-term, Treasury-based instruments for their floating rate reference rather than money market indexes, such as LIBOR.  The term Constant Maturity Treasury refers to the par yield that would be paid by a treasury bill, note, or bond which matures in exactly one, two, three, five, seven, 10, 20, or 30 years.

Constant Prepayment Rate (CPR) -  Typically, the result is stated as a percentage of the mortgage balance outstanding at the beginning of a period (for example, prior month or year) to a subsequent like period.  This number is referred to as the CPR.  The CPR includes only prepayments, not contractual amortization payments.

Consumer Credit Counseling - Where a consumer can get help in the case that they have over-extended or developed derogatory credit.

consumer price index (CPI) - A measurement of the cost of living determined by the Bureau of Labor Statistics.

CONTRACT - A legally binding agreement between two or more capable persons for consideration or value.

Contract for Deed - A financing arrangement for the sale of property whereby land ownership remains with the seller until the total purchase price is paid.

contract of sale - Agreement between the buyer and seller which conveys title after certain conditions are met, outlining purchase price, terms, etc.

contingency - A specific condition that must be met before a contract is legally binding. Usually that the house must pass the home inspection and the borrower must get a loan.

Contingency Clause - When associated with a mortgage this is when the seller can back out of the purchase contract in the case that the buyer can not obtain financing within a specified amount of time.

conveyance - A written document (such as a deed or lease) that transfers ownership interest in a property from one person to another.

construction loan (interim loan) - A loan to provide the funds necessary to pay for the construction of buildings or homes. The lender advances funds to the builder at periodic intervals as the work progresses.

CONVECTION SYSTEM - A system in which heat is transferred through circulatory motion of air that occurs when the temperature varies. (hot water or steam radiator is one such system)

Convertible Adjustable Rate Mortgage - An ARM that can be converted into a fixed-rate mortgage under the terms of the loan agreement.

convertibility clause - A clause in some ARMs which allows the buyer (borrower) to change to a fixed-rate mortgage at a specified time.

Conventional loan - A mortgage loan not insured by the FHA or guaranteed by the VA.

CONVENTIONAL MORTGAGE - A first mortgage granted by an institutional lender wherein the amount of the loan does not exceed 75 % of the appraised lending value of the property.

convertible mortgage - An adjustable rate mortgage (ARM) that allows a borrower to switch to a fixed-rate mortgage at a specified point in the loan term.

Convexity - The amount that a bond’s price sensitivity differs from what is implied by its duration.

CONVEYANCE - The transfer of an interest in property from one individual to another.

CO-OPERATIVE - Provide affordable housing while permitting resident members the opportunity to have a say in the upkeep and management of their residence. The underlying premise of cooperatives is open, voluntary membership where members accept responsibilities of membership in return for the coop's services.

cosigner - A term referring to a person, other than the principal borrower, who signs for a loan. The cosigner(s) assumes equal liability for the loan.

CORPORATION - A form of business organization created by statute law which is legally considered as a separate entity.

COST APPROACH - Based on the proposition that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property.

Cost of funds - For the purpose of a subsidized advance, this is the estimated cost of issuing bank system consolidated obligations with maturities comparable to that of the subsidized advance.

Counseling Cost - These are costs that may be incurred in connection with assisting a homebuyer in the purchase of a home.  AHP subsidies may be used to pay for counseling costs only where such costs are incurred in the actual purchase of an AHP assisted unit, and the cost of counseling has not been covered by another funding source, including the member.

COUNTER-OFFER - An offer by a seller to sell the property, open for an acceptance for a specified period of time, and offered to particular purchasers.

Counter party Credit Risk - The risk of financial loss arising out of holding a particular contract or portfolio of contracts as a result of one or more parties to the relevant contract(s) failing to fulfill its financial obligations under the contract.  Counter party credit risk is managed through the use of an ISDA Master Agreement, which allows netting of all exposures related to all derivatives contracts between two counter parties, and an ISDA Credit Support Annex, which provides for the posting of collateral based on net exposure. 

COVENANT - An agreement contained in a deed, which creates a legal obligation.

CPM (CERTIFIED PROPERTY MANAGER) - Designation awarded by the Real Estate Institute of the United States and the Real Estate Institute of Canada to individuals involved in the management of residential, commercial or industrial properties.

CPD Programs - Community Planning and Development Programs.

CRA (CANADIAN RESIDENTIAL APPRAISER) - Designation awarded by the Appraisal Institute of Canada. The CRA denotes members who are qualified in the appraisal and valuation of individual, undeveloped residential dwelling sites and dwellings containing not more than four self-contained housing units.

CRB (CERTIFIED REAL ESTATE BROKER MANAGER) - Designation awarded by the Real Estate Brokers Managers Council of the National Association of Realtors.

credit - The promise to pay in the future in order to buy or borrow in the present. The right to defer payment of debt.

Credit Bureau - An agency that keeps track of individual's credit history and updates their payment history when borrowing money. The three largest bureaus are Equifax, TransUnion, and Experian.

credit history - A record of how a person has borrowed and repaid debt.

Credit Report - A person's personal payment history of how they repaid borrowed money in the past.

Credit Score - The number that can fluctuate depending on your payment history. If you pay your creditors on time your score will rise, and if you pay late or are delinquent your score may fall.

credit scoring system - A statistical system used to determine whether to grant credit by assigning numerical scores to various characteristics related to creditworthiness.

Credit Spread - A credit spread is the difference in yield between two debt issues of similar maturity and duration.  The credit spread is often used as a measure of relative creditworthiness, with reduction in the credit spread reflecting an improvement in the borrower’s perceived creditworthiness.

credit union - Financial cooperative organization whose membership consists of individuals who have a common bond, such as place of employment or residence or membership in a labor union. Credit unions accept deposits from members, pay interest (in the form of dividends) on the deposits out of earnings, and use their funds mainly to provide consumer installment loans to members.

creditor -  A person or entity (a bank or other lender) who funded the loan and to whom a debt is owed.

creditworthiness - A creditor's measure of a consumer's past and future ability and willingness to repay debts.

CRES (CERTIFIED REAL ESTATE SPECIALIST) - Designation awarded by the Real Estate Institute of Canada to persons involved in the sale of residential real estate.

CROWN PATENT - An original title deeded by the government.

CRS (CERTIFIED RESIDENTIAL SPECIALIST) - Awarded by the Residential Sales Council of the National Association of Realtors (US).

cul-de-sac -  A dead-end street with a turn-around space at the end. These are attractive to some homeowners because the ending street cuts down on "thru" traffic, speeding, etc.

curtailments - The borrower's privilege to make payments on a loan's principal before they are due. Paying off a mortgage before it is due may incur a penalty if so specified in the mortgage's prepayment clause.

Custody - Maintaining possession of documents on behalf of another party or the bank.  The bank is entrusted with maintaining proper administration of documents and accounting for all items in its possession.

Custodial Account -  A demand deposit account maintained by a servicer into which principal and interest payments or escrow funds, as the case may be, are deposited.   The types of custodial accounts are: Principal and Interest (P&I) Custodial Account, Escrow (T&I) Custodial Account, and Buy down Custodial Account.

Custodial Collateral Services -  A service whereby the Bank takes possession of a member’s whole loan documents as collateral for Advances.  In some cases, the Bank requires delivery of collateral due to the financial condition of the member.

CUSTOMER - A person who receives services from a brokerage, but who does not have an agency relationship with the brokerage.

- D -

DAMAGES - Compensation or indemnity for loss owing to breach of contract, or a tort (civil wrong).

DAMPPROOFING - Usually involves the coating of exterior foundation walls with a one-quarter inch layer of mortar or tar, which ideally extends down to the footing. The foundation/footing joint is also covered to improve the seal and direct the water into the drainage tile.

DAMPER - A valve or plate operated mechanically or manually to regulate airflow to or from any prescribed point.

debt - Money owed to repay someone.

DEBT RATIO - One of several commonly used financial ratios using data found on the balance sheet, profit and loss statement, or a combination of the two.

Debt to Income Ratio - The monthly or annual amount of income compared to your monthly or annual debt owed.

Debt Service Ratio - The ratio of a project’s annual net operating income divided by the total annual debt service.

DECLARATION - The constitution of a condominium corporation which creates the condominium and defines the responsibilities of the owners and the corporation.

DEED - A legal document, duly executed and delivered, that conveys title or an interest in real property.

DEED RESTRICTION - An imposed restriction in a deed to limit the use of the land.

Deed of Trust - This is when the deed is overseen by a trustee who works as a liaison between the borrower and lender in some states.

DEFAULT - Failure to fulfill a promise or obligation.

deferred interest - Unpaid interest added to the loan balance.

DEFERRED MAINTENANCE - Ordinary maintenance that is not performed and negatively affects a property's use and value.

DELEGATION OF DUTIES - The authorization given by one party to another to carry out the specific responsibilities that party has undertaken on behalf of a client.

Delinquency - The period of time between when your mortgage payment is due and when you pay it, up to thirty days. If you are late with a mortgage payment you are considered delinquent until the payment is officially thirty days late at which time the loan goes into default.

Delinquency Advances -  Funds advanced by a servicer to cover any deficit in the principal and interest custodial account on the withdrawal date, which results from delinquent mortgage loan payments (for scheduled/scheduled remittance types only).

Delivery versus Payment (DVP) -  Securities industry procedure whereby delivery of securities sold is made to the buying customer’s bank in exchange for payment, usually in the form of cash.

Delta - The delta of an option describes its premium’s sensitivity to changes in the price of the underlying instrument.

Demand Deposit Account (DDA) - Compares to an individual’s checking account except interest is paid daily on all balances.  All incoming and outgoing wires, Advances credits and debits, as well as any principal and interest payments from securities and Advances are posted into the DDA. 

Department of Housing and Urban Development (HUD) - A Cabinet-level federal government agency founded in 1965 that is responsible for stimulating housing development in the United States. 

Department of Veterans Affairs (VA) -  A federal government agency with oversight for programs created for veterans of the U.S. armed forces.  Mortgage loans granted by a lending institution to qualified veterans or to their surviving spouses may be guaranteed by the VA.

DEMAND LOAN/LINE OF CREDIT - An arrangement between the business customer and a financial institution respecting the maximum amount of credit allowed that business.

DEMISED PREMISES - Premises, or parts of real estate, in which an interest or estate has been transferred temporarily, such as an interest in real property conveyed in a lease.

Deposit Auction - The Bank offers callable and non-callable deposits (collectively referred to as term deposits) which have maturities ranging from one week to 10 years.  The deposits are generally offered on a weekly basis via auctions that are conducted on Secure Connect.

Depository Trust Corporation (DTC) - A central securities repository where stock and bond certificates are exchanged.

DENSITY - References the maximum allowable usage for a given parcel of land e.g., number of people, amount of residential units, or square footage .

DEPOSIT - Payment of money or other valuable consideration as a pledge for fulfillment of a contract.

DEPRECIATION - Any decline in the value of a physical asset, usually resulting from physical (ordinary wear and tear) deterioration and functional/ locational obsolescence.

Derivative -  An instrument or product whose value changes with changes in one or more underlying market variables, such as equity or commodity prices, interest rates or foreign exchange rates.

DESCRIPTION, LEGAL - A legal identification of land or premises.

DEVELOPER - One who engages in the subdivision or improvement of land.

DIFFUSER - A device for reducing the velocity of air flow from a mechanical duct system supplying air within a structure. Its shape is usually circular or square and is set in the ceiling at predetermined locations to diffuse air within a defined space. Diffusers, in residential property, are the small rectangular grates normally

Direct Subsidy - An AHP subsidy in the form of direct cash payment,

DISBURSEMENTS - The term disbursement, for real estate purposes, normally refers to those items requiring apportionment as of the date of closing. Such disbursements include any rents, mortgage interest, realty taxes, local improvement rates, unmetered public or private utility charges, and unmetered cost of fuel. Such disbursements are apportioned and allowed to the day of completion, the day of completion itself to be charged to the purchaser.

DISCLAIMER - The repudiation or denial of a claim.

DISCLOSURE - The open and forthright discussion of relevant matters by an agent to his/her principal.

Disclosure Committee - The SEC recommends that companies establish a Disclosure Committee to oversee the adoption and execution of the controls and procedures and disclosures called for by the Sarbanes-Oxley Act.

Discount Note Advance (DNA) - A fixed rate advance for the term, priced off prevailing short term Discount Note market.

Discount Points - When you get a mortgage loan you may pay these discount points in order to get better terms on your long-term mortgage loan. A point is usually equal to 1% of the loan value, so if you were taking a loan for $200,000 one point would be $2,000. Points are paid out-of-pocket by the borrower in order for the lender to have an incentive to offer a lower overall interest rate.

discount rate - Officially the primary credit rate, it is the interest rate at which an eligible depository institution may borrow funds, typically for a short period, directly from a Federal Reserve Bank. The law requires that the board of directors of each Reserve Bank establish the discount rate every fourteen days, subject to review and determination by the Board of Governors.

DISCOUNTING - The process of purchasing the face or remaining value of a mortgage at a lower cost to increase yield.

DISTRAIN (DISTRESS) - Right of the mortgagee or landlord to seize and suction chattels, after due notice of a public auction, in settlement of the mortgagor's or tenant's debt.

DISTRIBUTION PANEL - An electrical panel providing the interface between the service entrance wires to a structure and dispersing of power throughout that structure.

DOD - Department of Defense.

DOE - Department of Energy.

DOMINANT TENEMENT - The estate (i.e., property) which derives benefit from an easement over a servient tenement, as in right-of-way.

DOUBLE HUNG WINDOW - Made up of two movable parts, an outer part in the top half of the opening and an inner part on the bottom half of the opening. They move up and down on their guides.

DOWER - To give a widow a life interest in one-third of her husband's real estate. To convey clear title, a wife would have to release her interest or bar her dower rights if the husband was an owner and wished to sell or mortgage the property.

Down Payment - The amount of money you put down on the purchase of a home. The amount of a down payment is usually a certain percentage of the price of a home which varies from lender to lender, but generally anywhere from 3-10% is required. Some lenders accept gift funds for down payment assistance from organizations such as Ameridream. For VA Home Loan Guaranteed mortgages no down payment is required because of the guarantee to the lender from the VA.

DUAL AGENCY - Representation of two principals (usually seller and buyer) by the same agent in the same transaction.

due - on - interest - A mortgage clause that allows a lender to call a loan due and payable upon the transfer of the property. Known as "paragraph 17" in FNMA/FHLMC mortgages.

Due on Sale - When you sell a property which has a mortgage lien the remaining balance of the loan is paid to the lender at the time of the sale.

DUPLEX - A two-family dwelling or house have two self-contained residential units. There is only one deed for the ownership of both units.

Duration / Duration of Equity (DOE) - The average life of the present values of all future cash flows from a bond.

DURESS - The threat of violence, force or undue pressure to coerce a person into an action against his/her will.

- E -

Earnest Money - The money that is placed on a purchase agreement that shows a buyer wants to purchase a home. This money is given to the real estate or title agent so that the seller holds the home until necessary appraisals and inspections can be completed and the closing of the loan takes place.

EASEMENT - A right enjoyed by one tenement over another tenement, usually granted for a specific purpose rather than for the general use and occupation of the land, and once granted attaches to the land and binds subsequent owners. Usually this is for the local government to have access to portions of the property they need for utility lines, road extensions, sewer and water pipeline installations, hazardous tree removals, and more

Economic Independence and Self-Sufficiency Programs - Programs undertaken by Public Housing Agencies (PHAs) to promote economic independence and self-sufficiency for participating families.

ECONOMIC LIFE - The period over which improvements to real estate contribute to the value of the property.

ECONOMICS - The study of how individuals and society allocate scarce resources in satisfying their wants and needs, including production, distribution, and consumption of goods and services to meet the needs of various economic units.

EFFECTIVE AGE - The estimated age in years as indicated by the condition and utility of a structure based on the age of structures of equivalent utility, condition, and remaining life expectancy, as distinct from chronological age.

EFFECTIVE DATE - The day or date upon which something occurs or ceases to occur.

EFFECTIVE RATE OF INTEREST - The true rate of interest charged on a mortgage loan.

8-K - An ad hoc report required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock, or in the Bank’s case, the value of its debt.

Elderly Household - A family in which the head of the household or a spouse is at least sixty-two years of age.

ELEVATION - The exterior of a structure usually viewed from the front or otherwise identified: e.g., side elevation, rear elevation.

ELIHPA (Title II) - Emergency Low Income Housing Preservation Act.

Embedded Option - An option, often an interest rate option, embedded in a debt instrument that affects its redemption.  Examples include mortgage-backed securities and callable and puttable bonds.

EMINENT DOMAIN - The right of a government or municipal quasi-public body to acquire private property for public use.

Employment Verification - A lender requires employment verification of potential borrowers to verify their income and job security.

Empowerment Zone (EZ) - A distressed area in need of sustainable community development. EZ is designed to afford communities real opportunities for growth and revitalization.

encroachment - An illegal intrusion on someone else's property.

encumbrance - A lien or claim on a property.

Enterprise Community (EC) -  A designation by USDA (rural) or HUD (urban) based on four key principals: economic opportunity, sustainable community development, community-based partnerships, and strategic vision for change.  In addition to tax benefits and grants, these communities receive special consideration for and assistance from federal programs.

entitlement - VA home loan benefit are known as entitlement and/or eligibility.

EPA - U. S. Environmental Protection Agency.

EQUALIZATION (TAXATION) - The raising or lowering of assessed values for tax purposes in a particular county or taxation district to make them equal to assessments in other counties or districts.

equity - The value of a property beyond any liens against it. Also referred to as owner's interest.

EQUITY CAPITALIZATION RATE - Expresses the relationship between cash flow and the equity invested in a property, usually obtained from comparable properties.

EQUITY OF REDEMPTION- The right of the mortgagor to reclaim clear title to the property upon full repayment of the debt. It is a right granted to mortgagors but is extinguishable upon foreclosure.

ESCALATION CLAUSE - A clause in a contract providing for increases or decreases in rent payments in accordance with fluctuations of certain direct costs or expenses of the landlord.

escape clause - A provision allowing one party or more to cancel all or part of the contract if certain events fail to happen, such as the ability of the buyer to obtain financing within a specified period.

ESCHEAT -The reversion of property to the state or some agency of the state in the event the owner thereof dies leaving no will and having no legally qualified heir to whom the property may pass by lawful descent.

ESCROW - A written agreement between two or more parties providing that certain instruments of property be placed with a third party to be delivered to a designated person upon the fulfillment or performance of some act or condition.

Escrow Company - Also called a Title Company or Title Agency. They hold the money in an escrow account until funds need to be distributed correctly. They also help with the closing of a home purchase, the mortgage paperwork, the transfer of money from the lender to the seller, and the title changes.

ESTATE - An interest in land or more specifically the degree, quantity, nature, and extent of interest that a person has in real property.

ESTOPPEL - A bar to alleging or denying a fact because of one's own previous actions or words to the contrary.

ESTOPPEL CERTIFICATE - The Estoppel Certificate provides a reasonably complete report on the financial health of the condominium corporation but it is by no means exhaustive.

ETJ - Extraterritorial Jurisdiction.

EVICTION - The forced removal, by legal means, of a tenant from the leased premises.

EVICTION NOTICE - A written notice to a tenant to vacate the leased premises within a specified time for infractions of the lease or other specified causes.

EXCLUSIVE AGENT - An agent with the exclusive rights to sell, lease or exchange the property owned by another for a fixed period.

EXECUTOR / EXECUTRIX - A person appointed by testator to carry out the provision of the testator's will.

Existing Homeowner - An owner-occupant of residential property who holds legal title to the property and who uses the property as his or her principal residence.

Exotic Option - Any option with a more complicated pay-out structure than a plain vanilla put or call option.

EXPANSION JOINT - An opening designed for expansion that is located between independent segments within a structure.

EXPENSE RATIO - The fraction of gross income consumed by expenses.

EXPRESS AUTHORITY- A precise instruction, either in writing or orally, in which an authority is granted.

EXPROPRIATIONS - Taking of private property by the state for public use, with fair compensation to the owner, through the exercise of the right of eminent domain.

Extendible Swap - A swap in which the fixed-rate payer has an option to extend the swap.

- F -

FAS 115 -  This statement addresses the accounting and reporting requirements for investments in equity securities that have readily determinable fair values and for all investments in debt securities.  This statement does not apply to unsecuritized loans.  However, after mortgage loans are converted to mortgage-backed securities, they are subject to its provisions.

FAS 133 -  This statement addresses accounting for derivative instruments and hedging activities.  It requires that all interest rate derivatives be recorded on the statements of condition at their fair values, and that periodic changes in their fair values be recorded in either current earnings or other comprehensive income.

Fair Housing Act - An act created by the federal government that makes it illegal for lenders, sellers, agents, brokers, and anyone involved in the sale or purchase of a home to discriminate against a buyer for any reason.

market value - The price a property can realistically sell for, based upon comparable selling prices of other properties in the same area.

Family - A household comprised of one or more individuals.

Fannie Mae, Federal National Mortgage Association (FNMA) - A corporation created by Congress that purchases and sells conventional, FHA and VA residential mortgages. Makes mortgage money more available and affordable.

FALSE REPRESENTATION - A false statement of fact.

Innocent Misrepresentation - A statement by one party of a material fact, that is untrue, but is believed to be true.

Fraudulent Misrepresentation- Made with the knowledge of its falsity or with reckless disregard for its truth on the part of the person making it; the purpose must have been to induce the other party to enter a contract; it must have been acted upon to the other party's prejudice.

Negligent Misrepresentation - if there is a special relationship between the parties and a misrepresentation is made negligently, then the person who is mislead will have an action for damages.

Farmers Home Administration (FmHA) - An organization that finances loans for farmers and other qualified borrowers who are unable to obtain loans elsewhere.

Fed Funds Rate - The rate of interest at which Fed funds are traded.

Federal Deposit Insurance Corporation (FDIC) - Federal agency established in 1933 which guarantees (with limits) funds on deposit in member banks and performs other functions such as making loans to or buying assets from member banks to facilitate mergers or prevent failures.

federal funds rate - Rate charged by a depository institution on an overnight loan of federal funds to another depository institution; rate may vary from day to day and from bank to bank.

Federal Housing Administration (FHA) -  A government agency, which is a part of the Department of Housing and Urban Development (HUD).  It was established in 1934 and insures lenders against loss on residential mortgages. 

FHA mortgage insurance -  is a way of insuring an FHA loan. It requires a small fee (up to 3.8 percent of the loan amount ) paid at closing or a portion of the fee added to each monthly payment. Also requires an annual fee of 0.5 percent of the current loan amount, paid in monthly installments . The lower the down payment, the more years the fee must be paid.

Federal Housing Finance Board (FHFB) -  An independent regulatory agency of the executive branch of the U.S. Government with a five member board that regulates the 12 FHL Banks and the Office of Finance.

Federal Home Loan Mortgage Corporation (FHLMC) (Freddie Mac) - A publicly owned, government-sponsored enterprise that buys qualifying residential mortgages from lenders, packages them into new securities backed by those pooled mortgages, provides certain guarantees, and then resells the securities in the open market. 

Federal National Mortgage Association (FNMA) (Fannie Mae) -  A publicly owned, government-sponsored enterprise that purchase mortgages from lenders and resells them to investors. 

Federal Open Market Committee (FOMC) -  The committee in the Federal Reserve System, which sets short-term monetary policy for the Federal Reserve.

Federal Preference for Admission - The preference given to otherwise eligible applicants under HUD's rental assistance programs who, at the time they seek housing assistance, are involuntarily displaced, living in substandard housing, or paying more than 50 percent of family income for rent. (See, for example, section 882.219).

FEMA - Federal Emergency Management Agency.

FHA - Federal Housing Administration.

Federal Reserve Bank -  One of the 12 member banks constituting the Federal Reserve System that is responsible for overseeing the commercial and savings banks of its region to ensure their compliance with regulation.

Federal Reserve Bank System (FED) - The monetary authority of the US, established in 1913, and governed by the Federal Reserve Board located in Washington, D.C.  The system includes 12 Federal Reserve Banks and is authorized to regulate monetary policy in the US as well as to supervise Federal Reserve member banks, bank holding companies, international operations of US banks, and US operations of foreign banks.

fee simple - The maximum form of ownership, with the right to occupy a property and sell it to a buyer at any time. Upon the death of the owner, the property goes to the owner's designated heirs. Also known as fee absolute.

Fees - The costs that are associated with getting a mortgage loan that include servicing fees, loan origination fees, title fees, appraisal fees, home inspection fees, and more.

FHA Loan / FHA Mortgage - A mortgage loan insured by the Federal Home Administration.

FHLB - Federal Home Loan Bank.

FIDUCIARY RELATIONSHIP - A person to who power or property is entrusted for the benefit of another.

FIDUCIARY RESPONSIBILITIES - An agent owes to his/her principal various fiduciary duties such as competence, obedience, good faith, and full disclosure, and full accounting.

Competence - A degree of care and skill that might be expected from an average person in that trade or profession.

Obedience - A duty to follow the principal's lawful instructions whether the agent agrees with them or not.

Good Faith & Full Disclosure - Honesty of intention, abstention from taking advantage of another and freedom from knowledge of circumstances that ought to cause a reasonable person to investigate.

Full Accounting - The requirement for full and complete accounting, such as details of all funds held in trust, and all monies handled on behalf of the principal.

fifteen-year mortgage - A loan with a term of 15 years. Although the monthly payment on a 15-year mortgage is higher than that of a 30-year mortgage, the amount of interest paid over the life of the loan is substantially less.

Financial Accounting Standards Board (FASB) -  A board established in 1973 which is responsible for establishing and interpreting generally accepted accounting principles.

FINDER'S FEES (MORTGAGE) - Often referenced as a mortgage referral fee, is paid to persons such as real estate brokers or mortgage brokers for successfully referring customers to lending institutions.

first mortgage - The mortgage which is the primary lien against a property.

First-Time Home Buyer - An individual or family who has not owned a home during the three year period preceding the HUD-assisted purchase of a home that must be used as the principal residence of the home buyer.

FIT UP - Sometimes referenced as fitting up or build-outs, it is the construction necessary within the enclosing walls to divide and improve the tenant's space into a functional layout.

FIXED ASSETS - Frequently referenced as capital assets, add value to a business and are used in the operation of the enterprise, and are being held by the company for the intention of resale in the marketplace.

Fixed Rate / Fixed Term Advance (FRFT) -  Type of advance in which the principal is paid at maturity but interest is collected monthly.

Fixed Rate Mortgage (FRM) -  A mortgage whose rate is fixed for the life of the loan.

FIXED EXPENSES - Charges that do not vary with occupancy, and have to paid whether the property is occupied or vacant.

FIXTURES - An item that is attached to the real property or building to become part of it.

FLASHING - Sheet metal or other material used in roof and wall construction to shed water.

FLAT PAYMENT - A payment structure in which the borrower is not required to repay any of the principal until the maturity date.

flood insurance - A form of insurance that protects the owner of the insured property against losses stemming from flood damage. The Federal Flood Disaster Protection Act of 1973 requires that federally-regulated lenders determine if real estate to be used to secure a loan is located in a Specially Flood Hazard Area (SFHA). If the property is located in a SFHA area, the borrower must obtain and maintain flood insurance on the property. Most insurance agents can assist in obtaining flood insurance.

FLOOD PLAIN - The area, usually low lands, adjoining a watercourse that has been, or may be covered by floodwater.

FmHA - The Farmers Home Administration, or programs it administers. FmHA is now know as the Rural Economic and Community Development agency under the U.S. Department of Agriculture.

FNMA: Federal National Mortgage Association (Fannie Mae).

FOIA Request - Freedom of Information Act Request.

FOOTING - The widen section, usually concrete, at the base or bottom of a foundation wall, pier or column.

FORECLOSURE - Remedial court action taken by a mortgagee, when default occurs on a mortgage, to cause forfeiture of the equity of redemption of the mortgagor, and also subsequent encumbrancers' equity of redemption.

Forward Rate Agreement (FRA) -  This agreement allows purchasers/sellers to fix the interest rate for a specified period in advance.

FRAMING - The rough timber work of a house, including the flooring, roofing, partitioning, ceiling and beams.

Freddie Mac, Federal Home Loan Mortgage Corporation (FHLMC) - A quasi-governmental agency that purchases conventional mortgage loans from insured depository institutions (savings and loans) and HUD-approved mortgage bankers.

FRI (FELLOW OF THE REAL ESTATE INSTITUTE) - Designation to licensed individuals who have completed the Real Estate Institute of Canada (REIC) education program.

FRI (A) (FELLOW OF THE REAL ESTATE INSTITUTE APPRAISAL SPECIALIST) - Members who specialize in residential appraisals.

FRI (E) (FELLOW OF THE REAL ESTATE INSTITUTE EXECUTIVE) - Designation for unlicensed management professionals, who are not involved in residential or commercial sales.

front-end ratio - Your prospective monthly mortgage payments divided by your gross monthly income. This comes out to a percentage, and a lender uses this percentage to get an idea of how much of your income will be going to pay your loan. If they like the number (say, below 29%) then they will be more inclined to sell you the loan.

FUNCTIONAL OBSOLESCENCE - Impairment of functional capacity or efficiency. Reflects the loss in value brought about by such factors as overcapacity, inadequacy, and changes in technology that affect the property item itself or its relation with other items comprising a larger property.

Funding Fee - The name of the fee that the VA charges when a veteran uses their Home Loan Guarantee Program.

Future - A future is a contract to buy or sell a standard quantity of a given instrument, at an agreed price, on a given date.

FY: Fiscal Year.

- G -

GABIONS - A metal enclosure made of mesh or chain links normally filled with stone designed to act as a retaining wall.

GABLE - An inverted 'V' or triangular shaped portion of a wall, extending down to the roof line, above the first floor level and may or may not contain a window or a decorative structure.

Gamma - The rate of change in the delta of an option for a small change in the underlying.

GARNISHMENT - A proceeding whereby property, money, or credits of a debtor; in the possession of another (the garnishee), are applied to the payments of debts by means of process against the debtor and the garnishee.

GENERAL CONTRACTOR - Normally selected through bidding procedures, is responsible for completion of the project in a skillful manner that is acceptable to both architect and owner.

Generally Accepted Accounting Principles (GAAP) - Conventions, rules, and procedures that define accepted accounting practice, including broad guidelines as well as detailed procedures.  The basic doctrine was set forth by the Accounting Principles Board of the American Institute of Certified Public Accountants, which was superseded in 1973 by the Financial Accounting Standards Board (FASB), an independent self-regulatory organization.

gift - A sum of money, including amounts from a relative or a grant from the borrower's employer, a municipality, non-profit religious organization, or non-profit community organization that does not have to be repaid.

Gift Funds - Free down payment assistance from the VA that is given to a buyer in order to help them purchase a home.

Gift Letter - In the case you are given money for a down payment from a friend, relative, or employer you must have a letter stating that the person giving you the money does not expect to be paid back. This is because if you borrow money that is expected to be repaid then the mortgage lender will need to calculate this into your income to debt ratio.

GNMA - Government National Mortgage Association (Ginnie Mae).

good faith estimate - The estimate on closing costs and monthly mortgage payments provided by a lender to the homebuyer within 3 days of applying for a loan.

GOODWILL - The expectation of continued business activity arising from the reputation of a business, and can be a salable asset of a corporation and as such can be included in the balance sheet.

Ginnie Mae, Government National Mortgage Association (GNMA) - A governmental agency that provides sources of funds for residential FHA-insured or VA-guaranteed mortgages.

government mortgage - A mortgage insured by the FHA or guaranteed by the VA or the Rural Housing Service (RHS).

Government Sponsored Enterprises (GSE) -  Federal government-sponsored enterprises that currently include Fannie Mae (FNMA), Freddie Mac (FHLMC), Ginnie Mae (GNMA), the Federal Home Loan Banks (FHLB) and their successors.

Government- Sponsored Mortgage Finance Corporations - The Federal National Mortgage Associating, the Federal Home Loan Mortgage Corporation, and the Federal Agricultural Mortgage Corporation.

GRADUATED LEASE - A lease that provides for specific increases or decreases in rent at definite times based on specified conditions during the term of the lease.

GRADUATED PAYMENT - A blended payment plan with regular increases of individual payments to a predetermined level.

Graduated Payment Mortgage (GPM) - A type of mortgage loan where payments start out low and increase with time. This type of loan is good for people who expect their income to increase over time.

Gramm-Leach-Bliley Act (GLB) -  Banking legislation enacted in 1999 that set forth the following: (1) Banks with less than $500 million in assets may use long-term advances for loans to small businesses, small farms and small agribusinesses.  (2) A new, permanent capital structure for the Federal Home Loan Banks is established.  Two classes of stock are authorized, redeemable on 6-months and 5-years notice.  Federal Home Loan Banks must meet a 5% leverage minimum tied to total capital and a risk-based requirement tied to permanent capital. (3)   Equalizes the stock purchase requirement for banks and thrifts. (4) Voluntary membership for Federal savings associations takes effect six months after enactment. (5)  The current annual $300 million funding formula for REFCORP obligations of the Federal Home Loan Banks is changed to 20% of annual net earnings. (6)  Governance of the Federal Home Loan Banks is decentralized from the Federal Housing Finance Board to the individual Federal Home Loan Banks.  Changes include the election of a chairperson and vice chairperson of each Federal Home Loan Bank by its directors rather than the Finance Board, and a statutory limit on Federal Home Loan Bank directors’ compensation.

GRANDFATHER CLAUSE - A colloquial expression pertaining to a rule or regulation placed in force, but exempts various persons or situations owing to pre-existing conditions.

GRANT - A legal term used in deeds of conveyance to indicate a transfer of an interest or estate in real property by the Grantor to the Grantee.

Grantee - The legal term for a buyer in mortgage loan paperwork.

GRANTEE/GRANTOR - The grantee is the party to whom an interest in real property is conveyed. The grantor conveys an interest in real property.

GROSS DEBT SERVICE RATIO (GDS RATIO) - Refers to the relationship between a borrower's income and the sum of principal, interest, and property tax payment during the year.

GROUND FAULT CIRCUIT INTERRUPTER - A ground fault specifically designed to shut the power off to a circuit when as little as .005 amps are leaking.

Growing Equity Mortgage (GEM) - A type of mortgage where the payments increase overtime, but the extra money is applied to the principle of the loan in order to pay off the loan faster.

guaranteed mortgage, guaranteed loan - A mortgage guaranteed by a third party.

guaranty - An agreement by which one person assumes responsibility of assuring payment or fulfillment of another's debts or obligations, or something given as security for the execution, completion, or existence (or payment) of something else.

GUARANTOR - Person providing a separate personal covenant over and above a named party in a contract regarding some obligation(s): e.g., mortgage, personal loan or lease.

- H -

Haircut - The difference between the actual market value of a security and the value the Bank is willing to loan to collateralize a member’s advance.

Hazard Insurance - Insurance that pays to repair a property in the case of damage from fire, ice, floods, storms, acts of vandalism, and more. This type of insurance is usually required by your mortgage lender and can be included in your homeowners insurance policy.

HCALP - Home Construction and Acquisition Loan Program.

Hedge -  Strategy used to offset investment risk.  A hedge reduces or eliminates the possibility of future gain or loss.

Helping Hand (HH) - Advances granted from April 1996 to December 1997 for members to use to facilitate home ownership for families at or below 80% of the area median income.

HIGH RATIO MORTGAGE - A mortgage loan that exceeds the normal limit (75% of the value of the property) of a conventional first mortgage, with regard to the percentage of the loan amount to the property's lending value, and is insured through a mortgage insurance plan.

Highest and Best Use -  A concept in real estate appraisal It states that the value of a property is directly related to the use of that property; the highest and best use is the reasonably probable use that produces the highest property value. This use, the Highest and Best Use, may or may not be the current use of the property.

Historical Volatility - A measure of the volatility of an underlying instrument over a past period.

HOLDING OVER - The act of a tenant retaining possession of the premises longer than the term expressed in the lease; often referenced as over-holding.

HOLDOVER CLAUSE - A clause in a listing agreement that protects a real estate brokerage for a specific period of time of time after the listing agreement expires. It requires the payment of a commission fee when a buyer makes a private offer to purchase, after having been introduced to the property during the time the property was listed with the brokers.

HOME - The HOME Investment Partnerships Act, which is Title II of the National Affordable Housing Act.

home equity line of credit -  A loan against the amount of equity you have in a property. The equity serves as security for the new loan.

home equity loan - A mortgage on the borrower's principal residence, usually for the purpose of making home improvements or debt consolidation.

HOME Funds - Funds made available under the HOME Investment Partnerships Act through allocations and reallocations, plus all repayment and interest or other return to the investment of these funds.

HOME INSPECTION - The process by which a qualified person examines and evaluates various components of a residential building including but not limited to structural aspects, components, exterior coverings, roofing system, plumbing, electrical, heating, central air conditioning, insulation, ventilation, and interior structure. It is designed to provide a client with a thorough understanding of the condition of a property as of the date of inspection.

Home Loan Guarantee Program - A program within the Department of Veterans Affairs that guarantees a loan for veterans to purchase homes.

Home Warranty - A warranty that covers and problems that occur with your home within a specific amount of time. Some real estate companies offer a one year home warranty when you purchase your home that covers main systems like the heating, ventilation, air conditioning, appliances, and more. If you build a new home the builder offers a limited warranty on the home.

Homeowner Equity Leverage Partnership (HELP) - An FHLB program that supports first-time home buyers by matching their savings to cover a down payment and/or closing costs.

Homeowners Insurance - Insurance that covers damage to your property or home. This type of insurance also covers your personal belongings and contents of your home. Homeowners Insurance is required by your mortgage lender.

homeowner's warranty - A warranty provided by the seller (or the builder on new homes) as a condition of the sale. Covers repairs to specified parts of a house for a specific period of time.

HOPE 1 - The HOPE for Public and Indian Housing Home ownership Affordable Program, which is Title IV, Subtitle A of the National Affordable Housing Act.

HOPE 2 - The HOPE for Home ownership of Single Family Homes Program, which is Title IV, Subtitle A of the National Affordable Housing Act.

HOPE 3 - The HOPE for Home ownership of Single Family Homes Program which is Title IV, Subtitle C of the National Affordable Housing Act.

Household - One or more persons occupying a housing unit (U.S. Census definition).

Housing - Includes manufactured housing and manufactured housing lots.

HOUSING ABSORPTIONS - Refers to the rate for newly completed units sold or rented.

Housing Development Costs - The total of all costs incurred in financing, creating, or purchasing any housing development, including but not limited to a signal-family dwelling, which are approved by the department as reasonable and necessary. The costs may include but are not limited to the value of land and any buildings on the land, cost of land acquisition, options, deposits, or contracts to purchase; cost of site preparation demolition, and development; fee paid or payable in connection with the planning, execution, and financing of the development, such as those to architects, engineers, attorneys, accountants; cost of necessary studies, surveys, plans, permits, insurance, interest, financing, tax and assessment costs, and other operating and carrying costs during construction; cost of construction, rehabilitation, reconstruction, fixtures, furnishings, equipment, machines, and apparatus related to the real property; cost of land improvements, including without limitation, landscaping and off-site improvements; necessary expenses in connection with initial occupancy of the housing development; an allowance established by the Department for contingency reserves; and the cost of the other items, including tenant relocation, if tenant relocation costs are not otherwise being provided for, as determined by the department to be reasonable and necessary for the development of the housing development, less any and all net rents and other net revenues received from the operation of the real and personal property on the development site during construction.

Housing Development or Housing Project - Any real or personal property, project, building structure, or facilities work, or undertaking, whether existing, new construction, remodeling, improvement, or rehabilitation, which meets or is design to meet minimum property standards consistent with those prescribed in the federal HOME program for the primary purpose of providing sanitary, decent, and safe dwelling accommodations for rent, lease, use, or purchase by persons and families of low and very low-income and persons with special needs. This term may include buildings, structure, land, equipment, facilities, or other real or personal properties which are necessary, convenient, or desirable appurtenances, such as but not limited to streets, water, sewers, utilities, parks, site preparation, landscaping, stores, offices, and other non-housing facilities, such as administrative, community, and recreational facilities the Department determines to be necessary, convenient, or desirable appurtenances.

housing expenses-to-income ratio - A borrower's housing expenses divided by his /her net effective income (for FHA/VA loans) or gross monthly income (for conventional loans). Expressed as a percentage.

Housing Finance Division - A division or divisions of the department.

Housing Problems - Households with housing problems include those that: (1) occupy units meeting the definition of Physical Defects; (2) meet the definition of overcrowded; and (3) meet the definition of cost burden (> 30 percent of income spent on housing).

Housing Strategy - A Comprehensive Housing Affordability Strategy prepared in accordance with 24 CFR part 91, consisting of either a complete submission or and annual update. Approved housing strategy means a housing strategy that has been approved by HUD in accordance with 24 CFR part 91.

Housing Unit - An occupied or vacant house, apartment, or a single room (SRO Housing) that is intended as separate living quarters (U.S. Census definition).

HUD - The Department of Housing and Urban Development - A government agency that aids people with purchasing homes, getting financing for a home mortgage, counseling and education for the home buying process, and much more.

HUD-1 Form - A list of the purchases and transactions involved when you buy a home through The Department of Housing and Urban Development and The Federal Housing Authority.

HOUSING STARTS - The number applied to quantity of units, where construction has advanced to a stage where full (100%) footings are in place. In the case of multiple unit structures, the definition of a start applies to the entire structure.

HUB - Historically Underutilized Business. A HUB is defined as a business entity that is at least 51 percent owned by an African American, Hispanic, American, Asian-Pacific American, Native American, or a woman of any ethnicity.

HVAC - An acronym used primarily in commercial and industrial leasing/sales to indicate the Heating, Ventilating and Air-Conditioning facilities within a particular building/structure.

Hybrid Mortgage Loan - A loan to purchase a home that combines an adjustable rate mortgage with a fixed rate mortgage. Most hybrid mortgages have a fixed interest rate for the first ten years and then the interest rate becomes adjustable. This type of mortgage is good for people who are not planning to live in the home during the adjustable interest rate period or who plan to refinance the mortgage before the interest rate begins to rise.

- I -

IADL - Instrumental Activities of Daily Living.

ICH - Federal Interagency Council on the Homeless.

IC&I (INDUSTRIAL, COMMERCIAL, & INVESTMENT) AS A SPECIALTY FIELD - While the field tends to be specialized, the degree is largely reflected in the extent of urbanization within the local marketplace. In smaller centers, it is usual for residential real estate brokerages to have one or two individuals focused on IC&I activities. In larger urban centers, the business tends to become more specialized, with companies specifically focusing on selected areas.

ICIDH - International Classification of Impairments, Disabilities and Handicaps.

IDA - Individual Development Account.

IHA - Indian Housing Authority.

IMPLIED - Created by the conduct or words of other parties, and not arising from explicit agreements.

Implied Volatility - The value of volatility embedded in an option price.

IMPOSSIBILITY OF PERFORMANCE - A contract may be discharged because of the impossibility of performance, or frustration due to supervening and unanticipated circumstances.

Income - Any money that you receive in a given period of time. For the purposes of obtaining a mortgage you should consider your steady monthly income when determining your affordable mortgage payment amounts. You may not want to include income such as child support, interest on investments, or other variable amount types of income.

INCOME APPROACH - A procedure in appraisal analysis that converts anticipated benefits (dollar income) to be delivered from the ownership of property into a value estimate.

income approach to value - A method used by real estate appraisers to predict a property's anticipated future income. Income property includes shopping centers, hotels, motels, restaurants, apartment buildings, office space, etc.

INCOME SOURCE VERIFICATION - Lenders will vary in terms of the type of proof required to support an application for mortgage financing. The most complete form is an Income Verification Form completed by the applicant's employer, which provides information concerning both the reliability and durability of the applicant's income stream.

impound, reserves - A portion of the monthly payment held by the lender to pay for things like taxes, hazard insurance and mortgage insurance as they become due.

INCURABLE DEPRECIATION - A loss in value resulting from physical deterioration or functional obsolescence that either cannot be corrected, or can only be corrected at a cost greater than their contribution to the value of the property.

INDEMNIFY - To secure against hurt, loss or danger; to make compensation for incurred hurt, loss or damage.

INDENTURE - A deed or agreement setting out specific objects and executed by the parties.

INDEPENDENT CONTRACTOR - Generally an individual who works according to his/her own methods and judgment.

Index - A published interest rate compiled from other indicators such as U.S. Treasury bills or the monthly average interest rate on loans closed by savings and loan organizations. Mortgage lenders use the index figure to establish rates on adjustable rate mortgages (ARMs).

Index Amortizing Swap - An interest rate swap whose principal amortizes on the back of movements in an index, such as LIBOR or constant maturity treasuries.  The fixed-rate received in the swap effectively grants an option to the fixed-rate payer to amortize the swap. 

Indian Area -  A term defined by the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.), that also encompasses Alaskan Native Village and Native Hawaiian Home Land.

INDUCEMENTS - The act of persuading or in some way influencing the actions and/or attitudes of others.

INFILL HOUSING - Any project that create new housing within an existing established neighborhood.

INHERITANCE - Land passes to heirs after the death of the owner.

initial interest rate, start rate, teaser - The interest rate of the mortgage at the time of closing.

INSTRUMENT - A form of written legal document.

INTENSIFICATION - Regarding urban planning, involves the expanded use of buildings and serviced land to provide additional housing stock and more effectively use of existing municipal services as opposed to the creation of new housing stock through subdivision developments, and has various dimensions which includes the increased use of existing housing stock through the creation of accessory apartments.

Interest - The money that is paid to a lender for the use of their money. In the case of a mortgage the interest is a percentage rate over a certain period of time paid to the mortgage company.

interest adjustment - If the closing (the date on which the buyer takes possession of the property) occurs at a time of the month other than the date on which the mortgage payment is due, the borrower will pay an amount to cover interest from the interest adjustment date.

INTEREST ADJUSTMENT DATE - The date in a blended payment plan, prior to commencement of the mortgage term, to which accrued interest computed on the various advances is calculated.

Interest Only Loan: - A mortgage loan that allows the borrower to pay only the interest on the mortgage for a set amount of time before they start paying towards the principal. People use this type of mortgage when they expect an increase in income in the future, do not plan to live in the home for a long period of time, or plan to refinance the mortgage on the home once their current mortgage begins requiring them to make larger payments. Often times once the interest only period is over the mortgage converts to an adjustable interest rate which is also undesirable if you plan to stay in the home for a long period of time.

interest payments - The return expressed in percentages earned on an investment each year. These payments are issued every six months based on an annual rate.

interest rate - Rate of interest paid on deposits and other investments determined by the interaction of the supply and demand for funds in the money market.

Interest Rate Cap or Interest Rate Ceiling - The highest amount of interest that can be charged according to a legal agreement. With adjustable rate mortgages there is an interest rate cap that allows the mortgage lender to raise the interest rate to a certain point, and then they are not allowed to raise the rate any further.

Interest-Rate Exchange Agreements - Agreements that include interest-rate swaps, swaptions, rate caps and floor agreements that are used to manage exposure to changes in interest rates.

Interest Rate Floor - A contract whereby the seller agrees to pay the purchaser, in return for an upfront premium or a series of annuity payments, the difference between a reference rate and an agreed strike rate, should the strike rate exceed the reference rate.  Commonly, the reference rate is three-month LIBOR, six-month LIBOR, five-year CMS or 10-year CMS.

IRRRL- Interest Rate Reduction Refinancing Loan - This is a VA mortgage loan that takes mortgages in the VA Home Loan Guarantee Program and allows the owner to refinance the loan for a lower interest rate. The loan can be an adjustable rate mortgage refinanced to a fixed rate mortgage or a fixed rate mortgage refinanced to a fixed rate mortgage as long as the interest rate is lower and your monthly mortgage payment decreases.  

Interest Rate Swap - An agreement to exchange interest payments for a specific period of time on a given principal amount.  The most common interest rate swap is a fixed-for-floating coupon swap, with the floating rate coupon indexed to LIBOR.  The notional principal is typically not exchanged in a swap.

interim financing - A construction loan made during completion of a building or a project which is replaced by a permanent loan once the building is completed.

INTERIOR PARTITIONS - All types of interior non-load-bearing partitions that enclose or subdivide space and may be of steel, wood, glass, masonry, or combinations of these materials and can be either movable or non-movable, prefabricated, or built on the job.

In-The-Money -  Describes an option whose strike price is advantageous compared to the current forward market price of the underlying.  The more an option is in-the-money, the higher its intrinsic value and the more expensive it becomes.

INTESTATE - A person who dies without a will, or leaves one defective in form, in which case his/her estate descends by operation of law to the heirs or next of kin.

Intrinsic Value - The amount by which an option is in-the-money.

IRREVOCABLE - Incapable of being recalled or revoked; unchangeable, unalterable.

- J -

JOINT AND SEVERAL- This is a term that is normally used regarding loans and mortgages in which one or more parties are liable for the repayment of a debt.

JOINT TENANCY - Ownership of land by two or more persons whereby, on the death of one, the surviving tenants take the whole interest in the property.

JOINT VENTURE - A real estate project undertaken by a group of investors in which the parties share in the project including any profits or losses.

jumbo loan - A nonconforming loan that is larger than the limits set by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines.

JUDGMENT - The decision of the court and is most commonly found as a lien registered against land and is more fully described as a charge, or lien, upon the lands of a debtor.

JUDICIAL SALE - Is one type of remedy available to a mortgagee when the mortgage is in default. The mortgagee looks to the court to sell the property with the proceedings being applied against the mortgage debt.

JURISDICTION -1 - Refers to the authority to act and the defined limitations of that authority.

Jurisdiction - 2: A unit of state or local government.

- K -

key lot - Real estate deemed highly valuable because of its location.

key rate - The interest rate that controls, either directly or indirectly, bank lending rates and the cost of credit paid by borrowers.

kicker, equity kicker, lender participation - A lender or investor's right to share any income from a property, in addition to loan payments.

- L -

LACE -  A credit reporting term that stands for Liquidity, Asset, Capital, and Earnings.

LAND - Includes the surface of the earth, air space, and subsurface area.

LANDSCAPING - The planting of shrubs, grass and trees, including alterations to the contours of the property to improve the overall aesthetic appeal of the site.

Large Financial Institution (LFI) -  A member, which has deposits insured under the Federal Deposit Insurance Act (FDIC), and average total assets greater than $500 million based on regulatory reports for the three most recent calendar year-ends adjusted by CPI as determined by the FHFB.  The actual LFI limit for 2002 was $527 million, and is $538 million for 2003.

Late Charge or Late Fee - An extra amount of money you have to pay when you are late making your mortgage payment. This also may be called a penalty fee or penalty payment.

LATENT DEFECT - A physical deficiency or construction defect not readily ascertainable from a reasonable inspection of the property, such as a defective septic tank or underground sewage system, or improper plumbing or electrical lines.

LAWFUL OBJECT - Being within the bounds of the law, in regards to a real estate transaction, it is the transferal of ownership of the seller's property to a purchaser.

LEACHING BED - One component of a disposal system normally built using two or more rows of buried distribution pipe.

LEASE - A contract between the landlord (lessor) and tenant (lessee) for the occupation or use of the landlord's property by the tenant, for a specified time and for a specified consideration (rent).

LEASE BUYOUT - A cash payment or other settlement made by the tenant to the landlord to terminate a lease.

Lease-Purchase Agreement - A way to purchase a home by first renting the home for a set amount of time and then purchasing the home. This is also called rent-to-own and is extremely useful to people who need time to repair their credit or want to wait for lower interest rates before obtaining a mortgage loan.

Lease-Purchase Mortgage Loan - A way that is available to purchase homes by first leasing the home and then purchasing the home for low income families. This option is offered by Fannie Mae and the families lease the property from the not for profit organization with the opportunity to purchase the home later. Part of the monthly rental payments are saved in order for the renters to have down payment money at the end of their lease in the case they want to purchase the home.

Lender - The company that loans you the money to purchase a home.

Lender Appraisal Processing Program - A program through which the Department of Veterans Affairs allows VA approved lenders to conduct their own appraisals of value on a property. The VA may also require one of their own appraisers to also appraise the property in order to determine value for the VA Home Loan Guarantee Program.

lender of last resort - As the nation's central bank, the Federal Reserve has the authority and financial resources to act as “lender of last resort” by extending credit to depository institutions or to other entities in unusual circumstances involving a national or regional emergency, where failure to obtain credit would have a severe adverse impact on the economy.

Letter of Credit (LOC) -  A standby document issued by the Bank on behalf of a member as a guarantee against which funds can be drawn, that is used to facilitate various types of business transactions the member may have with third parties.  “Standby” is defined as: The Bank standing by to make good on the obligation made by the obligor to the beneficiary.

LETTER OF INTENT - A general understanding of the parties that may ultimately lead to a detailed agreement setting out various provisions, covenants, terms and other matters between those parties.

LETTER OF OPINION - A brief, unsubstantiated statement of an appraiser's opinion of value or value range.

LEVERAGE - The use of borrowed funds to make investment(s) in real property in the hope of realizing a profit in addition to monies necessary to pay for the borrowed funds.

LEVY - To impose or assess a tax on a person or property.

Liability Swap - A package of an interest bearing liability (typically a fixed rate consolidated obligation) and a corresponding swap that transform the liability cash flows into a floating rate instrument, typically indexed to LIBOR.

LICENSE - Permission given by an authority to engage in an action for a particular purpose.

LICENSE LAW - A general reference in real estate to the regulatory controls imposed on real estate practitioners by a governing body.

LIEN - A right of encumbrance affecting any property, and can be either in the form of an agreement between two parties, namely, the party owing the money (lienor) and the party to whom those funds are due (lienee).

LIFE ESTATE - An interest in property that continues for the life of an individual and terminates in favor of others in the event of his/her death.

Lifetime Cap - With an adjustable rate mortgage this is the highest interest rate than can be charged over the life of the loan.

LIHPRHA - Low Income Housing Preservation and Resident Homeownership Act.

LIHTC - (Federal) Low-income Housing Tax Credit.

LIMITED LIABILITY - Responsibility for the debts of a business in relation to the amount of investment one makes within that enterprise.

LIMITED PARTNER - A participant in a limited partnership whose liability is confined to his/her investment and who does not have a voice in the management of the partnership.

LIMITED PARTNERSHIP - An investment arrangement that limits the partner's liability to the amount invested and also limits the profit he/she can make.

LINE OF CREDIT - A line of credit is a highly flexible form of interim financing that is based on the past performance and strength of personal or corporate covenants.

LINTEL - A horizontal structural member (beam) that supports the load over an opening, such as a door or window.

liquidity - Quality that makes an asset easily convertible into cash with relatively little loss of value in the conversion process. Sometimes used more broadly to encompass cash and credit in hand and promises of credit to meet needs for cash.

Liquidity Risk - The risk associated with transactions made in illiquid markets.  Such markets are characterized by wide bid/offer spreads, lack of transparency and large movements in price after a deal of any size.

LISTING AGREEMENT - A written agreement under which the owner appoints a real estate broker for a designated period of time to sell, lease or exchange the property based on the owner's stated terms, and under which the owner agrees to pay the broker a commission.

listing price - The price at which a house is listed for sale; the asking price.

LISTING TYPES - There are three major listing types:

Open Listing - These are usually written arrangements in which the owner gives one or more brokers authority to find a purchaser for the property.

Exclusive Listing - Gives one broker the authority to offer the property for sale (lease, exchange, etc.) during a specified time period.

MLS® Listing - A signed multiple listing form contains an authority from the seller permitting the broker to employ the services of cooperating brokers who are members of the real estate board or association. The responsibility regarding promotion, negotiations, and payment of commission to cooperating brokers is that of the listing agent.

Loan - When money is given to a second party with the legal stipulation that the second party pay back that money in accordance with the terms of the agreement.

Loan Approval - When the lender agrees to loan money to a borrower based on information like income, debt, assets, employment, credit worthiness, and more.

Loan Guarantee Entitlement - The amount of money that you can get from the VA for guaranteeing your home mortgage loan.

Loan Level Credit Enhancement -  With respect to certain MPF Mortgage Products, the portion of the Credit Enhancement pertaining to the risks of an individual mortgage loan.

LOAN RATIO - The ratio of the principal amount of the loan to the lending value of the property.

Loan Servicing - The maintenance required for any given loan. In the case of a mortgage loan with an escrow account the servicing is needed to take the monthly mortgage payment and split the money between the principal, interest, and the escrow account. Then when the time comes for the homeowners insurance and property taxes to be paid the loan servicer is responsible for making those payments on time. This fee is usually added to your monthly mortgage payment.

Loan-to-Value Ratio (LTV) - The ratio, expressed as a percentage, of the principal balance of a mortgage loan (the numerator) to the value or sales price of the related mortgage property (the denominator).

Local Government - A county; an incorporated municipality; a special district; any other legally constituted political subdivision of the State or a combination of any of the entities described here.

lock-in - The guaranty of a specific interest rate and/or points for a specific period of time. Some lenders will charge a fee for locking in an interest rate. 

Lockout -  The period of time during which prepayment is prohibited.

London Interbank Offer Rate (LIBOR) - The offer rate that a Euromarket bank demands in order to place a deposit at (or equivalently, make a loan to) another Euromarket bank in London.  Rates are offered on deposits maturing in one month, two months, three months, etc. LIBOR is frequently used at the reference rate for the floating rate coupon in interest rate swaps and option contracts such as caps and floors. 

long-term interest rates - Interest rates on loan contracts—or debt instruments such as Treasury bonds or utility, industrial, or municipal bonds—having maturities greater than one year. Often called capital market rates.

LOT GRADING - The general topography of the lot.

Low-e - Low-emittance.

Low Income Neighborhood - A neighborhood that has at least 52 percent of its households at or below 80 percent of AMFI.

LTV - Loan to Value Percentage  - The amount of a home you own as compared to the amount of a home you still owe to a mortgage lender expressed as a percentage. For instance, if you put 25% down on a home then your Loan to Value Percentage is 75% because that is what you still owe to the mortgage lender.

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MAI - Member of the Appraisal Institute - is a professional designation for appraisers who are experienced in the valuation and evaluation of commercial, industrial, residential and other types of properties, and who advise clients on real estate investment decisions.

maintenance costs - The cost of the upkeep of the house. These costs may be minor in cost and nature (replacing washers in the faucets) or major in cost and nature (new heating system or a new roof) and can apply to either the interior or exterior of the house.

margin - The amount a lender adds to the index of an adjustable rate mortgage to establish an adjusted interest rate. For example, a margin of 1.50 added to a 7 percent index establishes an adjusted interest rate of 8.50 percent.

margin requirement - Buying on margin refers to buying stocks or securities with borrowed money (usually borrowed from a brokerage firm or bank). The margin requirement is the minimum amount (expressed as a percentage) the buyer must put up (rather than borrow). The Federal Reserve Board sets margin requirements.

MARKET INDICATORS - They include: list to sale price ratio, number of days on the market, average and median price, inventory turnover ratios, and sales volume/sales unit production figures.

market interest rates - Rates of interest determined by the interaction of the supply of and demand for funds in freely functioning markets.

MARKET POSITION - The concept of positioning based on the premise that market niches exist.

MARKET RENT - The rental income that a property would most probably command on the open market, as indicated by current rentals being paid for comparable space as of the effective date of the rental appraisal.

Market Risk -  Exposure to a change in the value of some market variable, such as interest rates or foreign exchange rates, equity, or commodity prices.

MARKET VALUE - The highest price in terms of money, which the property will bring to a willing seller if exposed for sale on the open market; allowing a reasonable time to find a willing purchaser, buying with the knowledge of all the uses to which it is adapted and for which it can be legally used, and neither party acting under necessity, compulsion or peculiar and special circumstances.

MARKETABLE TITLE - A title that a court of equity considers to be so free from defect that it will legally force its acceptance by a purchaser.

Marking-to-Market - To calculate the value of a financial instrument or portfolio of instruments based on the current market rates or prices of the underlying asset.

MASTER/SERVANT - A master directly controls and supervises the work of the servant, who is bound to comply with all of the master's reasonable orders. The master is responsible to third parties for the servant's actions in the performance of that work. Although this relationship may have originated with the ancient doctrines of servitude, the concept persists today in relationships involving most employees in the typical business situation. It is also true of the registered real estate salesperson employed by a broker.

MATRIMONIAL HOME - Any property in which a person has an interest, and that is or was at the date of separation occupied by the person and the spouse as their family residence.

maturity - The date at which a note or bond is due.

MATURITY DATE - The final day in the term of an agreement, most frequently used in real estate with respect to mortgages.

Maximizer (MAX) -  A Secure Connect overnight fixed rate advance that is priced daily based on the Fed Funds Market.  The advance must be executed by 9:00 a.m. CST and no cap is associated with this advance type.

Maximizer-Floating Rate Advance -  An advance entered via Secure Connect that adjusts daily based on the Fed Funds rate for the term of the advance.

MCC - Mortgage Credit Certificate Program.

MECHANIC'S LIEN - A claim against a property which is filed by a person or corporation in the land registry office for labour, services or materials supplied.

Membership Cooperative -  An organization owned by its members.

MENTAL INCOMPETENCE - In terms to parties to a contract, any person declared to be mentally incompetent is incapable of contracting.

METES AND BOUNDS - A system of written land description whereby all boundary lines are set forth by use of terminal points and angles; metes referring to a limit or limiting mark (i.e., distance) and bounds referring to boundary lines (i.e., directions)

Metropolitan and Metro - Refers to all areas outside those designated as metropolitan statistical areas by the Bureau of the Census in the most recent decennial census.

Metropolitan Statistical Area (MSA) - Metropolitan and micropolitan statistical areas (metro and micro areas) are geographic entities defined by the U.S. Office of Management and Budget (OMB) for use by Federal statistical agencies in collecting, tabulating, and publishing Federal statistics.

Military Base Closing -  Areas affected by military closings as defined by the Department of Defense at 32 CFR part 176.

MINIMUM LOT SIZE / AREA - Normally set out in square feet/meters or acres/hectares upon which a building may be built in compliance with local zoning bylaws.

MISTAKE - In legal terms, applying to real estate contracts has a narrow meaning. Not every mistake or simple error affects a contract and is considered a legal mistake of fact. The law does not simply declare a contract void simply because one or other of the parties make a mistake. Only certain types of mistakes give rise to a remedy. Obviously, the determination of a mistake and its impact on a contract is a legal issue.

As a general description for real estate practitioners, mistakes can be grouped under three common headings.

Common - Both parties to the contract know the intention of the other, accept it, but are somehow mistaken concerning some underlying material or fundamental fact. As an example, both seller and buyer believe that the property includes the right of way to the beach, but in fact there is nothing to support this belief.

Mutual - The parties misunderstand each other and are at cross-purposes. In other words, the seller owns two lots on opposing sides of the lake. The buyer believes he/she is buying the south shore property, while the seller believes the north shore property is being sold.

Unilateral - One party is mistaken and the other party knows of this mistake concerning fundamental aspect of a contract. As an example, the buyer believes that the lot is approximately one acre in size, and the seller is clearly aware of this mistaken belief.

MIXED USE PROJECT - A planned development that provides at least two types of uses (e.g., retail/office, office/residential, etc.) within a single project.

modification - A change in the terms of the mortgage note, such as a reduction in the interest rate or a change in maturity date.

MORE OR LESS - Term often found in a property, intended to cover slight, unimportant or insubstantial inaccuracies of which both parties are willing to assume the risk.

MORTGAGE - A conveyance of property to a creditor (mortgagee) as security for payment of a debt, with a right of redemption upon payment of the debt.

Mortgage Backed Security (MBS) -  A type of security backed by mortgages.

Mortgage Banker - A company that makes mortgage loans to people in order to sell the mortgages for a profit. Once the mortgage is closed then they will sell it on the secondary loan market to another company who wants to invest in the mortgage in order to get the interest money.

Mortgage Broker - A person who takes the financial and credit information of people who are looking for a mortgage lender and facilitates the process by shopping for a mortgage loan for the borrower. You will usually pay a commission fee for the services of a mortgage broker, who in essence is the 'middle man' of a mortgage loan transaction.

Mortgage Electronic Registration System (MERS) -  A system, which enables mortgage lenders to record MERS as mortgagee of record (as nominee for the lender) in county land records, and thereafter to electronically track changes in servicing and beneficial ownership rights over the life of the loan.

Mortgage Guaranty Insurance Corporation (MGIC) -  The leading private mortgage insurance (PMI) company.

Mortgage Identification Number (MIN) -  A permanent number assigned by the Mortgage Electronic Registration System (MERS). 

mortgage interest - The interest rate charge for borrowing the money for the mortgage. It is used to calculate the interest payment on the mortgage each month.

Mortgage Interest Rate - The percentage of interest you agreed to pay in your mortgage loan terms.

mortgage insurance - Money paid to insure the mortgage when the down payment is less than 20 percent.

mortgage insurance premium (MIP) - The 0.5 percent borrowers pay each month on FHA-insured mortgage loans. It is insurance from the FHA to the lender against incurring a loss on account of the borrower's default.

Mortgage Margin - For adjustable rate mortgages this is the set amount of how much your interest rate can increase at each adjustable period of time. For instance, if your loan agreement states that your interest rate can not increase more than 1/2% in any 6 month period of time then that is your mortgage margin.

Mortgage Note - The legal paperwork of a mortgage loan that specifies the terms of the loan which include the monthly mortgage payment amount, the interest rate, the amount of the loan, and the length of time the term of the loan is for.

MORTGAGE RENEWAL - An agreement whereby the lender may agree to extend the loan, but possibly on revised terms, concerning such items as principal repayments and interest rate.

Mortgage Swap -  An asset swap attached to fixed-rate mortgage payments.

mortgage term - The length of time that a mortgage is scheduled to exist. Example: a 30-year mortgage term is for 30 years.

Mortgagee - A term used in mortgage loan paperwork that refers to the lender.

Mortgagor - In the legal paperwork of the mortgage loan this refers to the borrower.

MSA - Metropolitan Statistical Area.

MULTIPLE LISTING SERVICE ®(MLS®) - The trademarks known as MLSâ, Multiple Listing Serviceâ and the MLSâ design marks are Certification Marks registered and owned by The Canadian Real Estate Association (CREA). These marks are protected throughout Canada for the exclusive use of members of CREA in connection with services defined as listing to effect the purchase and sale of real estate. The Certification Marks may only be used in association with listing services performed as part of a plural system arrangement and are performed by members in good standing of The Canadian Real Estate Association.

MUTUAL AGREEMENT - This is one of the essential elements of a contract. It is created by an offer, the acceptance of the offer and communication of the acceptance back to the offeror. It is the basis for a meeting of the minds between the contracting parties.

Mutual Savings Bank (MSB) -  A savings bank organized under state charter for the ownership and benefit of its depositors.

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NAFTA - North American Free Trade Agreement.

National Association of Securities Dealers (NASD) - A self-regulatory organization with jurisdiction over certain broker-dealers. The NASD requires member brokers to register and conducts examinations for compliance with net capital requirements and other regulations. It also conducts market surveillance of the over-the-counter (OTC) securities market. National Association of Securities Dealers Automated Quotations (NASDAQ) is a subsidiary of the NASD which facilitates the trading of approximately 5,000 most active OTC issues through an electronically connected network.

national bank - A commercial bank that is chartered by the Office of the Comptroller of the Currency, which is a bureau of the U.S. Department of the Treasury; by law, national banks are members of the Federal Reserve System.

National Credit Union Administration (NCUA) -  The federal agency that oversees and insures the federal credit union system, and is funded by its members.

NATIONAL HOUSING ACT - The National Housing Act (1954) revised and superseded previous housing and mortgage policies. It facilitates the insuring of National Housing Act (NHA) loans made by approved lenders and for direct mortgage lending under a variety of programs by Canada Mortgage and Housing Corporation (CMHC).

Native American Housing Assistance and Self-Determination Act (NAHASDA) -  An act passed in 1996 to provide federal assistance for Indian tribes in a manner that recognizes the right of tribal self-governance. NAHASDA reorganized the system of Federal housing assistance to Native Americans by eliminating several separate programs of assistance and replacing them with a single block grant program.

NATIVE LANDS - Those reserved lands held by the Crown for the use and benefit of native people.

NCDI - National Community Development Initiative.

NCFH - National Center for Farm worker Health.

NCHS - National Center for Health Statistics.

Negative Amortization - In the case that the monthly mortgage payment is not enough to cove r the interest and principal amount due on the loan then whatever the negative difference is will be added to the loan. This means that the amount you owe will increase instead of decrease. A good example is a graduated Payment Mortgage in which the monthly payments start out low and grow overtime, so in the beginning the payments may not be high enough to cover the principal and mortgage payments, but the difference is added to the total principal of the loan which you will pay off in time as the monthly mortgage payments gradually increase.

negotiable rate mortgage - A loan in which the interest rate is adjusted periodically.

Neighborhood - A geographic location designated in comprehensive plans, ordinances, or other local documents as a neighborhood, village, or similar geographical designation that is within the boundary but does not encompass the entire area of a unit of general local government. If the general local government has a population under 25,000 the neighborhood may, but need not, encompass the entire area of a unit of general local government.

net effective income - Gross income minus federal income taxes.

Net Interest Margin (NIM) -  Interest income less interest expense. 

NET (SINGLE-NET) LEASE - An agreement in which the tenant pays the rent and certain expenses connected with the leased premises.

NET-NET LEASE - An agreement in which the tenant pays all maintenance and operating expenses, plus property taxes.

NET-NET-NET (TRIPLE NET) LEASE - An agreement in which the tenant pays maintenance and operating expenses, property taxes, and insurance.

NET OPERATING INCOME - Annual net income remaining after deducting all fixed and operating expenses, but prior to deducting financial charges such as expenses for debt service, and income taxes.

Net Present Value - A technique for assessing the worth of future payments by looking at the present value of those future cash flows discounted at today’s cost of capital.

NIMBY - Not In My Backyard.

no-doc loan - A loan requiring very little loan documentation. These loans usually require large (25%) down payments.

non-assumption clause - In a mortgage contract, a statement that prohibits a new buyer from assuming a mortgage loan without the approval of the lender.

non-conforming loan - A loan that does not conform to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. Jumbo loans are nonconforming.

NON-CONFORMING USE - Use of land prohibited by the terms of he current approved zoning by-law.

Non-Institutional - Group quarters for persons not under care or custody.

nominal interest rates - Current stated rates of interest paid or earned.

NORMAL WEAR AND TEAR - This refers to the physical deterioration that occurs while using the property without negligence.

NOTARY PUBLIC - An officer appointed by the Province with authority to take the acknowledgment of persons executing documents and to witness the signature(s) and affix a notarial seal.

Note -  In connection with a mortgage loan, the document that evidences the borrower’s obligation to pay a specified sum of money at a stated interest rate during a specified term, which is secured by a security instrument.

NOTICE - Information about or warning of something. Notice may be by personal observation or by written or oral message from another person.

Notice of Default - In the case a borrower goes into default the mortgage lender will send them this notice to inform them that they have broken the mortgage contract agreement. At this time the borrower should contact the mortgage lender to work out a forbearance or terms of repayment for the missed mortgage amount.

NOTICE OF POWER OF SALE - A notice delivered to the mortgagor (and spouse) and subsequent encumbrancers in accordance with the Mortgages Act (or the mortgage document), stating that a Power of Sale action is being commenced.

NOTICE TO VACATE - A legal notice requiring tenants to remove their possessions from the premises within a stated period or upon a specified date, and to deliver vacant possession of the premises to the owner, agent, or designated successor.

Notional Amount -  The amount of principal underlying an interest rate exchange agreement, and upon which is based the calculation of payments.

NUISANCE - In real estate activity, a nuisance normally refers to an act that affects the enjoyment and/or use of a person's property.

NULL AND VOID - Having no legal force or effect. This term is commonly found in an Agreement of Purchase and Sale that involves a condition and related waiver.

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OBSOLESCENCE - It is the impairment of desirability and usefulness caused by new inventions, changes in design, improved processes for production, or caused by external influencing factors. Obsolescence makes property less desirable and less valuable for a continued use. One of the causes of depreciation.

OCCUPANCY PERMIT - A permit issued by a municipality allowing the premises to be occupied for the uses intended.

Occupied Housing Unit - Other housing unit that is the usual place of residence of the occupant(s).

OCS - Office of Community Services.

OFFER TO LEASE - When accepted, an agreement between interested parties to enter into a lease that sets forth the basic lease terms.

Office of Comptroller of the Currency (OCC) - Regulator for national chartered banks.

Office of Finance (OF) - The Office of Finance (OF) is operated on behalf of the 12 regional FHL Banks to issue and service all debt securities for the FHL Banks, while obtaining the most cost-effective terms possible, given the needs of investors and dealers. 

OMB - Office of Management and Budget.

Office of Thrift Supervision (OTS) -  The primary regulator of all federally chartered and many state-chartered thrift institutions, which include savings banks and savings and loan associations.  OTS was established as a bureau of the U.S. Department of the Treasury on August 9, 1989.

open-end credit - A line of credit that may be used repeatedly up to a certain limit. Also called a charge account or revolving credit.

open-end lease - A lease that may involve a balloon payment based on the value of the property when it is returned. Also called finance lease.

open-end mortgage - A mortgage allowing the borrower to receive advances of principal from the lender during the life of the loan.

OPEN HOUSE - The practice of licensed salespersons and brokers demonstrating listed property by inviting the public to inspect the property within selected hours on a specific day (or days).

OPEN LISTING - A listing given to any number of brokers without liability to compensate any, except the one who first acquires a buyer ready, willing and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer.

OPEN MORTGAGE - Mortgage containing some form of prepayment privilege for the partial or total reduction of principal with or without penalty.

OPS -  A term that stands for operations. 

Option -  A contract that gives the purchaser the right, but not the obligation, to buy or sell an underlying instrument at a certain price (the exercise, or strike price) on or before an agreed date (the exercise period).  For this right, the purchaser pays a premium to the seller.

Option Styles -  There are various styles of options.  For example, the purchaser of a European-style option has the right to exercise it on a predetermined expiry date.  In contrast, the holder of an American-style option has the right to exercise it at any time during its lifetime, up to and including its expiry date.  A variation on these styles is the Bermudan option, which falls between American and European style options.

OPTION TO BUY /PURCHASE - A right given by the owner of property to another (for valuable consideration) to buy certain property within a limited time at an agreed price.

Origination Fee - The fee that the lender charges the borrower for the services that are required in order to create a mortgage loan agreement. This usually includes underwriter costs, legal fees, and other fees associated with originating the mortgage loan.

Other Household - A household of one or more persons that does not meet the definition of a Small Related Household or a Large Related Household, or is an elderly household comprised of three or more persons.

Other Low-Income - Households whose incomes are between 51 percent and 80 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 80 percent of the median for the area of the basis of HUD's findings that such variations are necessary because of prevailing levels of constructions costs of fair market rents, or unusually high or low family incomes.

Other Qualifying Area -  Other areas designated for targeted economic development area that qualifies for assistance under another federal or state targeted economic development program with prior approval of the FHLB Dallas.

Other Vacant - Vacant year round housing units that are not For Rent, For Sale, or Vacant Awaiting Occupancy or Held. (U.S. Census definition).

Out - of - the - Money - Describes an option for which the current forward market price is below the strike price in the case of a call, or above it in the case of a put.

Overcrowded - A housing unit containing more than one person per room. (U.S. Census definition).

OVER-IMPROVEMENTS - The placement of improvements on a property that are excessive and consequently inconsistent with the overall size, quality, or appearance of other improvements within the general vicinity.

Owner - A household that owns the housing unit it occupies. (U.S. Census definition).

Owner Financing - In cases where the buyer can not get a mortgage loan due to lack of down payment or derogatory credit the seller may make arrangements to finance the loan for the buyer in which case the buyer would sign an agreement with the seller as to the loan terms.

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P&I -  This term stands for principal and interest.

PITI - Abbreviation for principal, interest, taxes and insurance.

PITIO - Abbreviation for principal, interest, taxes, insurance and other monthly non-housing costs.

Pair-off Fee - A fee assessed against a PFI when the aggregate principal balance of mortgages funded or purchased under a delivery commitment falls below the tolerance specified.

PAPER TRAIL - A well- documented paper trail is critical, should past events come under scrutiny. Poorly documented files are a source of risk for real estate practitioners. Research indicates that the weakest link in a paper trail can attract liability. Injured parties, be they customers or clients, frequently undertake a careful examination of all documentation prepared by salespeople and brokers. It is vital that agreements, listing and other documents are accurate and complete.

PARTIAL DISCHARGE - A discharge of a finite portion of the mortgaged lands, usually given after the mortgagor has prepared a specific portion of the mortgage debt.

Participating Jurisdiction - Any jurisdiction (as defined in these section) that has been so designated by HUD in accordance with 92.105.

PARTIES TO A CONTRACT - The parties to a contract are those individuals or corporations directly involved in, and having a vested interest in, an Agreement of Purchase and Sale as seller(s) or buyer(s), or as duly authorized representatives of the seller or buyer. The parties to a contract must be clearly identifiable.

PARTNERSHIP - Must consist of at least two partners. These individuals pool their resources of capital, ability and effort.

Payment Cap - In some adjustable rate mortgages there is a limit as to how high a monthly mortgage payment can increase even when the interest rate is increased.

permanent loan - A long-term mortgage (10 years or more).

Physical Defects - A housing unit lacking complete kitchen or bathroom (U.S. Census definition).

Planned Unit Development (PUD) - An association in a neighborhood of homes that shares some common property in exchange for monthly or annual fees for the association to maintain the common property. An example of a PUD is a condominium development where each homeowner pays a monthly maintenance fee that is used for the upkeep of the property like grass mowing and snow removal, and the upkeep of any shared facilities like playgrounds, tennis courts, or pools.

pledged account mortgage (PAM) - When the borrower places money in a pledged savings account, and these funds, plus interest earned, are gradually used to reduce mortgage payments.

points - Charges levied by the lender based on the loan amount. Each point equals one percent of the loan amount; for example, two points on a $100,000 mortgage equals $2,000. Discount points are used to buy down the interest rate. Points can also include a loan origination fee, which is usually one point.

POSSESSION - Right of an owner to occupy property. When the property is occupied by a tenant, possession is transferred to the tenant; however, the owner has constructive possession by right of title.

POSSESSION DATE - The date of completion/closing is normally possession date, unless otherwise provided in the Agreement.

POSTPONEMENT - For mortgage purposes, a term used in relation to a contract between mortgagor and mortgagee, whereby the mortgagee agrees to maintain a position of subsequent priority in the event of rearrangement and registration of a prior mortgage.

Power of Attorney - A legal document that gives one person the full legal right and authority to act for another person.

POWER OF SALE - The right of the mortgagee to force the sale of a property without judicial proceedings, should default occur.

Predevelopment Costs - Costs related to a specific eligible housing project including: a) expenses necessary to determine project feasibility, (including costs of an initial feasibility study), consulting fees, costs of preliminary financial applications, legal fees, architectural fees, engineering fees, engagement of a development team, site control and title clearance; and b) reconstruction housing project costs that the board determines to be customary and reasonable, including but not limited to the costs of obtaining firm construction loan commitments, architectural plans and specifications, zoning approvals, engineering studies, and legal fees. Predevelopment costs does not include general operational or administrative costs.

prepayment - A privilege in a mortgage which allows the borrower to make payments before they are due.

prepayment penalty - Fees for early repayment of debt, allowed in 36 states and the District of Columbia.

Primary Housing Activity - A means of providing or producing affordable housing - such as rental assistance, production, rehabilitation or acquisition - that will be allocated significant resources and/or pursued intensively for addressing a particular housing need. (See also, "Secondary Housing Activity.")

Program 48 - A part of the First Time Homebuyer Program under the Housing Finance Division.

Project - A site or an entire building including a manufactured housing unit, or two or more buildings together with the site or sites on which the building or buildings is located, that are under common ownership, management, and financing (i.e. a project assisted with HOME funds, under a commitment by the owner, as a single undertaking). Project includes all the activities associated with the site and building. If there is more than one site associated with a project, the sites must be within a four-block area.

Project Completion - All necessary title transfer requirements and project, not for a specific tenant. Tenants receiving project-based rental assistance give up the right to that assistance upon moving from the project.

PSA - Public Service Announcement.

Public Housing - Any state, county, municipality or other government entity or public body (or its agency or instrumentality) that is authorized to engage in or assist in the development or operation of low-income housing. The term includes any Indian Housing Authority.

PRE-APPROVED PURCHASER - Pre-approved mortgage financing has become increasingly popular. It adds negotiating strength in the marketplace as the buyer becomes virtually a cash buyer, subject to the conditions of the pre-approval.

pre-qualification - Tentative establishment of a borrower's qualification for a mortgage loan amount of a specific range, based on the borrower's assets, debts, income, employment status and credit history.

PREMISES - This term most commonly appears in lease documents relating to retail space. It refers to the physical space leased and occupied by the tenant and specifically described by a site plan or similar schedule attached to and forming part of the lease document and often referenced as the demised premises in lease document.

Prepayable Advance w/ Prepayment Option (Prepay) -  An advance with the option to prepay after five years without a fee.  The cost for the prepayment option is approximately 25 bps added to the lowest advance rate applicable.

PREPAYMENT CLAUSES - A clause inserted in a mortgage that gives the mortgagor the privilege of paying the mortgage debt in advance of the maturity date based on stipulated terms.

Prepayment Penalty - The fee that is paid to a lender in the case you pay off your mortgage loan before a certain amount of time has gone by. This penalty may or may not be written into a mortgage loan agreement. It is designed to deter the borrower from refinancing the loan so that the lender is guaranteed a certain return on their investment. If you are financing through the VA Home Loan Guarantee Program you can not have a prepayment penalty written into your mortgage contract.

Pre-purchase counseling - First time buyers should obtain counseling on the process of purchasing a home and obtaining a mortgage prior to beginning the process. This is done in an attempt to allow the borrower the knowledge to make informed decisions through the purchasing process. In the case of FHA loans you are required to obtain pre-purchasing counseling before you can get a loan.

Pre qualification - A borrower can give all of their financial and credit information to a lender who will use this information to inform the borrower what type of loans they qualify for and how much of a monthly payment they can afford based on their personal situation. This way the borrower knows exactly what price range they can shop for a home in and is assured they can get a mortgage loan.

PREVENTIVE MAINTENANCE - A program of regular inspection and care that allows potential problems to be prevented or at least detected and solved before major repairs are needed.

Prime - The interest rate banks charge to their most creditworthy customers.  The rate is determined by the market forces affecting a bank’s cost of funds and the rates.

PRIME TENANT - A tenant who occupies a significant part of the space available within a given building. The more common term used is anchor tenant.

prime rate - The interest rate commercial banks charge their most creditworthy customers.

primary mortgage market - Lenders making mortgage loans directly to borrowers such as savings and loan associations, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as FNMA or GNMA, etc.

Principal - The amount of money that is loaned to a borrower. The principal loan amount decreases every time a mortgage payment is made for most types of mortgages.

Principal, Interest, Taxes, and Insurance (PITI) - These are the four monthly costs that are combined into a mortgage payment. Some mortgage loan agreements do not include these additional housing costs, so make sure you know what your monthly mortgage payments include before you choose a loan.

PRINCIPAL AND AGENT - The relationship created by express or implied contract or by law, whereby one party delegates the transaction of some lawful business, with more or less discretionary power, to another who undertakes to manage the affair and render an account thereof.

PRINCIPLE OF ANTICIPATION - Affirms that value is created by the anticipation of benefits (money or amenities) to be derived in the future. (Value may be defined as the present worth of all rights of future benefits).

PRINCIPLE OF BALANCE - This principle holds that value is created and maintained in proportion to the equilibrium attained in the amount and location of essential uses of real estate.

PRINCIPLE OF CHANGE - This principle holds that economic and social forces are constantly at work and that changes caused by these forces affect real property.

PRINCIPLE OF COMPETITION - This principle, in terms of appraisal theory, states that excessive profits in any line of business will tend to breed competition that, in turn, tends to destroy profits.

PRINCIPLE OF CONFORMITY - This principle states that to maintain maximum value, land must be utilized to reasonably conform with the existing standards of the area. The word reasonable is used to denote the degree of conformity. Too much conformity results in monotony, which could be as detrimental to value as not having any conformity at all. In residential areas, variety in the styling of buildings of the same quality presents a more pleasing appearance than rows of identical houses. Zoning regulations should protect a neighborhood from conversion to or intrusion of inharmonious uses. This principle is particularly useful in detailing a neighborhood analysis.

PRINCIPLE OF CONSISTENT USE - When improved lands is in a state of transition to another highest and best use, it cannot be appraised with one use allocated to the land and another to the building or other improvements. If an appraiser is estimating the market value of a downtown parcel of land improved with an old house, and estimates that the highest and best use is for an office building development, then the appraisal should not accord any value to the house over that of the land.

PRINCIPLE OF CONTRIBUTION - A valuation principle that states that the value of any component of a property is measured by how much it adds to the net income (or market value if the subject property is a single family dwelling) by reason of its presence, or detracts from the net income (or market value) by reason of its absence. In other words, the value of any factor in production depends upon its contribution to net income or value and not upon its cost.

PRINCIPLE OF HIGHEST AND BEST USE - That use which, at the time of the appraisal, is most likely to produce the greatest net return in money or amenities to the land over a given period. The present use will continue, however, unless and until in its highest and best use exceeds the total value of the property in its existing use.

PRINCIPLE OF INCREASING AND DECREASING (DIMINISHING) RETURNS - A valuation principle that states that when successive increments of one or more factors of production are added to fixed amounts of the other factors, there is a resulting enhancement of income (in dollars, benefits, or amenities), initially at an increasing rate to a point of maximum return and then decreasing until eventually the increment value becomes increasingly less than the value of the added factor (or factors).

PRINCIPLE OF PROGRESSION - The principle of progression, as an extension of the principle of conformity, states that between properties that are dissimilar, the value of the poorer property will be affected positively by the presence of the property of more value. The principle of conformity states that land must be utilized to reasonably conform with the existing standards of the area.

PRINCIPLE OF REGRESSION - The principle of regression is an extension of the principle of conformity. The principle of conformity states: To maintain maximum value, land must be utilized to reasonably conform with the existing standards of the area. The principle of regression extends that concept as follows: Between dissimilar properties, the value of the better property will be affected adversely by the presence of the property of lessor value.

PRINCIPLE OF SUBSTITUTION - A valuation principle that states a prudent purchaser would pay no more for real property than the cost of acquiring an equally desirable substitute on the open market.

PRINCIPLE OF SUPPLY AND DEMAND - A valuation principle that states that market value is determined by the interaction of the forces of supply and demand as of the date of the appraisal. According to this principle, if the supply increased but the demand remains constant, price will decrease. If the demand increases but the supply remains constant, price will increase. If both supply and demand increase or decrease proportionately, price will remain relatively stable.

PRIVATE ACCESS - The term is commonly used by recreational practitioners when referencing private roads leading to cottages properties.

private mortgage insurance (PMI) - Default insurance for conventional loans, normally required with smaller down-payment loans.

Principal Amortizing Advance (PRAM)  A type of advance.

PRIVITY OF CONTRACT - A basic principle of contract law, stating that, with few exceptions, only the parties to a contract can enforce or be bound by that contract.

PRO FORMA STATEMENT - Pro forma is literally translated from Latin as according to form. For most purposes, the term refers to actual financing statements showing the projected costs and income of an existing or new project. A pro forma statement prepared by a real estate broker usually concentrates solely on cash flow.

PROGRESS ADVANCES - Loan advances made on a property under construction whereby the lender makes advances while retaining an amount of the loan which in his/her opinion will be sufficient to complete the building should the borrower be unable to finish it.

Promissory Note - The legal document that a borrower and his or her spouse must sign that agrees to pay the mortgage loan back to the lender.

PROPERTY - Property is either real or personal. The distinguishing factor is mobility, with personal property being movable. Real property is the freehold ownership of land, including the tangible elements (physical elements) and intangible elements (rights that accrue from the ownership of physical real estate). Real estate usually refers to the physical tangible property, while real property is the more all encompassing term that includes both real estate and rights of ownership.

PROPERTY CONDITION DISCLOSURE STATEMENT - During the past several years, various jurisdictions throughout North America have introduced property disclosure forms. These forms provide buyers with a statement from the seller regarding the condition of the main structures and systems in a house. The questions posed on any Seller Property Information Statement, or any similar document, should be carefully reviewed with the seller, completed and signed by the seller. It is important to note the completion of this form by the seller does not relieve the listing broker from those obligations that he/she would otherwise have with respect to ascertaining the condition on the form should be used to assist in meeting those obligations. It also does not relieve the buyer from carrying out their own due diligence.

PROPERTY MANAGEMENT - Property management represents a specialty field within real estate. Real estate brokers usually become involved in property management as a result of rental or leasing activity.

Property Taxes - The amount of money you pay to the local government depending on the assed value of your home and the local cost of levies and tax rates. This payment may be part of your mortgage payments.

prorate - To proportionally divide amounts owed by the buyer and the seller at closing.

PROSPECTS - A common term often used to refer to potential buyers of a property.

PROVINCIAL ASSOCIATIONS - In organized real estate, provincial associations are defined to mean any duly incorporated provincial association or territorial association that are members of the Canadian Real Estate Association (CREA) as set out in CREA ByLaw No.1, Appendix "A" Rules and Regulations.

PROVISO - Exception or limitation relating to an overall statement or agreement.

Purchase and Sale Agreement - An agreement between the seller and buyer of a property that states the terms of the sale of the home.

Purchase Contract - The contract that is signed once the buyer and seller finish negotiating the terms of the sale of the home.

- Q -

qualification - As determined by a lender, the ability of the borrower to repay a mortgage loan based on the borrower's credit history, employment status, assets, debts and income.

qualification rate - Rate of interest used to calculate whether or not a borrower qualifies for a mortgage.

qualification requirements - guidelines used by lenders to decide whether to loan money to an applicant.

qualified acceptance, conditional acceptance - acceptance for a loan (or other contract) provided that certain conditions are met.

qualified buyer - A person who has been pre-approved for a mortgage loan.

Qualifying Ratios - Lenders look at asset-to-debt and other ratios in order to determine exactly how much the borrower can financially afford as a maximum mortgage amount. The more you owe in debt the less you will be able to borrow because the lender considers your total monthly expenses when determining how high of a mortgage payment you can afford. This is why it is important to rid yourself of as much unnecessary debt, like unsecured credit card debt, as possible before you apply for a mortgage loan to purchase a home.

quantum - A quantity or amount, a specified portion.

QUIET ENJOYMENT - A covenant, usually inserted into leases and conveyances on the part of the grantor, promising that the tenant or grantee shall enjoy possession of the premises in peace and without disturbance. In mortgages (often referred as quiet possession), it refers to the mortgagor's right to uninterrupted use of the property when not in default.

QUIT CLAIM DEED - A general release of all claims or rights to a parcel of land.

QUORUM - The minimum number of persons that must be present at a duly constituted meeting of an organization to transact business on behalf of that organization.

- R -

Race - Persons who identify themselves according to the following race categories on the 1980 Census questionnaire: White, Black or Negro, American Indian, Eskimo, Aleut, Japanese, Filipino, Korean, Asian Indian, Vietnamese, Hawaiian, Guamanian, Samoan, and Other. The "Other" category includes Malaysian, Polynesian, Thai, and other groups not included in the specific categories listed on the questionnaire. Users of the information listed on said questionnaire should not confuse RACE and ANCESTRY, i.e. Persons who claim SPANISH ORIGIN may be of ANY Race.

RADON - Is a naturally occurring radioactive gas resulting from the decay of uranium. Outdoors, radon is diluted, while indoor levels of concentration can reach hazardous levels. Measurement is the only way to determine the existence and extent of radon.

RAFTERS - Commonly associated with sloped roofs, whereas a similar member under a flat roof is referenced as a roof joist. The rafter supports the roof sheathing and transmits the roof loads to bearing walls and beams below.

Rate Lock - A specific fixed interest rate for a specified amount of time that is guaranteed by the mortgage lender.

RATIFICATION - A person may purport to act for someone knowing that authority to do so has not been granted, or that the limits of authority have not been exceeded. The subsequent adoption of the agent's acts by the principal is called ratification. This affirmation of the conduct of the agent after the fact puts the parties in the same legal position as if the agent always had authority to represent the principal.

REAL ESTATE - The land and any improvements found on it. For purpose of the Real Estate Trading Act, real estate, in addition to including those things that are normally considered as real estate, also artificially includes a business and mobile homes.

Real Estate Agent - A licensed professional who can help with the procedures involved with the purchase or sale of real property. Real estate agents accept a percentage of the sale price of a home as their commission payment for their services.

REAL ESTATE BROKER - An individual or firm licensed under the Real Estate Trading Act who represents a principal (e.g., a seller or buyer) in a real estate trade.

REAL ESTATE COMMISSION - The regulatory body for the real estate industry created by a provincial statute, the Real Estate Trading Act.

REAL ESTATE CYCLES - The real estate market generally moves through the same phases as overall business cycles. However, real estate may demonstrate more pronounced peaks and valleys. Prosperity can occasionally linger in the marketplace, buoyed by fervently optimistic consumers and speculators. Conversely, recessions deepen unnecessarily as developers flood an overheated market with units, only to see consumer demand vanish before their completion. On a more optimistic note, real estate markets have traditionally tended to be on the leading edge of the recovery cycle as improved economic conditions are evidenced within the overall economy.

Real Estate Owned (REO) -  Mortgaged property acquired by a servicer on behalf of the mortgagee, through foreclosure or Deed in Lieu of Foreclosure.

RESPA- Real Estate Settlement Procedures Act - This states that borrowers must be informed in advance of all of the charges for closing costs of the loan. There is usually a meeting where the borrower sits down with the lending agent while the agent reviews all of the associated costs and fees of the mortgage loan.

REAL ESTATE TRADING ACT - A provincial statute, proclaimed in January 1997 to create self-regulation of the real estate industry in Nova Scotia.

real interest rates - Interest rates adjusted for the expected erosion of purchasing power resulting from inflation. Technically defined as nominal interest rates minus the expected rate of inflation.

Real Property - All land, including improvements and fixtures and property of any nature appurtenant, or used in connection therewith, and every estate, interest, and right legal or equitable therein, including leasehold interests, terms for years, and liens by way of judgment, mortgage or otherwise.

REALTOR® - The term REALTOR® refers to real estate professionals in Canada who are members of the Canadian Real Estate Association (CREA).

Recapture - Unused or improperly used funds recovered by the Bank in cases where it is determined that AHP grant funds are no longer being used for the purpose approved by the Bank.

Receive versus Payment (RVP) -  Securities industry procedure whereby receipt of securities purchased is made to the selling customer’s bank in exchange for payment, usually in the form of cash.

RECD - Rural Economic and Community Development agency or programs it administers. It has replaced the Farmer's Home Administration.

Recipient - Community housing development organization, nonprofit organizations, local units of government and public housing authorities.

recision - The cancellation of a contract.

recording fees - Money paid to the lender for recording a home sale with local authorities, making it public record.

REFERRAL - a term commonly used in real estate brokerage referring to the act of a licensed salesperson or broker recommending or otherwise communicating a prospective buyer or seller to another licensed salesperson or broker operating within or beyond the referring salesperson's licensing jurisdiction, geographic area, or specific field of professional expertise.

refinance - Obtaining a new mortgage loan on a property already owned, often to replace existing loans.

Refinancing - Getting a new mortgage loan that replaces and pays your existing mortgage loan in full. This is like getting an entirely new mortgage loan which is usually done in order to lower interest rates on a current mortgage loan or take cash out of the equity in a home.

Regulation FD (Fair Disclosure) - An SEC rule that prohibits selective disclosure by requiring public companies (and certain other enterprises) to disclose material, non-public information by certain prescribed methods that are designed to achieve broad dissemination.  If information is inadvertently released, the company must take steps to broaden the dissemination of the information within 24 hours of discovering the disclosure.

REGISTRAR - The senior staff person who is responsible for overseeing the administration of the Real Estate Trading Act. The basic powers afforded the Registrar are outlined in the Act and Commission By-law.

RELEASE - A discharge by an act and/or a written document in which some claim, right, or interest in a property is relinquished.

renegotiable rate - A type of variable rate involving a renewable short-term “balloon” note. The interest rate on the loan is generally fixed during the term of the note, but when the balloon comes due, the lender may refinance it at a higher rate. In order for the loan to be fully amortized, periodic refinancing may be necessary.

RENT - The compensation paid for the temporary use and/or occupation of real estate.

Rent and Mortgage Payment History - A lender will look into the history of other dwellings you have inhabited in order to see if you make your payments on time and are credible in the area of housing payments. They will contact past landlords or look at your credit history from any previous mortgages to make sure you were never delinquent.

RENTABLE AREA - Most commonly associated with the measurement of office buildings and more specifically individual tenanted areas, and is best described as the usable area of the tenanted space plus an allocation of floor common areas (e.g., lobby, janitorial areas, washrooms, and electrical room) in proportion to that individual tenanted areas as it relates to the overall usable area on a particular floor.

Rental Assistance - Rental assistance payments provided as either project-based rental assistance or tenant-based rental assistance.

Rental Housing - A rental housing unit is considered to be an affordable housing unit if it is occupied by a low-income family or individual and bears a rent that is the lesser of (1) the Existing Section 8 Fair Market Rent (FMR) for comparable units in the area; or (2) 30 percent of the adjusted income of a family whose income equals 65 percent of the median income for the area, except that HUD may establish income ceilings higher or lower than 65 percent of the median because of prevailing levels of construction costs or fair market rents, or usually high or low family incomes.

Renter - A household that rents the housing unit it occupies, including both units rented for cash and units occupied without cash payment or rent (U.S. Census definition).

Renter Occupied Unit - Any occupied housing unit that is not owner occupied, including units rented for cash and those occupied without payment of cash rent.

REPLACEMENT COST NEW - The cost of construction, at current prices, of a building having utility equivalent to the building being appraised, but built with modern materials and according to current standards, design and layout.

Report of Condition (RCON) -  Identifies the line items on the report of condition (call report) filed by financial institutions on a quarterly basis.

REPRESENTATIONS/WARRANTIES - It is important to note that recommended warranty clauses usually state the party represents and warrants. The two terms should be clearly differentiated. A warranty is a statement or covenant that is subsidiary or collateral to the contract. Breach of warranty entitles the purchaser to damages only and does not permit the purchaser to rescind the contract. A representation is a statement made by one party to another, before or at the time of contracting, regarding some existing fact or to some past event, which is one of the causes that induces a contract. These terms, in turn, should be differentiated from a condition. Whether or not a specific statement is a warranty or a condition is a question of contract and precise wording. The decision to use a condition, warranty or other representation will depend largely on circumstances.

Repurchase Agreement (Repo) -  A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date.  The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this.   Dealers use repos extensively to finance their positions.  An exception is when the Federal Reserve does a repo; it is lending money, that is, increasing bank reserves.

RESERVED FUND - A special fund established for the purpose of some contemplated future event(s).

Rescission Agreement - The legal document that both parties sign in order to cancel a previously signed legal contract. In the case of real estate transactions there may have been a purchase agreement signed and then the buyer or seller changed their minds about the home then a rescission agreement would have to be signed.

Residual Income - What is left of your earnings after you have paid you fixed expenses, variable expenses, and a future mortgage payment. Lenders look at this in order to determine how much of a monthly mortgage payment you can afford.

Resolution Funding Corporation (REFCORP) -  A U.S. government agency created by Congress in 1989 to issue “bailout” bonds and raise industry funds to finance activities of the Resolution Trust Corporation (RTC), and merge or close sick institutions inherited from the disbanded Federal Savings and Loan Insurance Corporation (FSLIC).

RESTRICTIVE COVENANT - A limitation placed upon the use of property contained in the deed or other written instrument in the chain of title. More specifically, a restrictive covenant is a contract between two landowners, by which the person obtaining the promise (the covenantee) acquires the right to restrain the covenantor from putting the land to certain specific uses. Such contracts between landowners run with the land.

Return on Capital Stock (ROCS) - The Bank’s net income for a given period expressed as an annualized rate of return on members’ investment in the Bank’s capital stock.  Calculated as earnings for a period (e.g., a quarter or a year) divided by the average balance of capital stock outstanding during the period, and adjusted to an annualized rate.

Return on Equity (ROE) -  The Bank’s net income for a given period expressed as an annualized rate of return on the Bank’s total capital.  Calculated as earnings for a period (e.g., a quarter or a year) divided by the average balance of total capital outstanding during the period, and adjusted to an annualized rate.

reverse annuity mortgage (RAM) - A mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as collateral.

REVERSE MORTGAGE - A variation on the traditional mortgage concept that allows a homeowner to convert some or all of the equity (net value accumulated in the home) into cash or a stream of income payments, while retaining ownership and possession of the home. No repayment of the reverse mortgage or interest takes place until a specified time in the future: when the homeowner sells, when the homeowner moves permanently, when a preset period (perhaps 5 or 10 years) ends, or when a homeowner dies.

REVERSE OSMOSIS - The removal of dissolved minerals ( e.g., chloride, sulphate) from a water supply that is frequently used in recreational properties. This process involves forcing water through a semi-permeable membrane. The membrane passes fresh water leaving behind mineral content.

RFP - Request For Proposals.

RIDER - An addition or amendment to a contract, and are frequently encountered in lease documents.

RIGHT-OF-ACCESS - A clause that might be found in an Agreement of Purchase and Sale in which the buyer is contemplating the subdividing of the property and/or the erection of some structure(s) and consequently requires permission to enter the property for the purpose of surveying and conducting soil tests before the completion of the transaction.

right of first refusal - The right to purchase a property under conditions and terms made by another buyer and accepted by the seller.

right of rescission - The right to back out of a transaction, given automatically by law to the borrower in a real estate purchase transaction. When a borrower's principal dwelling is going to secure a loan, the borrower has three business days following signing of the loan documents to rescind or cancel the transaction. Any and all money paid by the borrower must be refunded upon rescission. The right to rescind does not apply to loans to purchase real estate or to refinance a loan under the same terms and conditions where no additional funds will be added to the existing loan.

RIGHT OF SURVIVORSHIP - The distinguishing feature of joint tenancies that provides that, where real property is held by joint tenants, upon the death of any joint owner, his or her interest in the real property will pass to the surviving co-owner(s) rather than to the estate of the deceased.

RIGHT - OF - WAY - The right to travel over another's land, more or less frequently, according to the nature of the easement.

RISK & LIABILITY REDUCTION - According to research involving errors and omissions claims, liability for real estate practitioners is commonly found in three specific areas: unreliable documentation, inaccurate seller representations; and inaccurate and/or unverified seller representations; and inaccurate and/or unverified published listing information. Key problem areas have been identified in researching errors and omissions claims. The following are five areas causing particular difficulties for practitioners.

False Representations - (The person making the statements knows it to be false.) Whether verbal or written, real estate practitioners are increasingly challenged about what is said, printed, or represented during the listing and selling process. Clearly, salespeople should investigate facts before making statements and properly qualify the content of such statements in terms of their knowledge levels, degrees of expertise, and other relevant matters.

Duty of Care - While agent duties to the client are well defined, legal cases during the past two decades have placed
increasing responsibility upon the agent and his or her representative to take particular care when providing information to persons other than the client.

Latent Defects - Items/defects that are present, but not apparent to the untrained eye, represent a special challenge for real estate practitioners. Latent defects crop up in many errors and omissions claims. Neither reliance on seller representations, nor purchaser indifference or ignorance, remove the hazards for the practitioners.

 Agency - Breach of agency duties, dual agency conflicts and confusion of fiduciary responsibilities to parties in a transaction have caused a great deal of litigation. Salespeople must ensure that proper agency disclosure procedures are followed at all times.

 Documentation - Practitioners should be careful in drafting all documents concerning the listing and selling of property. Be careful to avoid confusion in notice periods, improperly drafted conditions, lack of clear intention of the parties to the Agreement, and missing and/or inaccurate details about properties.

ROAD ALLOWANCE - A tract of land dedicated for the purposes of public travel.

ROOF PITCH - The pitch of a roof is really the slope of the roof. Convention dictates that the slope of the roof is defined as a ratio of rise over run.

ROOF TRUSSES - Roof trusses perform the same function as rafters, collar ties, knee walls, and ceiling joists. The roof truss holds up the roof sheathing and shingles, transferring the roof loads to the outside or bearing walls. The bottom of the truss also supports the ceiling finish, upon which the insulation rests. Most trusses used in residential construction are made up of wood components. The top and bottom members of the truss are referred to as chords. The interior members of a truss are called webs. Individual wood members of the trusses are secured with gusset plates.

rollover - The process by which a construction loan becomes a mortgage. At the end of the construction loan period, the borrower's file is delivered to Bank One Mortgage Loan Servicing Dept. Prior to delivery, CLD contacts the borrower and obtains funds for the tax and insurance escrows, a final title policy and homeowner's policy. This process is called a rollover.

RTC - Resolution Trust Corporation.

RUNNING WITH THE LAND - A covenant is said to run with the land when it extends beyond the original parties to the agreement and binds all subsequent owners to liability concerning, requirement to perform, or the right to take advantage of that covenant.

Rural and Urban - (Population) Rural and urban are type-of-area concepts rather than specific areas outlined on maps. As defined by the Census Bureau, the urban population comprises all persons living in urbanized areas (UA's) and in places 2,500 or more inhabitants outside UA's. The rural population consists of everyone else. Therefore, a rural classification need not imply farm residence or a sparsely settled area, since a small city or town is rural as long as it is outside a UA and has fewer than 2,500 inhabitants.

R-values - A term used to describe insulation -- higher R-values represent better insulation and greater resistance to heat flow.

- S -

SAA - State Administrative Agency.

sale price - The price at which the house actually sold. The difference between a home's sale price and the listing price is useful for buyers in making offers on comparable homes.

Sales Comparison Approach (SCA) - Is one of the three major groupings of valuation methods, called the three approaches to value, commonly used in real estate appraisal. This approach compares a subject property’s characteristics with those of comparable properties which have recently sold in similar transactions.

Sarbanes-Oxley Act - Legislation passed largely because of a number of corporate accounting scandals to protect shareholders and the public from accounting errors and fraudulent practices in the enterprise.  The act is administered by the SEC, which sets deadlines for compliance and publishes rules on requirements.  Sarbanes-Oxley is not a set of business practices and does not specify how a business should store records; rather, it defines which records are to be stored and for how long.  The legislation not only affects the financial side of corporations, but also affects the IT departments whose job it is to store a corporation’s electronic records.  The Sarbanes-Oxley Act states that all business records, including electronic records and electronic messages, must be saved for “not less than five years”.  The consequences for non-compliance are fines, imprisonment, or both.  IT departments are increasingly faced with the challenge of creating and maintaining a corporate records archive in a cost-effective fashion that satisfies the requirements put forth by the legislation.

satisfaction of mortgage, release of mortgage - The document issued by the mortgagee when the mortgage loan is paid in full.

Savings & Loan (S&L) - A depository financial institution, federally or state chartered, that obtains the bulk of its deposits from consumers and holds the majority of its assets as home mortgage loans.

savings bank - Depository institution historically engaged primarily in accepting consumer savings deposits and in originating and investing in residential mortgage loans; now may offer checking-type deposits and make a wider range of loans. See commercial bank.

SEAL - An impression made on a document to confirm in a formal manner the signing of a contract.

Second Mortgage - Another loan on the equity of a home. The second mortgage takes secondary authority to the first mortgage on the lien to the home. When the home is sold or in the case of a default or foreclosure the first mortgage lien holder is paid first and the second mortgage lien holder is paid later. Second mortgages usually have higher interest rates because they are higher risks because in the case of a

Secondary Mortgage Market - Where mortgages are purchased and sold by companies.

Section 8 - Section 8 Existing Housing Certificate Program.

Section 8 Program - Statewide Housing Assistance Payments Program.

Section 202 - Supportive Housing for the Elderly administered by HUD.

Section 215 - Section 215 of Title II of the National Affordable Housing Act. Section 215 defines what constitutes "affordable" housing projects under the Title II HOME program.

Section 302 - A section of the Sarbanes-Oxley Act that requires certifications by the CEO and CFO for 10-Ks and 10-Qs.

Section 404 - A section of the Sarbanes-Oxley Act that requires, in addition to other things, an annual evaluation of and attestation to the adequacy of internal controls by auditors.

Section 504 - Section 504 of the Rehabilitation Act of 1973 (Public Law 93-112, 29 U.S.C. 794) administered by HUD.

Section 811 Program - Supportive Housing for the Disabled administered by HUD.

SECURITY DEPOSIT - Money advanced by a commercial tenant and held by an owner or manager for a specific period to cover possible damages and ensure faithful performance of the lease by the tenant.

Securities and Exchange Commission (SEC) - An independent, nonpartisan, quasi-judicial regulatory agency with responsibility for administering the federal securities laws. The purpose of these laws is to protect investors and to ensure that investors have access to disclosure of all material information concerning publicly traded securities. The Commission also regulates firms engaged in the purchase or sale of securities, people who provide investment advice, and investment companies.

security interest - The property or a portion of property offered as security.

SEER - Central air conditioners are rated according to their seasonal energy efficiency ratio -- indicates the relative amount of energy needed to provide a specific cooling output.

Selected Conditions - Housing conditions which consists of the following components - incomplete plumbing facilities, overcrowding, in renter-occupied units, rent is 30 percent or more of household income, and in owner-occupied units the structure was built in 1939 or earlier and is valued below $25,000 (metro) or $20,000 (non-metro).

Seller Concessions - The seller may put a valuable asset into the purchase agreement for the buyer. An example of a seller concession is leaving all of the appliances in the home as an additional benefit to the buyer.

seller's points - In reference to a loan, seller's points consist of a lump sum paid by the seller to the buyer's creditor to reduce the cost of the loan to the buyer. This payment is either required by the creditor or volunteered by the seller, usually in a loan to buy real estate. Generally, one point equals one percent of the loan amount. See also points.

Seller Take Back - When the seller agrees to finance the property for the buyer which could also include assuming a mortgage contract.

SEPTIC TANK - A watertight container usually made of concrete, steel or fiberglass. It serves as a holding tank that allows heavy solids to settle to the bottom of the tank. Lighter materials that float are also held in the tank. Within the tank, most solids are broken down to gases or liquids. The breakdown takes place as a result of bacteria action, both aerobic and anaerobic. The liquids are discharged from the tank into the tile bed. The gas escapes through plumbing vents.

SERVIENT TENEMENT - Land over which an easement exists in favor of the dominant tenement.

service charge - A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Service Needs - The particular services identified for special needs populations, which typically may include transportation, personal care, housekeeping, counseling, meals, case management, personal emergency response, and other services to prevent premature institutionalization and assist individuals to continue living independently.

servicing - The responsibility of collecting monthly mortgage payments and properly crediting them to the principal, taxes and insurance, as well as keeping the borrower informed of any changes in the status of the loan.

Settlement - Also known as the closing of the loan, where the title of the home is transferred to the new owner and the sale of the property is finalized.

Settlement Sheet - A document that lists all of the details of the sale of the home. A real estate agent will normally go over this document with the buyer and seller and explain the fees or costs including previous years property taxes, points, insurance, title insurance, commission fees, loan and financing fees, and more.

Severe Cost Burden - SEE Cost Burden > 50 percent.

Severely Distressed Public Housing Agency - A PHA that has not met HUD performance standards. See also "Troubled Public Housing Agency."

shared appreciation mortgage (SAM) - A mortgage in which a borrower receives a below-market interest rate and, in return, the lender (or other investor) receives a portion of the future appreciation in the value of the property.

Short Option Advance (SOA) -  An advance in which the borrower grants the Bank one or more types of options to terminate, convert or otherwise restructure the terms of the advance, as well as advances in which the borrower agrees to the automatic termination, conversion, or restructuring of the terms of the advance based on interest rate levels or other similar criteria.

short-term interest rates - Interest rates on loan contracts—or debt instruments such as Treasury bills, bank certificates of deposit or commercial paper—having maturities of less than one year. Often called money market rates.

SILL - A level, continuous pad between the foundation top and the bottom of the framing system.

SIMPLE INTEREST - Interest computed on the principal balance only.

Single Family Dwelling (SFD) -  “Owner-occupied unit” means a unit in an owner-occupied project.  Housing with two to four dwelling units consisting of one owner-occupied unit and one or more rental units shall be considered a single owner-occupied unit.

SIPP - U.S. Census Bureau Survey of Income and Program Participation.

SITE - A parcel of land that is improved to the extent that it is ready for its intended purpose.

SLAB - A reinforced concrete floor between beams, columns, or walls. Also, any large, thin area of concrete such as a wall, roof, or balcony, is a slab.

SLIDER - A type of window normally identified by single panes of glass sliding on a wood or vinyl track with a simple locking device and pull knobs attached on the surface of the glass. This type of window was popular during the 1960's and is generally regarded as a poorer quality window.

Small Business (SB) -  The Small Business Administration has many definitions of a small business.  In general, any business with revenue under $500,000 per year will qualify, but many larger agricultural and commercial businesses may also apply.   The definition is found in section 3(a) of the Small Business Act (15 U.S.C. 632 (a)) and implemented by the Small Business Administration under 13 CFR part 121, or any successor provisions. 

Small Related - A household of two to four persons which includes at least two related persons.

SMOKE CHAMBER - The smoke chamber is found above the damper in a fireplace and below the chimney. It is often covered with a special cement parging to provide a smooth surface. The side walls of the smoke chamber are sloped to direct the smoke from the wide damper opening into a narrow chimney flue. The slope of the smoke chamber wall should not be more than forty-five degrees off vertical and should slope evenly from both sides. The smoother the walls of the smoke chamber, the more likely the smoke is to move freely through it.

soft market - A market where houses aren't selling much or quickly, so the sales price is likely to be significantly lower than the asking (listing) price. It's a good time for buyers to buy, but not the best time for prospective sellers to sell.

SPECIFIC PERFORMANCE - A remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.

SPECIFICATIONS - A detailed and exacting statement of what is to be done, including requirements, dimensions, and materials as in the case of a proposed building.

SPECIAL ASSESSMENT - A tax or levy customarily imposed against only those specific parcels of realty, which will benefit from a proposed public improvement, as opposed to a general tax on the entire community.

SPECIAL WARRANTY DEED - A deed in which the grantor warrants or guarantees the title only against defects arising during the period of his tenure and ownership of the property and not against defects existing before the time of his ownership.

Standard & Poor’s (S&P) -  A rating service that rates stocks and bonds according to risk.

Standby Line of Credit (SLC) -  A one-year commitment to funding with a floating rate, adjusted daily based on the overnight Fed Funds market.

STANDING LOAN - A commitment by the interim or construction lender to keep the money already funded in the project for a specified period of time after the expiration of the interim loan, usually until permanent take-out financing is secured.

STATEMENT OF ADJUSTMENTS - A statement, usually prepared by the solicitor for the seller, setting out in balance sheet form, all credits to the seller (e.g., purchase price, prepaid taxes, prepaid utilities etc.) and all credits to the buyer (e.g., deposits, arrears in taxes prior to the date of closing) and the balance due on closing. The Statements of Adjustments provides all parties to the transaction a financial breakdown as of the closing date.

state bank - Bank that is chartered by a state; may or may not be a member of the Federal Reserve System.

state member bank - A bank that is chartered by a state and has elected to join the Federal Reserve System.

Statement of Service - This document shows your service record including when you entered the service, how long you served, and with what branch you served, and is usually provided by the military unit you served with.

STATUTE OF FRAUDS - That law which requires certain contracts to be in writing and signed by the party to be charged therewith in order to be legally enforceable.

STATUTE OF LIMITATIONS - That law pertaining to the period of time within which certain actions must be brought to court.

STEP - Community Development Block Grant Program's Small Towns Environment Program.

STEP-UP-LEASE - A lease with fixed rent for an initial term and provision for predetermined rent increases at specified intervals and /or increases based upon periodic appraisals; sometimes called a graduated lease.

STUDDING - One of the series of vertical wood structural members (usually 2-inch nominal thickness) used as supporting elements in walls and partitions.

SRA Designation - An Appraisal institute designation held by real estate solutions providers who are experienced in the analysis and valuation of residential real property.

SUBAGENT - An agent authorized by the listing agent to assist in transacting the affairs of the principal (with express or implied consent of the principal) and having the same duties to the principal as the agent.

SUBCONTRACTOR - A subcontractor performs a particular task under the direction and coordination of the general contractor, who takes on the responsibility of managing the project according to the construction documents.

SUBFLOOR - Transmits the live loads of people and furnishings to the floor joists, and may be covered with a finish or may serve as a finished flooring itself. Historically, one-inch thick wood boards were used. More recently, plywood and wafer boards have been used.

SUBJECTIVE VALUE - Is created and exists only in the minds of the potential buyers and sellers. It is the price that people will pay for a property, irrespective of its cost. This is differentiated from objective value in which value is associated with the cost of production or cost of creating the property.

SUBJECT TO MORTGAGE - A grantee taking title to real property "subject to mortgage" is not personally liable to the mortgagee for payment of the mortgage note. In the event the grantor-mortgagor defaults in paying the note, the grantee could, however, lose property, and thus his equity, in a foreclosure sale.

SUBLEASE - A lease executed by the lessee of a leasehold estate, to a third person, that conveys the same estate for a shorter term, or a portion of the real estate for the same or shorter term.

SUBLETTING - Sublet should be clearly differentiated from assignment of a lease. When an entire interest is transferred, it is said to be assigned. Thus, the tenant as assignor may transfer all of his/her interest to a new tenant, the assignee. The original tenant remains liable for the lease obligations to the landlord. A tenant may assign or sublet at will without the approval of the landlord unless the lease stipulates otherwise. In fact, most leases contain an express covenant that the tenant will not assign or sublet, or a qualified covenant that there will not be any assignment or subletting without prior written consent of the landlord. This clause may be further qualified so that the landlord's consent will not be withheld arbitrarily. In these circumstances the tenant can apply to a judge to obtain approval for any appropriate tenant who intends to use the premises in a reasonable manner. Usually both the tenant and assignee or subtenant will sign a form agreeing to be bound by the main lease and the landlord will consent to this agreement. The parties will pay the landlord's reasonable costs in arranging for this consent and they will include the legal expenses, credit investigations and similar expenses.

SUBORDINATION - An agreement, by which a lien holder, a lessee, or one having an interest or claim in or against personal or real property, places the interest behind that of another.

SUBORDINATION AGREEMENT - An agreement whereby a prior mortgagee agrees to subordinate or give up their priority position to an existing or anticipated future lien.

Subrecipient - A public agency or nonprofit organization selected by the participating jurisdiction's home program. A public agency or nonprofit organization that receives HOME funds solely as a developer or owner of housing is not a subrecipient. The participating jurisdiction's selection of a subrecipient is not subject to the procurement procedures and requirements.

SUBROGATION - The act of replacing one person with another in regard to a legal right, interest, or obligation; substitution such as an insured transferring claim rights to the insurance carrier in return for direct payment of the loss.

Substandard Condition but Suitable for Rehabilitation - By local definition, dwelling units that do not meet standard conditions but are both financially and structurally feasible for rehabilitation. This does not include units that require only cosmetic work, correction or minor livability problems, or maintenance work. The jurisdiction must define this term (i.e., standard condition, financially and structurally feasible for rehab) and include this definition in the Appendix (Glossary of Terms) portion of its CHAS submission.

Substantial Rehabilitation - Rehabilitation of residential property at an average cost for the project in excess of $25,000 per dwelling unit.

Supportive Housing - A housing, including Housing Units and Group Quarters, that has a supportive environment and includes a planned service component.

Supportive Services - Services provided to residents of supportive housing for the purpose of facilitating the independence of residents. Some examples are case management, medical or psychological counseling and supervision, child care, transportation, and job training.

SUMMARY POSSESSION - A legal process used by a landlord to regain possession of the leased premises if the tenant has breached the lease or is holding over after the termination of tenancy.

SURRENDER - A premature conveyance of a possessory estate to a person having a future interest, as when a lessee surrenders the leasehold interest to the owner of the reversion interest, the lessor, before the normal expiration of the lease.

SURVEY - The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of houses in a lot including the determination of any existing encroachments or easements.

SURVIVORSHIP - The right of survivorship is that special feature of a joint tenancy whereby all title, right and interest of a decedent joint tenant in certain property passes to the surviving joint tenants by operation of law, free from claims of heirs and creditors of decedent.

SUSPENDED CEILING -Suspended ceilings are normally built using the exposed T-bar arrangement, but variations exist in which the T-shaped metal framing pieces are either recessed or invisible, following final installation of the suspended tiles or panels. This lightweight ceiling system has proven attractive, owing to its cost efficiency in installation, the ability to reduce unneeded height within buildings, sound deadening qualities and ease of access of mechanical parts of the building.

Swaption -  An option to enter an interest rate swap.  A payer swaption gives the purchaser the right to pay fixed), a receive swaption gives the purchaser the right to received fixed.

sweat equity - Equity created by a purchaser performing work on a property being mortgaged.

Systemic Risk - The risk that a market crisis places on the financial system as a whole.

- T -

T&I - This term stands for taxes and insurance.

tax deed - A written document conveying title to property repossessed by the government due to default on tax payments.

TAX LIEN - A general statutory lien imposed against real property for failure to pay taxes.

TAX RATE - Based on the value of the property. The requirement that property tax be paid is one of the basic limitations upon the rights of ownership or real property. The basis of the real property tax system is the ad valorem or according to value system. The amount of property tax to be paid by a homeowner is simply a percentage of the value of the real property. To apply the system to any individual property, a municipality must be capable of determining two factors: (1) the value of the property (assessment), and the percentage of value to be paid (tax rate).

TAX SHELTER - A phrase often used to describe some of the tax advantages of real estate investment, such as deductions for depreciation, interest, taxes, etc., which may offset the investor's other ordinary income to reduce the investor's overall tax payment.

tax savings - The deduction a taxpayer can take on their tax form for interest paid on a home mortgage. The amount of money that the homeowner is not required to pay the government in taxes because he or she owns a home.

10-K - Annual report required by the SEC each year.  Provides a comprehensive overview of a company’s state of business.  Must be filed within 90 days after fiscal year-end.

10-Q - Quarterly report required by the SEC each quarter.  Provides a comprehensive overview of a company’s state of business.

TENANCY AT SUFFERANCE - A tenancy which exists when a tenant wrongfully holds over after the expiration of a lease, without the landlord's consent, as where the tenant fails to surrender possession after termination of the lease.

TENANCY AT WILL - A tenancy in which a person is in a possession of real estate with the permission of the owner, for a term of unspecified or uncertain duration, as when an owner permits a tenant to occupy a property until it is sold.

TENANCY BY THE ENTIRETY - A special joint tenancy between a lawfully married husband and wife, which places all title to the property into the marital unit, with both spouses having an equal, undivided interest in the whole property.

TENANCY FOR YEARS - A less-than-freehold estate in which the property is leased for a definite, fixed period of time, be it for 60 days or any fraction of a year, a year, ten years, etc.

TENANCY IN COMMON - A form of concurrent ownership of property between two or more persons, in which each has an individual interest in the whole property; frequently found when the parties acquire title by descent or by will.

TENANCY IN SEVERALTY - Ownership of property vested in one person alone, and not held jointly with another; also called Several Tenancy or Sole Tenancy.

TENANT - In general, one who holds or possesses property, such as a life tenant or a tenant for years; commonly used to refer to a lessee under a lease.

Tenant Assistance - Rental assistance payments provided as either project-based rental assistance or tenant-based rental assistance.

Tenant-Based (Rental) Assistance - A form or rental assistance in which the assisted tenant may move from a dwelling unit with a right to continued assistance. The assistance is provided for the tenant, not for the project.


Damages - If the tenant vacates possession, the rent must still be paid until proper termination of the lease occurs. The tenant has agreed to pay a sum and is liable for the total amount. The landlord can sue for damages for any loss resulting from the tenant's failure to pay rent as agreed: however, the landlord must take reasonable steps to mitigate the damages. That loss may include the actual unpaid rent, any deficiency in monies received from a replacement tenant, and the cost of re-renting, including legal expenses and commission paid to a leasing agent.

Forfeiture - The landlord can take possession and terminate a commercial lease if rents is in arrears for fifteen days or if a breach has not been corrected after appropriate notice. The lease terms, or statute, may outline specific requests of notice to be followed, such as notice to the non-owner spouse if it's a matrimonial home. The tenant may be able to obtain relief from the forfeiture by paying all arrears and costs and remedying any other breaches of covenants. This is a discretionary remedy of the court and the tenant must show good faith, and demonstrate that no third party, such as a new tenant, would be prejudiced.

TENANCY TYPES - The relationship of a landlord to the tenant depends on ancient feudal doctrines. Over the years, four major categories have developed.

Fixed Term - The tenant has exclusive possession for a specific term, which is normally agreed to in a written contract. The commencement and expiry date must be determined before the lease takes effect.

Periodic - A tenancy may be for a fixed period but indefinite length that can be made certain by notice of termination. In other words, the periodic tenancy automatically renews itself (usually on a weekly, monthly, or yearly basis) unless notice is given to the contrary. It should be noted that if a residential tenant remains on the property following the expiration of a fixed term tenancy, the tenancy relationship converts into a periodic tenancy automatically.         

Tenancy at Will - A tenancy agreement can occur by contract or by implication from the acts of the parties. An implied tenancy at will may arise when a trespasser occupies premises without rent. An express tenancy at will may arise when a real estate transaction does not close on the scheduled date.         

Tenancy at Sufferance - This rare type of tenancy will occur if a person has possession without the consent of the owner and without paying rent. It arises by implication of law, in situations where the tenancy has been terminated but the tenant does not vacate.

TENANT DUTIES - The tenant is one who occupies land or tenement under a landlord. The tenant is given possession of the premises and must treat the premises as would a careful and prudent owner. Following are some typical duties of the tenant.

Use of the Premises - The tenant covenants to use the premises in a reasonable manner, and further promises to deliver up to the premises to the landlord at the end of the term in substantially the same condition as at the commencement of the term.         

Repair - It may be that tenant is granted a lease of the premises and is required to maintain the premises for the term, or the tenant leases the land and with it obtains the building, but the landlord has not warranted the continued existence of the structure. Accordingly, most leases will have specified provisions dealing with the standard of repair, arrangements for insurance, procedures on total partial destruction, and inspections. In current leases the landlord may be obligated only for the exterior structure and the tenant for everything else.         

Insurance - The landlord must insure the building and those contents and obligations that are not the landlord's must be insured by the tenant. Depending on the repair clause, liability provisions and specific provisions (e.g., concerning plate glass and boilers) in the lease, the prudent tenant will deliver a copy of the lease, to an insurance agent to arrange proper coverage that adequately protects the tenant.         

Fixtures - A tenant can remove any personal belongings at the end of the lease term, and may also remove trade fixtures, repairing any damage caused by the removal.  

Rent - The tenant covenants to pay rent without deduction. It must be paid to the landlord on the date it is due. The tenant may not deduct from the rent any claims for alleged breaches of covenants by the landlord. The landlord has a right to receive the rent as consideration for the loss of the exclusive possession of the property.

TERM - A fixed period of time.

TERMINATION OF AGREEMENT - Where conditions must be fulfilled and the appropriate party is unable to do so, a notification to the other party to the transaction is required that fulfillment of the condition is impossible and thus the Agreement is terminated.

THERMOPANE - A brand name (now used generally) for a window-glass construction that has insulating qualities due to two layers of glass separated by an airspace: also called double-glazing, or insulating glass.

Threshold Criteria - To be considered for funding, a housing project must first demonstrate that it meets all the threshold criteria set forth as follows: a) the project is consistent with the requirements established in this rule; b) the applicant provides evidence of their ability to carry out the project in the areas of financing, acquiring, rehabilitating, developing, or managing affordable housing developments; and c) the project addresses an identified housing need. This assessment will be based on statistical data, surveys or other indicators of needs as appropriate.

Third Party Pledge -  The Bank’s Safekeeping Department offers a service whereby the member may deliver securities into the custody of the Bank for the benefit of a member’s depositor.  The member requests in writing that the Bank provisionally segregate the specified collateral, in essence pledging the collateral to the depositor.

thrift institution - A general term encompassing savings banks, savings and loan associations, and credit unions.  

Thrift Institutions Advisory Council (TIAC) - Group established by the Board of Governors to obtain information and opinions on the needs and problems of thrift institutions. Made up of representatives of savings and loan associations, savings banks, and credit unions.

TIME IS OF THE ESSENCE - The clause in a contract, which emphasizes that punctual performance is an essential requirement of the contract.

TIMESHARE - A modern approach to communal ownership and use of real estate which permits multiple purchasers to buy undivided interests in real property (which is usually in a resort condominium or hotel) with a right to use the facility for a fixed or variable time period. Timeshare ownership, a relatively new concept in property ownership, generally falls under two broad categories.

Fee Ownership Interest - This carries with is the right to encumber, convey, or otherwise transfer the interest for all future time.  

Right-to-Use Ownership - This is a non-fee interest in the designated property and the purchaser receives no registrable title. Instead, the owner of this interest has a contractual right to enjoy the use of the property for a specific period.

TITLE - The lawful ownership of property; also, the means of evidence by which the owner has lawful ownership thereof.

Title Company - A company that researches titles, the history of titles, liens, and encumbrances in order to make sure all entitlement to a property are fulfilled before the tile can be transferred to a new owner.

TITLE INSURANCE - A comprehensive contract of indemnity under which the title company agrees to reimburse the insured for any loss if the title is not as represented in the policy.

TITLE SEARCH - An examination of the public records to determine what, if any, defects there are in the chain of title.

TOPOGRAPHY - Surface features of land, such as elevation, ridges, slope and contour.

Total Bonded Indebtedness - All single family mortgage revenue bonds (including collateralized mortgage obligations), multifamily mortgage revenue bonds, and other debt obligations issued or assumed by the Department and outstanding as of August thirty-one of the year of calculation, excluding; all such bonds rated AAA by Moody's Investors Service or AAA by Standard & Poors Corporation for which the Department has no direct or indirect financial liability form the Department's unencumbered fund balances, and all other such bonds, whether rated or unrated, for which the Department has no direct or indirect financial liability form the Departments unencumbered fund balances, unless Moody's' or Standard & Poors has advised the Department in writing that all or portion of the bonds excluded by this clause should be included in a determination of total bonded indebtedness.

TOTAL DEBT SERVICE RATIO - The ratio of annual (or monthly) mortgage charges for principal, interest, and taxes; plus payments on various other debts (normally bank or finance company loans etc.), compared with annual gross income of the borrower.

Total Vacant Housing Units - Unoccupied year round housing units (U.S. Census definition).

TOWNHOUSE - A type of dwelling unit, attached to two or more similar units, normally having two floors, with the living area and kitchens on the base floor and the bedrooms located on the second floor.

TRADE FIXTURES - Articles of personal property annexed to leased premises by the tenant, as a necessary part of the tenant's trade or business.

Tranche -  Risk maturity or other classes into which a multi-class security, such as a Collateralized Mortgage Obligation (CMO) or a Real Estate Mortgage Investment Conduits (REMIC) is split.

Transfer Tax - When a title is transferred to a new owner there are state and local taxes that need to be paid.

TRIPLE NET LEASE - A net, net, net clause, where in addition to the stipulated rent, the lessee assumes payment of all the expenses associated with the operation of the property.

Troubled Public Housing Agency - A PHA with at least 250 units that is in the third year of official HUD status as not having met targets for improved performance.

Truth in Lending Act - A government act that insures all lenders fully disclose the costs associated with the money being borrowed.

TRADING - Includes a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for sale, exchange, option lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt.

TRADE FIXTURES - Articles installed by a commercial tenant under the terms of a lease and removable by the tenant before the lease expires.

TRANSACTION BROKER - A person licensed under a regulatory act concerning the trade of real estate who assists one or more parties to the transaction, but not an agent for the interests of either party.

TRAPS - Traps are provided below house plumbing fixtures and are designed to hold some water in the waste piping system and is designed to prevent sewer odors from coming back through the fixture drain when not in use.

TRUST DEED - A real property security device (also called a deed of trust) very similar to a mortgage, except that there are three parties, the trustor, the trustee, and the beneficiary (the lender).

TRUST-OWNERSHIP - Ownership in trust exists when the title is in the name of a registered owner who may, in fact, be holding title as a trustee for the real or beneficial owner.

TRUST FUND ACCOUNT - An account set up by a broker at a bank or other recognized depository, into which the broker deposits all funds entrusted to him by his principal or others.

TURNKEY PROJECT - A development term meaning the complete construction package from the ground breaking to the completion of the building. All that is left undone is to turn over the keys to the buyer.

two-step mortgage, premier mortgage - A mortgage in which the borrower receives a below-market interest rate for a specified number of years (7 to 10) and then receives a new interest rate adjusted (within limits) to market conditions at that time.

- U -

UFAS - Universal Federal Accessibility Standards.

Underlying - The variable on which a futures or option contract is based.

underwriting - The decision whether to make a loan to a potential homebuyer based on credit, employment, assets, and other factors, and the matching of this risk to an appropriate rate and term or loan amount.

Underwriter - A person employed by a lending company who evaluates a borrower's loan application and all of the paperwork involved to determine if the borrower can receive the loan or not.

Unencumbered Fund Balances - Is the sum of the balances resulting at the end of each Department fiscal year form deducting the sum of bond indenture and credit rating restrictions and liabilities for the sum of amounts on deposit in indenture funds and other tangible and intangible assets of each department housing bond program, and b) uncommitted amounts of deposit in each independent or separate unrestricted fund established by the housing finance division or its administrative component units.

Uniform Settlement Statement - A standard document prescribed by the Real Estate Settlement Procedures Act containing information for closing which must be supplied to both buyer and seller.

UNILATERAL CONTRACT - A contract in which one party makes an obligation to perform without receiving in return any express promise of performance from the other party, such as an open listing contract, where the seller agrees to pay a commission to the first broker who brings in a ready, willing and able buyer.

UPSET PRICE - A minimum price set by a court in a judicial foreclosure, below which the property may not be sold by a court appointed commissioner at public auction; the minimum price which can be accepted for the property after the court has had the property appraised.

Urban and Rural - (Population) Urban and rural are type of area concepts rather than specific areas outlined on maps. As defined by the Census Bureau, the urban population comprises all persons living in urbanized areas (UAs) and in places of 2,500 or more inhabitants outside UA's. The rural population consists of everyone else. Therefore, a rural classification need not imply farm residence or a sparsely settled area, since a small city or town is rural as long as it is outside a UA and has fewer than 2,500 inhabitants. The terms urban and rural are independent of metropolitan and nonmetropolitan designations; both urban and rural areas occur inside and outside of SMSA's

UREA FORMALDEHYDE FOAM INSULATION - Urea Formaldehyde is a colorless, chemical compound found in certain resins, glues and bonding agents. Its familiarity to real estate practitioners lies in its use for insulation. UFFI is a low density foam made from plastic resins, a foaming agent and compressed air. At the time of installation, UFFI has the appearance and consistency of shaving cream. While normally identified as a white or cream-colored substance, at least one product contained blue dye. A controversy arose from the curing process when the product was injected into walls and other areas in residential property, and formaldehyde gas was released. A product ban appeared in 1980 because of potential health concerns. A general consensus now minimizes UFFI as a health concern.

USPAP - Uniform Standards of Professional Appraisal Practice - USPAP can be thought of as the quality control standards applicable for appraisal analysis and reports in the United States and its territories. USPAP, as its commonly known, was first developed in the 1980's by a joint committee representing the major U.S. and Canadian appraisal organizations. As a result of the Savings and Loan Crisis The Appraisal Foundation (TAF) was formed by these same groups, along with support and input from major industry and educational groups, and TAF took over administration of USPAP.

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 authorized the Appraisal Subcommittee (ASC), which is made up of representatives of the leading U.S. government agencies and non-governmental organizations empowered to oversee the U.S. mortgage and banking system. The ASC provides oversight to TAF.

TAF carries out its work through two divisions – the Appraisal Standards Board (ASB) and the Appraisal Qualifications Board (AQB). The latter group sets forth minimum qualifications for appraisal licensure, and its work has been adopted by all states and territories. The ASB maintains USPAP, and issues updates in January of even numbered years.

U.S. Treasury securities - Obligations of the U.S. government issued by the U.S. Department of the Treasury as a means of borrowing money to meet government expenditures not covered by tax revenues. All marketable Treasury securities have a minimum purchase amount of $1,000 and are issued in $1,000 increments. There are three types of marketable Treasury securities: bills, notes, and bonds.

Treasury bill (T-bill) Short-term U.S. Treasury security having a maturity of up to one year. T-bills are sold at a discount. Investors purchase a bill at a price lower than the face value (for example, the investor might buy a $10,000 bill for $9,700); the return is the difference between the price paid and the amount received when the bill is sold or it matures (if held to maturity, the return on the T-bill in the example would be $300). 

Treasury note Intermediate-term security having a maturity of one to ten years. Notes pay interest semiannually, and the principal is payable at maturity. 

Treasury bond Long-term security having a maturity of longer than ten years. Bonds pay interest semiannually, and the principal is payable at maturity.

The Treasury Department also issues several types of non marketable securities, including savings bonds.

USEFUL LIFE - That period of time over which an asset, such as a building, is expected to remain economically feasible to the owner.

USURY - Charging a rate of interest in excess of that permitted by law.

utility costs - Periodic housing costs for water, electricity, natural gas, heating oil, etc.

U-Value - A window's measure of its insulating ability-low U-value means better insulating ability.

- V -

VA - Department of Veterans' Affairs.

VA Form 26-1880 - The request for Certificate of Eligibility form. Veterans must complete this form in order to be eligible for many VA benefits including the VA Home Loan Guarantee Program.

VA Home Loan Program - This program is a benefit to veterans that allows them to take a home loan mortgage with a guarantee from the VA. The VA guarantees that a certain percentage of the loan will be paid back to the lender even in the case of borrower default.

VA loan - A long-term, low- or no-down-payment loan guaranteed by the Department of Veterans Affairs restricted to those qualified by military service or other entitlements .

VA mortgage funding fee - A premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan.

VACANCY AND BAD DEBT LOSSES - An allowance, often in the 5 % range but varying in specific locales, for vacancies in rental units and uncollectible rents from tenants.

VACANCY FACTOR - An allowance or discount for estimated vacancies (unrented units) in a rental project. The vacancy rate is the ratio between the number of vacant units and the total number of units in a specified project or area.

VACANT WAITING OCCUPANCY OR HELD - Vacancy year round housing units that have been rented or sold and are currently awaiting occupancy, and vacant year round housing units that are held by owners or renters for occasional use (U.S. Census definition).

VALUABLE CONSIDERATION - Valuable consideration is anything to which a value can be attached, given by the promisee to the promiser. It may be:

An act in return for an act;

A promise in return for a promise;

An act in return for a promise.

VALUE - The power of a good or service to command other goods in exchange for the present worth of future rights to income or amenities; the present worth to typical users and investors of future benefits arising out of ownership of a property.

Value-at-Risk (VaR) - Measures the worst expected loss over a given time interval under normal market conditions at a given confidence level.

Vapor Barrier - A form of moisture control including polyethylene sheets, low-perm-rated paints, laminated asphalt-covered building paper, vinyl wall coverings, and foil-type wallpapers.

Variable (v) - The word variable is the same as a variable interest rate on your loan. The APR on your loan is your annual percentage rate, and if it has the letter V next to it then that means that your interest rate is subject to change in the future.

Variable Interest Rate - This is the type of interest rate on a mortgage loan that usually starts out fixed, but after a set period of time, usually 3-5 years, can begin to increase and fluctuate with market trends.

Variable Rate - Also called an adjustable rate, it is an interest rate that changes. The changes in interest rates usually occur with fluctuation in the current market.

VARIABLE RATE MORTGAGE - Mortgage in which the interest rate fluctuates during the term and either payments or balance outstanding are adjusted accordingly.

VENDOR TAKE BACK MORTGAGE - Seller retains an interest, by way of a mortgage from the buyer, for the balance of funds owing to the seller upon closing.

VARIANCE - Permission obtained from governmental zoning authorities to build a structure or conduct a use which is expressly prohibited by the current zoning laws; an exception from the zoning laws.

Vega -  A measure of the change in an option’s price caused by changes in volatility.

VENDEE - The purchaser of realty; the buyer. The buyer under an agreement of Purchase and Sale.

VENDOR - The seller of realty. The seller under an agreement of sale.

Verification of Deposit - This is a financial document that the borrower gives to the lender which verifies the amount of money they have in reserve in the bank. Sometimes lenders want to see a certain amount of money in reserves in order to approve a mortgage loan.

Verification of Employment - This is when a mortgage lender contacts the potential borrower's place of employment in order to verify the information on the loan application.

Very Low Income - Households whose incomes do not exceed 50 percent of the median area income for the area, as determined by HUD, with adjustments for smaller and larger families and for areas with unusually high or low incomes or where needed because of prevailing levels of construction costs or fair market rents.

Veterans Administration - The government agency that offers benefits to military veterans, and in the case of home loans, offers a guarantee that a portion of the loan will be repaid if the borrower defaults.

VOID - Having no legal force or binding effect; a nullity; not enforceable. A contract for an illegal purpose (i.e. gambling) is void.

VOIDABLE - A contract which appears valid and enforceable on its face, but is subject to rescission by one of the parties who acted under a disability, such as being a minor or being under duress or undue influence; that which may be avoided or adjudged void but which is not, in itself, void.

Volatility - A measure of the variability (but not the direction) of the price of underlying instruments.  It is defined as the annualized standard deviation of the natural log of the ratio of two successive prices.

Voluntary Claim - When the owner of a property contents that a legal claim for payment can be placed against the property.

- W -

waive - To give up a claim or right voluntarily, to relinquish.

WAIVER - To voluntarily give up or surrender a right.

WAIVER OF CONDITION - The relinquishment of some right as set out in a condition within an Agreement.

WALK - UP - An apartment building of two or more floors where the only access to the upper floors is by means of stairways.

Walk Away Lease - In the case of a home, a person may have a lease to own agreement, and this allows them to decide at the end of the lease if they want to walk away without purchasing.

Walk Through - This is the final step before moving into a home. After the sellers have moved out of the home the buyers get to walk through the home with the selling agent and make sure it is in the condition is was when they agreed to purchase the property.

Wall Street Journal Prime Rate - This is the rate that banks set on interest for mortgage loans that is posted in the Wall Street Journal based on various banks in order to get an average current market interest rate.

WAREHOUSE - A building used to store merchandise and other materials or equipment.

WARRANTY - A guaranty by the seller, covering the title as well as the physical condition of the property.

WARRANTY DEED - A deed in which the grantor fully warrants good clear title to the premises. Also called a general warranty deed.

WASTE - An improper use or abuse of property by one in possession of land, who holds less than the fee ownership, such as a tenant, life tenant, mortgagor, or vendee.

WEAR AND TEAR - The gradual physical deterioration of property, resulting from use, passage of time and weather. Only property subject to wear and tear is depreciable.

Weighted Average Coupon (WAC) - The weighted average of the gross interest rate of mortgages underlying a pool as of the pool issue date; the balance of each mortgage is used as the weighing factor.

Weighted Average Maturity (WAM) - For an MBS, this is the weighted average of the remaining terms to maturity of the mortgages underlying the collateral pool at the date issue, using as the weighting factor the balance of each of the mortgages as of the issue date.

Whole Loan Advance (WLA) -  An overnight to 35 day fixed rate advance that is priced daily based on the prevailing short term Fed Funds and Discount Note market.  The overnight advance is capped at $50 million per institution.

WOOD FRAME WALL - Load-bearing walls that carry the weight of the roof and floors down to the foundations.

WORKING DRAWINGS - Detailed floor space plans that diagrammatically show all improvements to be made and are designed as instructions to the various contractors involved.

WRAP-AROUND-MORTGAGE - A method of refinancing in which the new mortgage is placed in a secondary or subordinate position. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount, without cashing out or distributing the existence of the first mortgage.

- X -

- Y -

YEAR-TO-YEAR TENANCY - A periodic tenancy in which the rent is reserved from year to year.

YIELD - The return on an investment or the amount of profit, stated as percentage of the amount invested.

Yield Curve - This is a graph that helps people see interest rates and when they occurred at different periods in time.

Yield to Maturity (YTM) -  Concept used to determine the rate of return an investor will receive if a long-term, interest bearing investment such as a bond is held to its maturity date.

- Z -

zero-coupon mortgage - A long-term commercial mortgage that defers all payments of principal and interest until maturity.

Zero Balance - This is when there is nothing left to repay on your mortgage loan.

Zero-Lot Line - This is when a house is constructed on the boundary line of the property.

ZONING - The regulation of structures and uses of property within designated districts or zones. Zoning regulates and affects such things as use of the land, types of structure permitted, building heights, setbacks, and density (the ratio of land area to improvement area).

ZONING AMENDMENT - A change to an existing zoning bylaw to permit the development or use of a property tat does not comply with the existing zoning bylaw.

ZONING BYLAW - A bylaw passed by a municipality to regulate the use of the land and specifically limiting the use of land in certain areas for any purpose other than as set out in the bylaw, and defines exactly what can take place on a parcel of land.

Zoning Ordinances - These are the laws regarding zoning and what is allowed to be built where as well as the codes they have to follow for safe construction practices.




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