- A -
American Association of Homes and Services for the Aging.
American Association of Retired Persons.
- 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.
- A reduction or decrease in amount, degree, intensity or worth.
- 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.
- 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.
- (also referenced as an Abstract Index) represents the central
reference source within the Land Registry system.
- 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.
Bordering upon or next to; the joining or touching of adjoining
land; sharing a common boundary.
- 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.
- 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.
- The expression of the intention of the person receiving an offer
(offeree, usually the seller) to be bound by the terms of the
- A general or specific right ingress and egress to a particular
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 -
called 'Ad Valorem' which refers to the value of your home and
property that your property taxes are based on.
addition to or expansion of land through natural causes. An
increase of land along the shore of a body of water through
- 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.
- A formal declaration made before a duly authorized officer,
usually a Notary Public, by a person who has signed a document.
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.
- A measure of land equaling 43,560 square feet; 4,840 square
yards; 160 square rods.
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
- The number of years which has elapsed since an original
structure was built. This is sometimes referred to as historical
Americans with Disabilities Act (42 U.S.C. 12101 et seq.).
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.
- A contract, which is very one-sided and favors the party who
drafted the document.
- 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.
Refers to those terms requiring apportionment as of the date of
Adjustment Date -
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.
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
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.
- 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 -
proportion to the value, according to value.
- A system of treating waste which involves the pumping of
quantities of air into the sewage to accelerate its breakdown.
- A sworn statement reduced to writing and made under oath before
a Notary Public or other official authorized by law to administer
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.
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.
- 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.
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
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.
That relationship whereby an individual is empowered by an agent
to act on his/her behalf.
- 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.
- 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.
- The total or gross amount for a lease term.
OF PURCHASE AND SALE
- An agreement between the seller (seller) and buyer (purchaser)
for the purchase of real property.
- The rights to use space above the physical surface of the land
while the surface can be used for some other purpose.
- 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.
Acquired member assets.
- Formalizes any mutual agreement between purchaser and seller
that affects an original contract, and which is acceptable to both
- Features, both tangible and intangible, which enhance and add to
the desirability of real estate.
Area Median Family Income.
- 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.
- The time period required to completely retire the debt through
scheduled payments of principal and interest.
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.
- The use of bacteria which can survive without oxygen in the
breakdown of sewage within a waste disposal system.
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."
- Refers to the attachment or incorporation of one parcel of land
within an adjacent municipality.
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.
- 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 -
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
Appraisal Standards Board (ASB) establishes the generally
accepted standards of the valuation profession which is known as
Standards of Professional Appraisal Practice (USPAP).
The Appraiser Qualifications
establishes the minimum education, experience and examination
criteria for appraisers which is known as
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 -
Institute is an international association of professional real
estate appraisers headquartered in
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
- A written summary estimating the value of property and the
conditions and limitations at the time of the appraisal.
- An increase in the worth or value of property due to economic or
related causes, which may prove to be either temporary or
- 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.
- 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.
- 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.
- A transaction freely arrived at in the open market, unaffected
by abnormal pressure or by factors limiting competitive
- The circumstance of being behind in payments, commonly used with
respect to delinquent payments under a mortgage document.
- The combining of two or more abutting parcels of land into one
ownership or use.
VALUATION (TAX ASSESSMENT)
- The value of real property as established by the government for
purposes of computing real property taxes.
- 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.
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 -
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.
- 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.
- An individual or firm who transfers or assigns rights or title
Assumable Mortgage -
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.
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.
- 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.
IN - FACT
- One who is authorized by another to act in his place under a
power of attorney.
- 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.
- 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.
- 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.
- 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.
- 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 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
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.
- 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.
- A contract stating the minimum established tenancy requirements
that are applicable to all tenants and are used in both
residential and IC & I properties.
- 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) -
of 1% (0.01%).
- 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.
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.
- 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
- 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.
- Contoured landscapes areas, normally surrounding commercial or
industrial properties, which act as a buffer within the overall
site plan for that particular enterprise.
(such as renovations and additions) that increases a property's
value, different from routine home maintenance and repairs.
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.
- 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.
- A written agreement by which one person sells, assigns or
transfers his right to, or interest in, personal property to
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.
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
- 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.
- 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 -
made or carried out in good faith; real; sincere; genuine.
certificate serving as security for payment of a debt. Bonds
backed by mortgage loans are pooled together and sold in the
Book Value -
value at which an asset is carried on a balance sheet.
One that mortgages property; a person who applies for and receives
a mortgage loan.
- The perimeters or limits of a parcel of land as fixed by legal
description, which is usually a metes and bounds description.
break or violate an agreement.
- 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.
- 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.
- A wood frame wall with an exterior single layer of brick and
transmits the roof and floor loads down to the foundation.
- 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.
- 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.
- 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.
- 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.
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.
- A strip of land separating one parcel from another.
- 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
- 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.
- A line fixed at a certain distance from the front and/or sides
of a lot, beyond which no building can project.
- 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).
- A method of determining the value of an improvement normally
used in appraising income property.
- 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.
- 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.
- Any undertaking for the purpose of profit, including any
interest in any such undertaking.
- 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.
- Days of week excluding Saturdays, Sundays, and holidays; normal
- Any type of
business which is for sale.
- Taxes levied and due to the appropriate municipality for the
operation of a business as defined by, and located within, that
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 -
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.
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 -
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.
The components of FDIC ratings, which stands for: capital
adequacy, asset quality, management, earnings, liquidity and
- 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.
- A projecting beam or overhanging portion supported at one end
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.
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.
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.
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.
cost of an improvement made either to extend the life of a
property or to increase its value.
- The taxable profit derived from the sale of a capitol asset.
- 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.
- A mathematical process for converting net income into an
indication of value, commonly used in the income approach to
Capped Floater -
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.
- Hinged at one side and can open either inwardly or outwardly.
Materials may include wood, metal, vinyl, or a combination
- 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.
- (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)
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
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
- 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
Once the home is appraised this certifies the fair market value of
certificate of title -
document which confirms that the title to a property is legally
held by the current owner.
- To attest to something as being certain, the truth or fact.
- A cheque which the bank guarantees to be good, and against which
a stop payment is ineffective.
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.
Code of Federal Regulations.
- 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
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.
of payment and/or interest rate changes in an ARM, usually
expressed in months.
- 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.
- An encumbrance on land by way of a mortgage as registered in the
Land Titles System.
- Personal property which is tangible and moveable.
- 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.
Capital Improvement Loan Program.
- 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.
- A person who has an agency relationship with a brokerage.
- A Trust Account set up by a broker to keep a client's monies
segregated from the broker's main Trust Account.
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.
- A mortgage that does not provide for any prepayment of principal
during the term.
- The final stage of consummating a real estate transaction when
the seller delivers title to the buyer, in exchange for the
- 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
- The date set for the completion of a transaction in an Agreement
of Purchase and Sale.
- 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.
- 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.
- The grouping of housing units on less than normal size
homesites, with remaining land being devoted to common areas.
- A written system of standards of ethical conduct.
- Laterally placed wood members that are installed between
opposing rafters approximately halfway up to the attic space.
- 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.
- A loan backed by a promissory note and then further secured by
means of a mortgage on real property.
- 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.
borrower to pay what he owes on a loan.
identifiable unincorporated area located within one hundred and
fifty (150) miles of the Texas-Mexico border that lacks
infrastructure and decent housing.
- 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
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.
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
specifies the terms being offered for a mortgage loan.
Generally means there has been a legally binding commitment of
funds to a specific project to undertake specific activities.
- The costs of operating, managing, maintaining, and repairing a
condominium's common elements and administering the Condominium
- That part of the law, formulated, developed and administered by
the common law courts, mostly unwritten and founded originally on
Community Adjustment and Investment Program
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)
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.
- A situation in which a country, individual, company or region
can produce a good at a lower opportunity cost than that of a
- Payment or reward for performance of service.
- One of two categories of bidders on Treasury securities:
competitive and noncompetitive. Competitive bidders are usually
- (formerly known as the Combines Investigation Act) is a federal
statute addressing many forms of competition.
- 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,
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.
- When two or more persons have a right of ownership at the same
power of the
to seize a
property, or rights in property, without the owner's consent. The
property is taken either for
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
Some states require that the government body offer to purchase the
property before resorting to the use of condemnation.
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.
- A condition in a contract referring to a future event upon the
happening of which the Agreement becomes no longer binding on the
- 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.
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.
- 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.
- Something of value given or promised to make an agreement
Consolidated Plan -
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
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
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
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
- A measurement of the cost of living determined by the Bureau of
- A legally binding agreement between two or more capable persons
for consideration or value.
Contract for Deed -
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.
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 -
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.
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.
- 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 -
that can be converted into a fixed-rate mortgage under the terms
of the loan agreement.
convertibility clause -
clause in some ARMs which allows the buyer (borrower) to change to
a fixed-rate mortgage at a specified time.
mortgage loan not insured by the FHA or guaranteed by the VA.
- 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.
- An adjustable rate mortgage (ARM) that allows a borrower to
switch to a fixed-rate mortgage at a specified point in the loan
The amount that a bond’s price sensitivity differs from what is
implied by its duration.
- The transfer of an interest in property from one individual to
- 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.
term referring to a person, other than the principal borrower, who
signs for a loan. The cosigner(s) assumes equal liability for the
- A form of business organization created by statute law which is
legally considered as a separate entity.
- 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 -
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 -
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.
- An offer by a seller to sell the property, open for an
acceptance for a specified period of time, and offered to
Counter party Credit Risk -
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
- An agreement contained in a deed, which creates a legal
(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
CPD Programs -
Planning and Development Programs.
(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
(CERTIFIED REAL ESTATE BROKER MANAGER)
- Designation awarded by the Real Estate Brokers Managers Council
of the National Association of Realtors.
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.
- A record of how a person has borrowed and repaid debt.
Credit Report -
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
statistical system used to determine whether to grant credit by
assigning numerical scores to various characteristics related to
Credit Spread -
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
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.
A person or
entity (a bank or other lender) who funded the loan and to whom a
debt is owed.
creditor's measure of a consumer's past and future ability and
willingness to repay debts.
(CERTIFIED REAL ESTATE SPECIALIST)
- Designation awarded by the Real Estate Institute of Canada to
persons involved in the sale of residential real estate.
- An original title deeded by the government.
(CERTIFIED RESIDENTIAL SPECIALIST)
- Awarded by the Residential Sales Council of the National
Association of Realtors (US).
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.
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.
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
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.
- A person who receives services from a brokerage, but who does
not have an agency relationship with the brokerage.
- Compensation or indemnity for loss owing to breach of contract,
or a tort (civil wrong).
- 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.
- A valve or plate operated mechanically or manually to regulate
airflow to or from any prescribed point.
- Money owed to repay someone.
- 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
Debt Service Ratio -
ratio of a project’s annual net operating income divided by the
total annual debt service.
- The constitution of a condominium corporation which creates the
condominium and defines the responsibilities of the owners and the
- A legal document, duly executed and delivered, that conveys
title or an interest in real property.
- An imposed restriction in a deed to limit the use of the land.
Deed of Trust -
when the deed is overseen by a trustee who works as a liaison
between the borrower and lender in some states.
- Failure to fulfill a promise or obligation.
Unpaid interest added to the loan balance.
- Ordinary maintenance that is not performed and negatively
affects a property's use and value.
- The authorization given by one party to another to carry out the
specific responsibilities that party has undertaken on behalf of a
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
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.
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
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.
LOAN/LINE OF CREDIT
- An arrangement between the business customer and a financial
institution respecting the maximum amount of credit allowed that
- 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 -
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) -
central securities repository where stock and bond certificates
- References the maximum allowable usage for a given parcel of
land e.g., number of people, amount of residential units, or
square footage .
- Payment of money or other valuable consideration as a pledge for
fulfillment of a contract.
- Any decline in the value of a physical asset, usually resulting
from physical (ordinary wear and tear) deterioration and
functional/ locational obsolescence.
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.
- A legal identification of land or premises.
- One who engages in the subdivision or improvement of land.
- 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,
- 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.
- The repudiation or denial of a claim.
- The open and forthright discussion of relevant matters by an
agent to his/her principal.
Disclosure Committee -
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)
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.
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.
- The process of purchasing the face or remaining value of a
mortgage at a lower cost to increase yield.
- 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.
- An electrical panel providing the interface between the service
entrance wires to a structure and dispersing of power throughout
Department of Defense.
Department of Energy.
- The estate (i.e., property) which derives benefit from an
easement over a servient tenement, as in right-of-way.
- 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.
- 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.
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.
- Representation of two principals (usually seller and buyer) by
the same agent in the same transaction.
due - on - interest -
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 -
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.
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.
- 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.
- 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
- The period over which improvements to real estate contribute to
the value of the property.
- 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.
- 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.
- The day or date upon which something occurs or ceases to occur.
RATE OF INTEREST
- The true rate of interest charged on a mortgage loan.
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
A family in
which the head of the household or a spouse is at least sixty-two
years of age.
- The exterior of a structure usually viewed from the front or
otherwise identified: e.g., side elevation, rear elevation.
(Title II) -
Income Housing Preservation Act.
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.
- The right of a government or municipal quasi-public body to
acquire private property for public use.
Employment Verification -
lender requires employment verification of potential borrowers to
verify their income and job security.
A distressed area in need of sustainable community development. EZ
is designed to afford communities real opportunities for growth
illegal intrusion on someone else's property.
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
VA home loan
benefit are known as entitlement and/or eligibility.
- U. S. Environmental Protection Agency.
- 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.
value of a property beyond any liens against it. Also referred to
as owner's interest.
- Expresses the relationship between cash flow and the equity
invested in a property, usually obtained from comparable
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.
- 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.
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.
-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
- 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 -
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.
- An interest in land or more specifically the degree, quantity,
nature, and extent of interest that a person has in real property.
- A bar to alleging or denying a fact because of one's own
previous actions or words to the contrary.
- The Estoppel Certificate provides a reasonably complete report
on the financial health of the condominium corporation but it is
by no means exhaustive.
- The forced removal, by legal means, of a tenant from the leased
- A written notice to a tenant to vacate the leased premises
within a specified time for infractions of the lease or other
- An agent with the exclusive rights to sell, lease or exchange
the property owned by another for a fixed period.
- A person appointed by testator to carry out the provision of the
Existing Homeowner -
owner-occupant of residential property who holds legal title to
the property and who uses the property as his or her principal
Exotic Option -
option with a more complicated pay-out structure than a plain
vanilla put or call option.
- An opening designed for expansion that is located between
independent segments within a structure.
- The fraction of gross income consumed by expenses.
A precise instruction, either in writing or orally, in which an
authority is granted.
- 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 -
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 -
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
price a property can realistically sell for, based upon comparable
selling prices of other properties in the same area.
comprised of one or more individuals.
Fannie Mae, Federal National Mortgage Association (FNMA) -
corporation created by Congress that purchases and sells
conventional, FHA and VA residential mortgages. Makes mortgage
money more available and affordable.
- A false statement of fact.
- A statement by one party of a material fact, that is untrue, but
is believed to be true.
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.
- 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
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
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
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) -
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
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).
Federal Emergency Management Agency.
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.
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
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 -
mortgage loan insured by the Federal Home Administration.
Federal Home Loan Bank.
- A person to who power or property is entrusted for the benefit
- An agent owes to his/her principal various fiduciary duties such
as competence, obedience, good faith, and full disclosure, and
degree of care and skill that might be expected from an average
person in that trade or profession.
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.
requirement for full and complete accounting, such as details of
all funds held in trust, and all monies handled on behalf of the
- 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
Financial Accounting Standards Board (FASB) -
A board established in 1973 which is responsible for establishing
and interpreting generally accepted accounting principles.
- 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 -
which is the primary lien against a property.
First-Time Home Buyer -
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.
- 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.
- 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
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.
- Charges that do not vary with occupancy, and have to paid
whether the property is occupied or vacant.
- An item that is attached to the real property or building to
become part of it.
- Sheet metal or other material used in roof and wall construction
to shed water.
- A payment structure in which the borrower is not required to
repay any of the principal until the maturity date.
- 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.
- The area, usually low lands, adjoining a watercourse that has
been, or may be covered by floodwater.
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.
Federal National Mortgage Association (Fannie Mae).
FOIA Request -
Freedom of Information Act Request.
- The widen section, usually concrete, at the base or bottom of a
foundation wall, pier or column.
- 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
Forward Rate Agreement (FRA) -
This agreement allows purchasers/sellers to fix the interest rate
for a specified period in advance.
- The rough timber work of a house, including the flooring,
roofing, partitioning, ceiling and beams.
Freddie Mac, Federal Home Loan Mortgage Corporation (FHLMC)
quasi-governmental agency that purchases conventional mortgage
loans from insured depository institutions (savings and loans) and
HUD-approved mortgage bankers.
OF THE REAL ESTATE INSTITUTE)
- Designation to licensed individuals who have completed the Real
Estate Institute of Canada (REIC) education program.
(FELLOW OF THE REAL ESTATE INSTITUTE APPRAISAL SPECIALIST)
- Members who specialize in residential appraisals.
(FELLOW OF THE REAL ESTATE INSTITUTE EXECUTIVE)
- Designation for unlicensed management professionals, who are not
involved in residential or commercial sales.
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.
- 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
Funding Fee -
name of the fee that the VA charges when a veteran uses their Home
Loan Guarantee Program.
future is a contract to buy or sell a standard quantity of a given
instrument, at an agreed price, on a given date.
- G -
- A metal enclosure made of mesh or chain links normally filled
with stone designed to act as a retaining wall.
- 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.
rate of change in the delta of an option for a small change in the
- 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
- 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
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
- 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.
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.
- Government National Mortgage Association (Ginnie Mae).
good faith estimate
estimate on closing costs and monthly mortgage payments provided
by a lender to the homebuyer within 3 days of applying for a loan.
- 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)
governmental agency that provides sources of funds for residential
FHA-insured or VA-guaranteed mortgages.
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
- A lease that provides for specific increases or decreases in
rent at definite times based on specified conditions during the
term of the lease.
- A blended payment plan with regular increases of individual
payments to a predetermined level.
Graduated Payment Mortgage (GPM) -
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) -
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.
- A colloquial expression pertaining to a rule or regulation
placed in force, but exempts various persons or situations owing
to pre-existing conditions.
- 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
legal term for a buyer in mortgage loan paperwork.
- The grantee is the party to whom an interest in real property is
conveyed. The grantor conveys an interest in real property.
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
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
mortgage guaranteed by a third party.
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.
- 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 -
The difference between the actual market value of a security and
the value the Bank is willing to loan to collateralize a member’s
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.
- Home Construction and Acquisition Loan Program.
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.
- 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.
- The act of a tenant retaining possession of the premises longer
than the term expressed in the lease; often referenced as
- 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.
- The HOME Investment Partnerships Act, which is Title II of the
National Affordable Housing Act.
home equity line of credit -
loan against the amount of equity you have in a property. The
equity serves as security for the new loan.
home equity loan
mortgage on the borrower's principal residence, usually for the
purpose of making home improvements or debt consolidation.
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.
- 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 -
within the Department of Veterans Affairs that guarantees a loan
for veterans to purchase homes.
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.
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
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
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.
more persons occupying a housing unit (U.S. Census definition).
Includes manufactured housing and manufactured housing lots.
- 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
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
division or divisions of the department.
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 -
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
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.
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.
- 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
- 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.
- An acronym used primarily in commercial and industrial
leasing/sales to indicate the Heating, Ventilating and
Air-Conditioning facilities within a particular
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 -
- Instrumental Activities of Daily Living.
- Federal Interagency Council on the Homeless.
(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
- International Classification of Impairments, Disabilities and
- Individual Development Account.
- Indian Housing Authority.
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
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.
- 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
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
- 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.
portion of the monthly payment held by the lender to pay for
things like taxes, hazard insurance and mortgage insurance as they
- 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.
- To secure against hurt, loss or danger; to make compensation for
incurred hurt, loss or damage.
- A deed or agreement setting out specific objects and executed by
- Generally an individual who works according to his/her own
methods and judgment.
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
Index Amortizing Swap -
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.
- The act of persuading or in some way influencing the actions
and/or attitudes of others.
- Any project that create new housing within an existing
- 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.
- A form of written legal document.
- 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
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.
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.
- 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.
- The return expressed in percentages earned on an investment each
year. These payments are issued every six months based on an
of interest paid on deposits and other investments determined by
the interaction of the supply and demand for funds in the money
Interest Rate Cap or Interest Rate Ceiling -
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 -
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 -
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 -
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.
construction loan made during completion of a building or a
project which is replaced by a permanent loan once the building is
- 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.
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.
- 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.
- Incapable of being recalled or revoked; unchangeable,
- J -
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
- Ownership of land by two or more persons whereby, on the death
of one, the surviving tenants take the whole interest in the
- A real estate project undertaken by a group of investors in
which the parties share in the project including any profits or
nonconforming loan that is larger than the limits set by the
Federal National Mortgage Association (FNMA) or Federal Home Loan
Mortgage Corporation (FHLMC) guidelines.
- 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.
- 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
- Refers to the authority to act and the defined limitations of
Jurisdiction - 2:
A unit of state or local government.
- K -
- Real estate deemed highly valuable because of its location.
- 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
lender or investor's right to share any income from a property, in
addition to loan payments.
- L -
A credit reporting term that stands for Liquidity, Asset, Capital,
- Includes the surface of the earth, air space, and subsurface
- 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
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
- 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.
- 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.
- One component of a disposal system normally built using two or
more rows of buried distribution pipe.
- 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).
- A cash payment or other settlement made by the tenant to the
landlord to terminate a lease.
Lease-Purchase Agreement -
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
Lease-Purchase Mortgage Loan -
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.
company that loans you the money to purchase a home.
Lender Appraisal Processing Program -
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
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
- 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.
- A brief, unsubstantiated statement of an appraiser's opinion of
value or value range.
- 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.
- 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.
- Permission given by an authority to engage in an action for a
- A general reference in real estate to the regulatory controls
imposed on real estate practitioners by a governing body.
- 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
- An interest in property that continues for the life of an
individual and terminates in favor of others in the event of
Lifetime Cap -
adjustable rate mortgage this is the highest interest rate than
can be charged over the life of the loan.
Income Housing Preservation and Resident Homeownership Act.
(Federal) Low-income Housing Tax Credit.
- Responsibility for the debts of a business in relation to the
amount of investment one makes within that enterprise.
- 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.
- An investment arrangement that limits the partner's liability to
the amount invested and also limits the profit he/she can make.
- A line of credit is a highly flexible form of interim financing
that is based on the past performance and strength of personal or
- A horizontal structural member (beam) that supports the load
over an opening, such as a door or window.
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
- 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.
- There are three major listing types:
- These are usually written arrangements in which the owner gives
one or more brokers authority to find a purchaser for the
- Gives one
broker the authority to offer the property for sale (lease,
exchange, etc.) during a specified time period.
- 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.
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 -
the lender agrees to loan money to a borrower based on information
like income, debt, assets, employment, credit worthiness, and
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
- The ratio of the principal amount of the loan to the lending
value of the property.
Loan Servicing -
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) -
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.
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
The period of time during which prepayment is prohibited.
London Interbank Offer Rate (LIBOR) -
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
- The general topography of the lot.
Low Income Neighborhood -
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
- M -
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
- 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.
- 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.
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.
- 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.
- The concept of positioning based on the premise that market
- 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.
- 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.
- A title that a court of equity considers to be so free from
defect that it will legally force its acceptance by a purchaser.
To calculate the value of a financial instrument or portfolio of
instruments based on the current market rates or prices of the
- 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.
- 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.
The date at
which a note or bond is due.
- 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.
- Mortgage Credit Certificate Program.
- A claim against a property which is filed by a person or
corporation in the land registry office for labour, services or
Membership Cooperative -
An organization owned by its members.
- In terms to
parties to a contract, any person declared to be mentally
incompetent is incapable of contracting.
- 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
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
Military Base Closing -
Areas affected by military closings as defined by the Department
of Defense at 32 CFR part 176.
SIZE / AREA
- Normally set out in square feet/meters or acres/hectares upon
which a building may be built in compliance with local zoning
- 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.
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.
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.
- 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.
- A planned development that provides at least two types of uses
(e.g., retail/office, office/residential, etc.) within a single
- A change in the terms of the mortgage note, such as a reduction
in the interest rate or a change in maturity date.
- Term often found in a property, intended to cover slight,
unimportant or insubstantial inaccuracies of which both parties
are willing to assume the risk.
- A conveyance of property to a creditor (mortgagee) as security
for payment of a debt, with a right of redemption upon payment of
Mortgage Backed Security
A type of security backed by mortgages.
Mortgage Banker -
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 -
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) -
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).
interest rate charge for borrowing the money for the mortgage. It
is used to calculate the interest payment on the mortgage each
Mortgage Interest Rate -
The percentage of interest you agreed to pay in your mortgage loan
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.
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.
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.
- 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.
length of time that a mortgage is scheduled to exist. Example: a
30-year mortgage term is for 30 years.
used in mortgage loan paperwork that refers to the lender.
legal paperwork of the mortgage loan this refers to the borrower.
- Metropolitan Statistical Area.
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.
- 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.
- N -
- 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
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
National Credit Union Administration
The federal agency that oversees and insures the federal credit
union system, and is funded by its members.
- 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
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
- Those reserved lands held by the Crown for the use and benefit
of native people.
- National Community Development Initiative.
- National Center for Farm worker Health.
- 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
loan in which the interest rate is adjusted periodically.
- 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.
- An agreement in which the tenant pays the rent and certain
expenses connected with the leased premises.
- An agreement in which the tenant pays all maintenance and
operating expenses, plus property taxes.
(TRIPLE NET) LEASE
- An agreement in which the tenant pays maintenance and operating
expenses, property taxes, and insurance.
- 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 -
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.
- Not In My Backyard.
requiring very little loan documentation. These loans usually
require large (25%) down payments.
- In a mortgage contract, a statement that prohibits a new buyer
from assuming a mortgage loan without the approval of the lender.
loan that does not conform to Federal National Mortgage
Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC) guidelines. Jumbo loans are nonconforming.
- Use of land prohibited by the terms of he current approved
quarters for persons not under care or custody.
nominal interest rates
Current stated rates of interest paid or earned.
- This refers to the physical deterioration that occurs while
using the property without negligence.
- 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.
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.
- Information about or warning of something. Notice may be by
personal observation or by written or oral message from another
Notice of Default -
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.
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
- 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.
- In real estate activity, a nuisance normally refers to an act
that affects the enjoyment and/or use of a person's property.
- Having no legal force or effect. This term is commonly found in
an Agreement of Purchase and Sale that involves a condition and
- O -
- 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.
- 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
Office of Community Services.
- 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) -
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.
- 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.
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.
- A mortgage allowing the borrower to receive advances of
principal from the lender during the life of the loan.
- 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).
- 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.
- Mortgage containing some form of prepayment privilege for the
partial or total reduction of principal with or without penalty.
A term that stands for operations.
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.
- A right given by the owner of property to another (for valuable
consideration) to buy certain property within a limited time at an
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
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
Other Vacant -
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.
housing unit containing more than one person per room. (U.S.
- 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.
household that owns the housing unit it occupies. (U.S. Census
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
- P -
This term stands for principal and interest.
- Abbreviation for principal, interest, taxes
- Abbreviation for principal, interest, taxes,
insurance and other monthly non-housing costs.
fee assessed against a PFI when the aggregate principal balance of
mortgages funded or purchased under a delivery commitment falls
below the tolerance specified.
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.
- A discharge of a finite portion of the mortgaged lands, usually
given after the mortgagor has prepared a specific portion of the
Any jurisdiction (as defined in these section) that has been so
designated by HUD in accordance with 92.105.
- 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.
- Must consist of at least two partners. These individuals pool
their resources of capital, ability and effort.
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.
long-term mortgage (10 years or more).
housing unit lacking complete kitchen or bathroom (U.S. Census
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
borrower places money in a pledged savings account, and these
funds, plus interest earned, are gradually used to reduce mortgage
- 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.
- 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.
- The date of completion/closing is normally possession date,
unless otherwise provided in the Agreement.
- 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 -
document that gives one person the full legal right and authority
to act for another person.
- The right of the mortgagee to force the sale of a property
without judicial proceedings, should default occur.
Predevelopment Costs -
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
privilege in a mortgage which allows the borrower to make payments
before they are due.
Fees for early repayment of debt, allowed in 36 states and the
District of Columbia.
Primary Housing Activity
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.")
part of the First Time Homebuyer Program under the Housing Finance
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 -
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.
- Public Service Announcement.
Public Housing -
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 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
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.
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.
- 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 -
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
Pre-purchase counseling -
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.
- 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.
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.
- A tenant who
occupies a significant part of the space available within a given
building. The more common term used is anchor tenant.
- The interest rate commercial banks charge their most
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.
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.
- 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.
- 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).
- 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.
- This principle holds that economic and social forces are
constantly at work and that changes caused by these forces affect
- 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.
- 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.
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.
- 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.
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.
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).
- 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.
- 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.
- 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.
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.
- 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.
- 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 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.
- 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 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.
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
- 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 -
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.
proportionally divide amounts owed by the buyer and the seller at
- A common term often used to refer to potential buyers of a
- 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.
- Exception or limitation relating to an overall statement or
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 -
- 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.
Rate of interest used to calculate whether or not a borrower
qualifies for a mortgage.
guidelines used by lenders to decide whether to loan money to an
qualified acceptance, conditional acceptance
acceptance for a loan (or other contract) provided that certain
conditions are met.
qualified buyer -
person who has been pre-approved for a mortgage loan.
Qualifying Ratios -
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.
quantity or amount, a specified portion.
- 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.
- A general release of all claims or rights to a parcel of land.
- 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 -
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.
- 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.
- 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.
- 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.
- 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 -
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.
- An individual or firm licensed under the Real Estate Trading Act
who represents a principal (e.g., a seller or buyer) in a real
- The regulatory body for the real estate industry created by a
provincial statute, the Real Estate Trading Act.
- 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 -
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
- A provincial statute, proclaimed in January 1997 to create
self-regulation of the real estate industry in Nova Scotia.
real 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.
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.
- The term REALTOR® refers to real estate professionals in Canada
who are members of the Canadian Real Estate Association (CREA).
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.
- Rural Economic and Community Development agency or programs it
administers. It has replaced the Farmer's Home Administration.
Community housing development organization, nonprofit
organizations, local units of government and public housing
The cancellation of a contract.
Money paid to the lender for recording a home sale with local
authorities, making it public record.
- 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.
Obtaining a new mortgage loan on a property already owned, often
to replace existing loans.
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) -
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 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
- A discharge by an act and/or a written document in which some
claim, right, or interest in a property is relinquished.
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.
- The compensation paid for the temporary use and/or occupation of
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.
- 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
Rental Assistance -
Rental assistance payments provided as either project-based rental
assistance or tenant-based rental assistance.
Rental Housing -
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.
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 -
occupied housing unit that is not owner occupied, including units
rented for cash and those occupied without payment of cash rent.
- 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.
- 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
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.
- A special fund established for the purpose of some contemplated
Rescission Agreement -
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).
- 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
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
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
A mortgage in
which the lender makes periodic payments to the borrower using the
borrower's equity in the home as collateral.
- 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.
- 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.
- Request For Proposals.
- An addition or amendment to a contract, and are frequently
encountered in lease documents.
- 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
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
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.
- 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
RIGHT - OF
- The right to travel over another's land, more or less
frequently, according to the nature of the easement.
- 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.
- (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.
- 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.
- 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
- 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.
- 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.
- A tract of land dedicated for the purposes of public travel.
- 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
- 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.
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.
- Resolution Trust Corporation.
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.
used to describe insulation -- higher R-values represent better
insulation and greater resistance to heat flow.
- S -
- State Administrative Agency.
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
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
satisfaction of mortgage, release of mortgage
The document issued by the mortgagee when the mortgage loan is
paid in full.
Savings & Loan
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.
- 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
- An impression made on a document to confirm in a formal manner
the signing of a contract.
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 Existing Housing Certificate Program.
Section 8 Program
Statewide Housing Assistance Payments Program.
Supportive Housing for the Elderly administered by HUD.
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 of the Sarbanes-Oxley Act that requires certifications by
the CEO and CFO for 10-Ks and 10-Qs.
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 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.
- 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
- 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
- The property or a portion of property offered as security.
- 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.
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).
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.
- 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.
- 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.
- Land over which an easement exists in favor of the dominant
- A component of some finance charges, such as the fee for
triggering an overdraft checking account into use.
Service Needs -
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
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.
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
Settlement Sheet -
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)
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
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
- A level, continuous pad between the foundation top and the
bottom of the framing system.
- 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.
- U.S. Census Bureau Survey of Income and Program Participation.
- A parcel of land that is improved to the extent that it is ready
for its intended purpose.
- 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.
- 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.
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
household of two to four persons which includes at least two
- 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
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.
- 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
- A detailed and exacting statement of what is to be done,
including requirements, dimensions, and materials as in the case
of a proposed building.
- 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.
- 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
A one-year commitment to funding with a floating rate, adjusted
daily based on the overnight Fed Funds market.
- 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.
- 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.
- 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 -
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.
- That law which requires certain contracts to be in writing and
signed by the party to be charged therewith in order to be legally
- That law pertaining to the period of time within which certain
actions must be brought to court.
- Community Development Block Grant Program's Small Towns
- 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
- One of the series of vertical wood structural members (usually
2-inch nominal thickness) used as supporting elements in walls and
Designation - An
Appraisal institute designation held by real estate solutions
providers who are experienced in the analysis and valuation of
residential real property.
- 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.
- 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
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- An agreement whereby a prior mortgagee agrees to subordinate or
give up their priority position to an existing or anticipated
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.
- 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 -
housing, including Housing Units and Group Quarters, that has a
supportive environment and includes a planned service component.
Supportive 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.
- 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.
- 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.
- 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.
- 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
-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.
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
Systemic Risk -
The risk that a market crisis places on the financial system as a
- T -
stands for taxes and insurance.
- A written document conveying title to property repossessed by
the government due to default on tax payments.
- A general statutory lien imposed against real property for
failure to pay taxes.
- 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).
- 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.
- 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.
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.
Quarterly report required by the SEC each quarter. Provides a
comprehensive overview of a company’s state of business.
- 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.
- 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.
- 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
- 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.
- 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.
- Ownership of property vested in one person alone, and not held
jointly with another; also called Several Tenancy or Sole Tenancy.
- 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.
Rental assistance payments provided as either project-based rental
assistance or tenant-based rental assistance.
Tenant-Based (Rental) Assistance
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.
- 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.
- 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.
- The relationship of a landlord to the tenant depends on ancient
feudal doctrines. Over the years, four major categories have
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.
- 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
- 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.
- 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.
- 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
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.
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.
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.
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
- A fixed period of time.
- 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.
- 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
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.
general term encompassing savings banks, savings and loan
associations, and credit unions.
Thrift Institutions Advisory Council
- 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 clause in a contract, which emphasizes that punctual
performance is an essential requirement of the contract.
- 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.
- This carries with is the right to encumber, convey, or otherwise
transfer the interest for all future time.
- 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.
- The lawful ownership of property; also, the means of evidence by
which the owner has lawful ownership thereof.
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.
- 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.
- An examination of the public records to determine what, if any,
defects there are in the chain of title.
- Surface features of land, such as elevation, ridges, slope and
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
- 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).
- 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.
- Articles of personal property annexed to leased premises by the
tenant, as a necessary part of the tenant's trade or business.
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.
When a title is transferred to a new owner there are state and
local taxes that need to be paid.
- 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
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.
- 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.
- Articles installed by a commercial tenant under the terms of a
lease and removable by the tenant before the lease expires.
- 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 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.
- 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).
- 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.
- 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.
- 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
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
- U -
- Universal Federal Accessibility Standards.
The variable on which a futures or option contract is based.
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.
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.
- 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.
- 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
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
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.
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.
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).
Intermediate-term security having a maturity of one to ten years.
Notes pay interest semiannually, and the principal is payable at
security having a maturity of longer than ten years. Bonds pay
interest semiannually, and the principal is payable at maturity.
Department also issues several types of non marketable securities,
including savings bonds.
- That period of time over which an asset, such as a building, is
expected to remain economically feasible to the owner.
- Charging a rate of interest in excess of that permitted by law.
- Periodic housing costs for water, electricity, natural gas,
heating oil, etc.
A window's measure of its insulating ability-low U-value means
better insulating ability.
- V -
- 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.
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
premium of up to 1-7/8 percent (depending on the size of the down
payment) paid on a VA-backed loan.
BAD DEBT LOSSES
- An allowance, often in the 5 % range but varying in specific
locales, for vacancies in rental units and uncollectible rents
- 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 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.
- 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.
Measures the worst expected loss over a given time interval under
normal market conditions at a given confidence level.
form of moisture control including polyethylene sheets,
low-perm-rated paints, laminated asphalt-covered building paper,
vinyl wall coverings, and foil-type wallpapers.
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.
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.
- Mortgage in which the interest rate fluctuates during the term
and either payments or balance outstanding are adjusted
- Seller retains an interest, by way of a mortgage from the buyer,
for the balance of funds owing to the seller upon closing.
- 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.
A measure of the change in an option’s price caused by changes in
- The purchaser of realty; the buyer. The buyer under an agreement
of Purchase and Sale.
- 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
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.
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.
no legal force or binding effect; a nullity; not enforceable. A
contract for an illegal purpose (i.e. gambling) is void.
- 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.
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
When the owner of a property contents that a legal claim for
payment can be placed against the property.
- W -
give up a claim or right voluntarily, to relinquish.
- To voluntarily give up or surrender a right.
- 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.
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.
- A building used to store merchandise and other materials or
- A guaranty by the seller, covering the title as well as the
physical condition of the property.
- A deed in which the grantor fully warrants good clear title to
the premises. Also called a general warranty deed.
- 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.
- 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
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
- Load-bearing walls that carry the weight of the roof and floors
down to the foundations.
floor space plans that diagrammatically show all improvements to
be made and are designed as instructions to the various
- 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 -
- A periodic tenancy in which the rent is reserved from year to
- The return on an investment or the amount of profit, stated as
percentage of the amount invested.
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 -
- A long-term commercial mortgage that defers all payments of
principal and interest until maturity.
This is when there is nothing left to repay on your mortgage loan.
This is when a house is constructed on the boundary line of the
- 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
- A change to an existing zoning bylaw to permit the development
or use of a property tat does not comply with the existing zoning
- 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.
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