ACCELERATION CLAUSE - A clause used in an installment note and mortgage (or deed of trust), which gives the lender the right to demand payment in full upon the occurrence of a certain even, such as failure to pay an installment payment by a certain date, change of ownership without the lenders consent, destruction of the property or any other event which endangers the security of the loan.

ACKNOWLEDGEMENT - A written declaration by a person executing an instrument, given before an officer authorized to give an oath (usually a notary public), stating that the execution if of his own volition.

ACQUISITION COSTS - Costs of acquiring property other than purchase price: escrow fees, title insurance, lenders fees, etc.

ADJUSTABLE RATE MORTGAGES (ARMs) - Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan.

A.L.T.A. (AMERICAN LAND TITLE ASSOCIATION) - An organization composed of title insurance companies, which has adopted certain insurance policy forms to standardize coverage on a national basis.

AMORTIZE - To reduce a debt by regular payments of both principal and interest, as opposed to interest only payments.

ANNUAL PERCENTAGE RATE (A.P.R.) - The yearly interest percentage of a loan as expressed by the actual rate of interest paid, in a uniform manner. For example: 7% add-on interest would be much more than 7% simple interest, even though both would say 7%. The A.P.R. is disclosed as a requirement of federal truth in lending statutes.

APPRAISAL - An opinion of value based upon a factual analysis.

APPRAISER - One who is trained and educated in the methods of determining the value of property through analysis of various factors and use of formal appraisal process, which determine said value.

APPRECIATION - An increase in value of property due to either a positive improvement of the area or the elimination of negative factors. Commonly, and incorrectly, used to describe an increase in value through inflation.

ASSESSED VALUE - Value placed on property for property tax purposes by the tax assessor.

ASSIGNMENT - A transfer of title to another of any property, real or personal, or of any rights or estates in said property. Common assignments are of leases, mortgages, deeds of trust or notes, but the general term encompasses all transfers of title.

ASSUMPTION OF MORTGAGE - Agreement by a buyer to assume the liability under an existing note secured by a mortgage or deed of trust. The lender usually must approve the new debtor in order to release the existing debtor (usually the seller) from liability.

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B

BALLOON NOTE - A note calling for periodic payments which are insufficient to fully amortize the face amount of the note prior to maturity, so that a principal sum known as a "balloon" is due at maturity.

BANKRUPTCY - Proceedings under federal bankruptcy statutes to relieve a debtor (bankrupt) from insurmountable debt. The bankrupt's assets are distributed by the court to the creditors as full satisfaction of the debts in accordance with certain priorities and exemptions. The debtor petitions for voluntary bankruptcy. Involuntary, is petitioned for by the creditors.

BASIS POINT - A finance term meaning a yield of 1/100th of 1% annually.

BINDER - A notation of coverage on an insurance policy, issued by an agent and given to the insured prior to issuance of the policy.

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C

CAP - A maximum amount of charge. For example: An Adjustable Rate Mortgage with a 5% rate cap could not adjust the interest rate by more than 5%.

CLOSING COSTS - Expenses incidental to a sale of real estate such as loan fees, title fees, appraisal fees, etc.

COMMUNITY PROPERTY - Property owned in common by, and acquired by joint effort of, a husband and wife, which was not acquired as separate property.

CONTINGENCY - Commonly, the dependence upon a stated event that must occur before a contract is binding. For example: The sale of a house, contingent upon the buyer obtaining financing.

CONVENTIONAL LOAN - A mortgage or deed of trust not obtained under a government insured program (such as FHA or VA).

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D

DEED - Actually, any one of many conveyancing or financing instruments, but generally a conveyancing instrument given to pass fee title to the property upon sale.

DEED OF TRUST - An instrument used in place of a mortgage. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), and reconveyed upon payment in full.

DEFAULT - Failure to fulfill a duty or promise or the discharge of an obligation; omission or failure to perform any act.

DEFERRED MAINTENANCE - Repairs necessary to put a property in good condition. A concern of a purchaser. An owner may have an account for such maintenance.

DEPOSIT - Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money.

DEPRECIATION - Loss of value in any asset brought about by age, physical deterioration or functional or economic obsolescence.

DISBURSEMENTS - Payments made during the course of an escrow or at closing.

DOWN PAYMENT - Cash portion paid by a buyer from his own funds as opposed to that portion of the purchase price, which is financed.

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E

EARNEST MONEY - Good faith money given by the buyer with an offer to purchase.

EARNINGS - Money received for labor or personal services rather than a return on capital, although corporate income from all sources is described as 'earnings'.

E.C.O.A. (EQUAL CREDIT OPPORTUNITY ACT) - Regulation "B" of Federal Regulations, prohibits the lender from discriminating in lending policies.

EQUITY - The value, which an owner has in property over and above all liens held against it.

ESCROW - The deposit of instruments and funds with instructions to a neutral third party to carry out the provisions of a set agreement or contract; when everything is deposited and recorded to carry out the instructions, it is called a completed escrow.

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F

FAIR CREDIT REPORTING ACT - A federal law giving one the right to see their credit report so that errors may be corrected. A lender refusing credit based on a credit report must inform the buyer which company issued the report and the buyer may see the report without charge if refused credit.

FAIR MARKET VALUE - The price that would be negotiated by a willing buyer and a willing seller in a reasonable time.

FANNIE MAE (see F.N.M.A.)

FEDERAL FAIR HOUSING LAW - Title VIII of the Civil Rights Act, which forbids discrimination in the sale or rental of residential properties because of race, color, sex, religion or national origin.

F.H.A. (FEDERAL HOUSING ADMINISTRATION) - A federal agency, which insures first mortgages, enabling lenders to loan a very high percentage of the sale price.

F.H.L.M.C. (FEDERAL HOME LOAN MORTGAGE CORPORATION) (FREDDIE MAC) - A semi-governmental purchaser of mortgages in the secondary market.

F.I.C.O. - Fair, Isaac and Company. A company set out to develop statistical evaluations of credit reports and assigned a corresponding "Risk Score" to each based on information contained in the credit report.

FINANCING COSTS - The costs involved in borrowing money to build or purchase real estate(this includes interest).

FIRE INSURANCE - Insurance against loss or damage by fire, which may also include other coverage.

FIRST MORTGAGE - A mortgage having priority over all other voluntary liens on a specific property.

FIXED RATE MORTGAGE - A mortgage having a rate of interest, which remains the same for the term of the mortgage.

F.N.M.A. (FEDERAL NATIONAL MORTGAGE ASSOCIATION) (FANNIE MAE) - A private corporation dealing in the purchase of first mortgages, at discounts.

FORECLOSURE - A proceeding in or out of court, to extinguish all rights, title, and interest of, the owner(s) in order to sell the property to satisfy a lien against it.

FULLY AMORTIZED LOAN - A loan of equal, regular payments, which cause the principal and interest to be completely paid by the due date.

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G

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GINNIE MAE) - A federal association, working with FHA, which offers special assistance in obtaining mortgages and purchases mortgages in a secondary capacity.

GOOD FAITH ESTIMATE - Something done with good intentions, without knowledge of fraudulent circumstances or reason to inquire further.

GRANT DEED - Also, sometimes, called a "Warranty Deed". One of the many types of instruments used to transfer real property. Contains warranties against prior conveyances or encumbrances.

GROSS INCOME - Total income before any expenses or taxes are deducted.

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H

HAZARD INSURANCE - Insurance protecting against loss caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

HOMEOWNER'S ASSOCIATION - An association of people who own homes in a given area, usually formed by the builder, for the purpose of maintaining or improving the quality of the area. Required by statute in some states for Condominiums, Townhouses and Planned Unit Developments and the builder's as well as the duties of the association are controlled by statute.

HOME WARRANTY INSURANCE - Private insurance insuring the buyer against defects (usually in air conditioning, plumbing, heating and electrical) in the home he has purchased. The period of insurance varies and both new and re-sale home may be insured.

HOUSING AND URBAN DEVELOPMENT, DEPARTMENT OF (HUD) - The federal department responsible for the major housing programs in the United States, such as F.H.A.

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I

IMPOUND ACCOUNT - A trust type account held by a lender for payment of taxes, insurance premiums, mortgage insurance premiums or other periodic debts against real property in order to protect their interests. Funding the impound account is done at loan closing and accumulation included in the monthly mortgage payments.

INSTRUMENT - Any writing having legal form and significance, such as a deed, mortgage, will, lease, etc.

INTEREST RATE - The percentage of a sum of money, which is charged for its use for a specified period of time.

INTEREST RATE CAP - The maximum interest rate increase of an Adjustable Rate Mortgage. For example: a 7% loan with a 5% interest rate cap would have a maximum interest rate for the life of the loan, which could not exceed 12%.

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J

JOINT NOTE - A promise to pay, executed by two or more persons, each having equal liability.

JOINT TENANCY - An undivided interest in property, taken by two or more joint tenants. The interests must be equal, accruing under the same conveyance and beginning at the same time. Upon the death of a joint tenant, the interest passes to the surviving joint tenant(s), rather than to the heirs of the deceased.

JUDGEMENT LIEN - An involuntary lien against the property of the debtor.

JUMBO LOAN - A loan on residential property for an amount greater than that allowable under conventional loan limits as set by FHLMC and FNMA.

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L

LATE CHARGE - A penalty charged for failure to pay an installment payment on time. The amount is usually set by statute or must be "reasonable".

LEASE - A contract between an owner of real property (lessor) and a tenant (lessee) setting forth conditions upon which the tenant may occupy and use the property and the term of occupancy.

LENDER - Any person or entity advancing funds, which are to be repaid.

LIEN - An encumbrance against property for money, either voluntary or involuntary. Example: Deed-of-Trust, Judgment, Taxes, etc.

LISTING - An agreement between an owner of real property and a real estate agent, whereby the agent agrees to secure a buyer or tenant for specific property at a certain price and terms in return for a fee or commission.

LOAN APPLICATION - The form used to obtain the borrower's information and define the terms of the loan for which they are applying in a uniform manner. It gives the name(s) of the borrower, place of employment, salary, bank accounts, credit references, assets, etc. It is the source of information on which the lender makes his decision on whether or not to approve the loan.

LOAN CLOSING - When all conditions have been met, the escrow officer authorizes the recording of the trust deed and the disbursal of loan funds. This process is sometimes called "funding" the loan.

LOAN ORIGINATION FEE - A one time set up fee charged by the lender.

LOAN SERVICING - The collection, bookkeeping and follow-up of a loan while in repayment.

LOAN TO VALUE (LTV) - The ratio, expressed as a percentage, of the loan amount to the lesser of the sales price or appraised value (value) of real property.

LOSS PAYABLE CLAUSE - A clause in a Hazard Insurance policy listing the priority of claims in the even of loss of the property insured.

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M

M.A.I. (MEMBER APPRAISAL INSTITUTE) - A designation given through experience, education and examination indicating the appraiser is a member of the American Institute of Real Estate Appraisers.

MARKET DATA APPROACH - Appraising the value of a property by comparing the sales price of similar properties recently sold in the area. The degree of similarity of the properties, distance from the subject property and terms of the sale are important considerations. One of the three methods used in the appraisal process and usually the most reliable on residential properties.

MARKET PRICE - The price a property brings in a given market regardless of pressures, motives or intelligence.

MARKET VALUE - The highest price that a willing buyer would pay and a willing seller accept, both being fully informed, and the property exposed for a reasonable period of time on the open market.

MISREPRESENTATION - A statement or conduct by a person, which represents to another a fact, which is not true. Failure to disclose is also misrepresentation.

MORTGAGE - The instrument by which real property is hypothecated as security for the repayment of a loan.

MORTGAGE BANKER - A company providing mortgage financing with its own funds. These funds are usually borrowed and the financing is either short term or, if long term, the mortgages are sold to investors within a short time.

MORTGAGE BROKER - One who, for a fee, brings together a borrower and lender and handles the necessary applications and paperwork for the borrower to obtain the loan against real property. As defined by Nevada Statutes, handles "private investor" loans.

MORTGAGE COMPANY - As defined by Nevada Statutes: the same as above only does not handle "private investor" loans, only institutional investor loan products.

MORTGAGEE - The party lending the money and receiving the mortgage.

MORTGAGE INSURANCE (PMI) - Insurance written to protect the mortgage lender against loss due to default, thus enabling the lender to lend a higher percentage of the sales price.

MORTGAGOR - The party who borrows the money and gives the mortgage.

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N

NONRECURRING CLOSING COSTS - The one-time costs of obtaining the loan (i.e.: title policy, appraisal, recording, etc.), which are not recurring.

NOTE - A unilateral written agreement acknowledging the debt and containing an express and absolute promise of the signer to repay the debt under specified terms, amounts and conditions.

NOTICE OF DEFAULT - A notice filed with the county recorder to show that the borrower is in default (usually, behind in payments) under a deed of trust or mortgage.

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O

OFFER - A presentation or proposal for acceptance, in order to form a contract. To be legally binding, an offer must be definite as to price and terms.

ORIGINAL COST - The purchase price of a property paid by the present owner.

ORIGINATION FEE - A lender fee charged to the borrower for handling and making a real estate loan.

OVER IMPROVEMENT - An improvement, excessive in cost, size or type in relation to land value or value of surrounding properties and for which one could not reasonably expect to receive a compensating return.

OWNER OCCUPIED - Property physically occupied by the owner(s) of record.

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P

PAR VALUE - The value of the mortgage without discount or buydown.

PERSONAL PROPERTY - Any property, which is not designated, by law, as real property.

PHYSICAL DEPRECIATION - Loss in value caused by wear and tear, disintegration, use and action of the elements or lack of maintenance. When economically feasible to correct, it is called "curable"; when not "incurable".

PI (PRINCIPAL AND INTEREST) - Used to indicate that only principal and interest are included in a quoted monthly payment on real property.

PITI (PRINCIPAL, INTEREST, TAXES AND INSURANCE) - Used to indicate that the four major portions of a monthly payment on real property are included in the quoted payment.

PLANNED UNIT DEVELOPMENT (PUD) - A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.

PRELIMINARY TITLE REPORT - A report showing the condition of title before a sale or loan transaction. After completion of the transaction, a title policy is issued.

PREPAYMENT PENALTY - A penalty specified under a note, mortgage or deed of trust and imposed when the loan (or a percentage thereof) is paid before it is due. These are usually for a set period of time from loan inception (i.e.: one year, three years, five years, etc.).

PRINCIPAL - (1) The person giving authority to an agent. (2) The amount of debt, not including interest.

PRIVATE MORTGAGE INSURANCE (PMI) - Insurance against loss by a lender in the event of default by the borrower. The premium is paid by the borrower and included in the mortgage payment.

PROFIT AND LOSS STATEMENT - A statement showing the income and loss of a business over a stated time, the difference being the profit or loss for the period.

PROMISSORY NOTE - (Also called, simply, "Note") A promise in writing, and executed by the maker, to pay a specified amount during a limited time, or on demand, or at sight, to a named person, or on order or to bearer. Establishes personal liability for repayment of the debt.

PROPERTY TAX - Generally, a tax levied on both real and personal property; the amount of the tax is determined by the assessed value of the property.

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Q

QUITCLAIM DEED - A deed operating as a release; intended to pass any title, interest or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor.

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R

RANGE - A division of land in the government survey, being a six-mile wide row of townships, running North and South, and used in legal descriptions.

RATE INDEX (INDEX) - An index used to adjust the interest rate of an Adjustable Rate Mortgage (i.e.: COFI, LIBOR, 6 month T-Bill, etc.)

REAL ESTATE - (1) Land and anything permanently affixed to the land, such as buildings, fences and those things attached to the buildings, such as light fixtures, plumbing and air conditioners, or other such items, which would be personal property if not attached. (2) May refer to rights in real property at well as the property itself.

REAL ESTATE BOARD - A board composed of regular members (licensed real estate brokers, sales agents) and affiliated members (lenders, title companies, appraisers, etc.) for the purpose of self-governing and furthering the real estate business in a given area.

REAL PROPERTY - (see: REAL ESTATE)

REALTOR - A designation given to a real estate broker or sales agent who holds active membership in a real estate board associated with the National Association of Realtors.

RECONVEYANCE - An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt and the debt has been fully discharged. Most commonly used upon payment in full of a trust deed. Also called a "Deed of Reconveyance" or "Release"

RECORDATION (RECORDING) - Filing instruments for official public record (and notice) with the County Recorder's Office.

REGULATION Z (TRUTH IN LENDING) - Requires that a borrower be advised in writing, prior to signing and in a specific, uniform manner, of the interest rate and all costs and fees incurred in a proposed loan transaction.

REHABILITATION - Restoring a property to satisfactory condition without drastically changing its plan, form or style or architecture.

REINSTATEMENT - (1) Payment of a note, mortgage, deed of trust, etc. to bring it from default to good standing. (2) Restoring the previously used entitlement of a veteran to enable the veteran to purchase real property under the VA program.

REMAINING ECONOMIC LIFE - Number of years between the time of an appraisal and the point of time when an improvement becomes economically valueless.

REPLACEMENT COST - The current cost to construct an exact duplicate of the subject property having the same utility, design, layout and quality of workmanship, but using modern materials.

R.E.S.P.A. (REAL ESTATE SETTLEMENT PROCEDURES ACT) - A federal statute effective June 20, 1975, requiring disclosures of certain costs in the sale of residential (one to four family) improved property.

RIGHT OF WAY - An easement either by grant, by fee, by condemnation or by agreement giving another the right to pass over a strip of land set aside to construct a roadway, or to use as a roadway or the right to construct through and over the land, telephone or electric power lines or the right to place underground water mains, gas mains or sewer mains.

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S

SECOND MORTGAGE - A mortgage, which ranks after a first mortgage in priority.

SEPARATE PROPERTY - Property owned by a husband or wife in which the other has no legal ownership interest.

SETTLEMENT STATEMENT (HUD-1) - A statement prepared by broker, escrow or lender giving a complete breakdown of costs and disbursements involved in a real estate sale.

SIMPLE INTEREST - Interest computed on the principal alone, as opposed to compound interest.

SINGLE FAMILY RESIDENCE - A general term originally used to distinguish a house designed for use by one family from an apartment house. More recently, used to distinguish a house with no common area from a planned development or condominium.

STATEMENT OF INFORMATION (STATEMENT OF IDENTITY) - A confidential form filled out by either buyer or seller (or both) to determine if any liens are recorded against either.

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T

TAX LIEN - (1) A lien for nonpayment of property taxes. (2) A federal income tax lien. May attach to all property of the one owing the taxes.

TAX RATE - The ratio of dollars of tax per hundred dollars of assessed valuation expressed as a percentage of valuation.

TITLE - The evidence one has of right to possession of land.

TITLE INSURANCE - Insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrances.

TRANSFER - The act by which the title to property is conveyed from one person to another.

TRUST DEED - An instrument used in place of a mortgage. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), and reconveyed upon payment in full.

TRUSTEE - (1) one who is appointed, or required by law, to execute a trust. (2) One who holds title to real property under the terms of a deed of trust.

TRUSTOR - The borrower under a deed of trust. One who deeds his property to a trustee as security for the repayment of a loan.

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U

UNDERIMPROVEMENT - An improvement, which is deficient in size or quality in relation to the site on which it is built.

UNDERWRITING - The analysis by a lender to determine the borrower's ability, capability and willingness to repay a proposed loan, the proper structuring of said loan and that the collateral value is there.

UNDUE INFLUENCE - Taking any fraudulent or unfair advantage of another's

USURY - Charging a rate, or amount, of interest that is greater than permitted by law.

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V

VALUATION - The estimating of value. Appraisal.

VALUE – (1) The usefulness of an object. (2) The monetary worth of an object. (3) In real estate lending, the lesser of the sales price or appraised value of a property.

VERIFICATION – Confirmation of truth, correctness or authenticity.

VESTED – Ownership rights, even though on a land contract or subject to a mortgage or deed of trust.

VETERAN’S EXEMPTION – A tax exemption for veteran’s or their widows.

VOLUNTARY LIEN – A Lien placed against real property by the voluntary act of the owner. Most commonly, a mortgage or deed of trust.

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W

WAIVE – To knowingly abandon, relinquish or surrender a right, benefit or claim.

WARRANTY DEED – A deed used to convey fee title to real property, which contains warranties to clear title. (Also see: Grant Deed).

WRAP-AROUND MORTGAGE (also called A.I.T.D. or ALL INCLUSIVE TRUST DEED) – A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage. The mortgage under the wrap-around collects a payment based on its face value and then pays the first mortgagee.

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Z

ZONING – The division of a city or county by legislative regulations into areas (zones), specifying the uses allowable for the real property in these areas.

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