First Mortgage Glossary of Terms Flashcards
Abandoned Property
property status indicating the property has been abandoned, is not being maintained, and is not offered for sale or rent
Abstract of Title
a written history of the title transaction or condition bearing on the title to a designated real estate. It covers the period from the original source of title to the present and summarizes all subsequent instruments of public record by setting forth their material parts.
Acceleration Clause
a provision in a mortgage contract that gives the lender the right to demand payment of the entire principal balance if the loan is in default
Accrued Interest
Interest earned for the period of time since interest was last paid
Acknowledgement
a formal declaration, attached to or a part of an instrument, made before a duly authorized office (usually a notary public) by the person who has executed the instrument, which declared, the executive to be his free act and deed
Acre
a measurement of land that is 43,560 square feet
Action to Quiet Title
a court action to remove any interest or claim to the title to real property. To remove a cloud on the title.
Administrator
a person appointed by a probate court to administer the estate of a person who died intestate (without a will)
Ad Valorem
“According to the value” Used in connection with taxation.
Advance
in real estate, a partial disbursement of funds under a note. Most often used in a construction loan.
Advance Commitment (Conditional)
a written promise to make an investment at some time in the future if specified conditions are met
Adverse Possession
the right by which someone occupying a piece of land might acquire title against the real owner, if the occupant’s possession has be actual, continuous, hostile, visible, and distinct for a statutory period at time
Affidavit
Sworn statement in writing before a proper official, usually a notary
Agent
one who legally represents another, called a principal, from who authority has been derived
Agent
one who legally represents another, called a principal, from who authority has been derived
Agreement for Sale
a written document in which the purchaser agrees to buy certain real estate (or personal property) and the seller agrees to sell under stated terms and conditions. Also called the sales contract, binder, or earnest money contract.
Alienation
to transfer real property from one person to another.
ALTA- American Land Title Association
a national association of title insurance companies, abstractors, and attorneys, specializing in real property law. The association speaks for the title insurance and abstracting industry, and establishes standard procedures and title policy forms.
Amenity
an aspect of a property that enhances its value (e.g., off-street reserved parking within a condominium community, the nearness of good public transportation, tennis courts, or a swimming pool)
Amortization
gradual debt reduction. Normally, the reduction is made according to a predetermined schedule of installment payments.
Amortization Schedule
Table showing the amounts of principal and interest due at regular intervals and the unpaid balance of the loan after each payment is made.
Annual Percentage Rate (APR)
a rate which represents the relationship of the total finance charge (interest, loan fees, and points) to the amount of the loan
Application
a form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security
Appraisal
a report by a qualified person setting forth an opinion or estimate of value. An appraisal is the process by which this estimate is obtained
Appraised Value
an opinion
Appraised Value
an opinion of value reached by an appraiser based upon knowledge, experience, and a study of pertinent data
Appreciation
an increased in value, the opposite of depreciation
Appurtenance
anything attached to the land and thus part of the property, such as a barn, garage, or an easement
Assessed Value
the value that a taxing authority places upon real or personal property for the purpose of taxation
Assessment
process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment
Assignee
one to whom property or a right is assigned or transferred
Assignment of Mortgage
a document that evidences a transfer of ownership
Assignor
one who transfers or assigns a right of property
Assumption
a written agreement by one party to pay an obligation originally incurred by another
Assumption Fee
the fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage
Assumption of Mortgage
assumption by a purchaser of the primary liability for payment of an existing mortgage or deed of trust. The seller remains secondarily liable unless specifically released by the lender
Attachment
Seizure of defendant’s property by court order as security for any judgment the plaintiff may recover in a legal action
Balance Sheet
financial statement showing assets, liabilities, and the net worth as of a specific date
Balloon Mortgage
mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at the end of the term
Balloon Payment
The unpaid principal amount of a mortgage or other long term loan due at a certain date in the future
Bankrupt
a person, firm, or corporation, who, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court appointed trustee
Basis Point
1/100 of 1 percent. Used to describe the amount of change in yield in many debt instruments, including mortgages
Beneficiary
the person designated to receive the income from a trust, estate, or from a trust deed
Bill of Sale
document in writing that transfers title to personal property
Bill of Sale
document in writing that transfers title to personal property
Binder, Insurance
written evidence of temporary hazard or title coverage that only runs for a limited time and must be replaced by a permanent policy
Blanket Mortgage
a lien on more than one parcel or unit of land frequently incurred by subdivides or developers who have purchased a single tract of land for the purpose of dividing it into smaller parcels for sale or development
Bona Fide
in good faith without fraud
Bona Fide
in good faith without fraud
Borrower
One who receives the funds with the expressed or implied intention of repaying the loan in full
Breach
violation of a legal obligation
Break Even Point
in residential or commercial property, the figure at which occupancy income is equal to all required expenses and debt service
Broker
one who for a commission or a fee brings parties together and assists in negotiating contracts between them
Building Code
the local regulations that control design, construction, and materials used in construction. Based on safety and health standards
Bundle of Rights
the rights or interests that a person has in a property. It is the exclusive right of an individual to own, possess, use, enjoy, and dispose of real property
Buy-Sell Agreement
an agreement entered into by an interim and a permanent lender for the sale and assignment of the mortgage to the permanent lender when a building has been completed. Often the mortgagor is a party to this agreement on the theory that the mortgagor should have a contractual right to insist that the permanent lender buy the mortgage
Call Provision
in the mortgage deed of trust, a clause giving the mortgagee or beneficiary the right to accelerate payment of the mortgage debt in full on a certain date or on the happening of specified conditions
Capital
Money used to create income, the accumulated wealth of a person or business
Capitalization Rate
rate which is believed to represent the proper relationship between real property and the net income it produces
Cash Flow
income from an investment after subtracting from gross income all operating expenses, loan payments, and the allowance for the income tax attributed to the income
Cash-on-Cash Return
Rate of return on an investment measured by the cash returned to the investor based on the investor’s cash investment without regard to income tax savings or the use of borrowed funds
Certificate of Occupancy
written authorization given by a local municipality that allows a newly completed or substantially completed structure to be inhabited
Certificate of Occupancy
written authorization given by a local municipality that allows a newly completed or substantially completed structure to be inhabited
Certificate of Title
A statement furnished by an abstract or Title Company or an attorney to a client stating that the title to real estate is legally vested in the present owner
Chain of Title
the history of all the documents transferring title to a parcel of real property starting with the earliest existing document and ending with the most recent
Chattel
Personal Property
Closing
conclusion or consummation of a transaction. In real estate, closing includes the delivery of a deed, financial adjustments, the signing of the notes, and the disbursement of funds necessary to the sale or loan transaction
Closing Cost
Expenses incidental to a sale of real estate, such as loan fees, title fees, appraisal fees, and others
Closing Statement
financial disclosure giving an account of all funds received and expected at closing, including escrow deposits for taxes, hazard insurance, and mortgage insurance for the escrow account
Cloud on Title
any conditions revealed by title search that adversely affects the title to real estate. Usually, a cloud on title cannot be removed except by a quitclaim deed, release, or court action
CMB Certified Mortgage Banker
Professional designation of the mortgage banking industry
Coinsurance
a sharing of insurance risk between insurer and insured depending on the relation of the amount of the policy and a specified percentage of the actual value of the property insured at the time of loss
Coinsurance
a sharing of insurance risk between insurer and insured depending on the relation of the amount of the policy and a specified percentage of the actual value of the property insured at the time of loss
Collateral
any property pledged as security for a debt
Collection
procedure followed to bring the mortgage account current and to file the necessary notices to proceed with foreclosure when necessary
Commercial Loan
mortgage loan on property that produces income
Commission
agents fee for negotiating a real estate or loan transaction
Commitment
agreement, often in writing, in which a lender agrees to loan money to a borrower under certain conditions
Commitment Fee
any fee paid by a borrower to a lender for the lender’s promise to lend money at a specified date in the future. The lender may or may not expect to fund the commitment
Community Property
in some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse
Common Law
an unwritten body of law based on general custom in England and used to extent in the Untied States
Comparables
an abbreviation for comparable properties used for comparative purposes in the appraisal process (Are facilities of reasonably the same size and location with similar amenities. Comparables are also properties which have been recently sold, which have characteristics similar to property under consideration, thereby indicating the approximate fair market value of the subject property
