Glossary of Terms
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Earnest Money - a deposit made by a purchaser of real estate to show good faith.
Easement - the right, privilege, or interest that one party has in the land of another.
Easement by Necessity - the right of an owner to cross over another’s property for a special necessary purpose.
Easement by Prescription - continued use of another’s property for a special purpose can convert to permanent use if certain conditions are met.
Egress - a means of access or exit.
Eminent Domain - the right of the government or a public utility to acquire property for necessary public use by condemnation, but the owner must be fairly compensated.
Employer-Assisted Housing - a special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.
Encroachment - a building, part of a building, or obstruction that physically intrudes upon, overlaps, or trespasses upon the property of another.
Encumbrance - any right to or interest in land that affects its value, including mortgage loans, unpaid taxes, easements, junior liens, or deed restrictions.
Equal Credit Opportunity Act (ECOA) - a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equitable Conversion - a legal doctrine in some states in which, under a contract of sale, buyers and sellers are treated as though the closing has taken place in that the seller in possession has an obligation to take care of the property.
Equitable Title - the interest held by one who has agreed to purchase, but has not yet closed the transaction.
Equity - The value of the unencumbered interest in real estate as determined by subtracting the total of the unpaid mortgage balances plus the sum of any current liens against the property from the property’s fair market value.
Escheat - the reversion of property to the state in the event that the owner dies without leaving a will and has no legal heirs.
Escrow - an agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.
Escrow Account - An account from which funds can be disbursed only for specified reasons; i.e. the money is held in trust for a specific use. In lending, these accounts are most often used to hold and disburse real estate taxes and hazard insurance premiums which have been paid in advance (usually on a monthly basis) by the borrower.
Escrow Analysis - the periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.
Escrow Collections - funds collected by the loan servicer and set aside in an escrow account to pay borrower expenses such as property taxes, mortgage insurance, and hazard homeowners insurance.
Escrow Disbursements - the use of escrow funds to pay real estate taxes, homeowners insurance, mortgage insurance, and other property expenses as they become due.
Escrow Payment - the portion of a borrower\’s monthly payment that is held by the loan servicer to pay for taxes, hazard homeowners insurance, mortgage insurance, lease payments, and other items as they become due. Known as \"impounds\" or \"reserves\" in some states.
Estate - the degree, nature, and extent of interest that a person has in real property.
Estate at Sufferance - the wrongful occupancy of property by a tenant after the lease has expired.
Estate for Life - see Life Estate.
Estate Tax - a tax on the value of property left by the deceased, subject to certain tax rules.
Estoppel - a doctrine of law that stops one from later denying facts which that person once acknowledged were true and others accepted on good faith.
Eviction - legal proceeding by a lessor (landlord) to recover possession of property.
Exchange - under Section 1031 of the IRS Tax Code, like-kind property used in a trade or business or held as an investment can be exchanged tax-free, subject to certain conditions.
Exclusive Listing - a written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner\’s right to sell the property alone without the payment of a commission.
Exculpatory Clause - provision in a mortgage allowing the borrower to surrender the property to the lender without personal liability.
Facade - the outside front wall of a building.
Face Value - the dollar amount, shown by words and/or numbers on a document.
Fair Credit Reporting Act - a federal law that allows individuals to examine and correct information used by credit reporting services.
Fannie Mae (FNMA) - Federal National Mortgage Association, a federally chartered corporation that purchases mortgages and packages them to sell as securities.
Federal Fair Housing Law - a federal law that forbids discrimination on the bais of race, color, sex, religion, or national origin in the selling or renting of property.
Federal Housing Administration (FHA) - an agency within HUD that administers many loan programs designed to make housing more available.
Fee Agreement - An agreement between a borrower and a broker which normally specifies the relationship between them and the amount of compensation to the broker.
Fee Simple - absolute ownership of real property.
Fiduciary Responsibility - An obligation to act in the best interest of another party. This type of obligation typically exists when one person places special trust and confidence in another person and that responsibility is accepted.
First Mortgage - That mortgage which is recorded at the earliest time. The time of recording is the sole criteria. Size of loan and type of mortgage are immaterial. When the first mortgage is paid off and released, the second mortgage (if any existed) becomes the first mortgage.
Fixed Payment Mortage - a loan secured by real property which features a periodic payment of interest and principal which is constant over the term of the loan.
Fixed Rate Mortgage - A mortgage with an interest rate that remains the same through the life of the loan.
Floodplain - A level land area subject to periodic flooding from a contiguous body of water.
Foreclosure - The process by which the mortgagor’s (borrower’s) rights to a property are terminated. While the general process is similar from state to state, the actual procedures tend to vary greatly.
FRBO - for rent by owner.
Freddie Mac (FHMLC) - Federal Home Loan Mortgage Corporation, a federally chartered corporation that purchases mortgages and packages them to sell as securities.
FSBO - for sale by owner.
Fully Amortized Adjustable-Rate Mortgage - A mortgage that amortizes, or pays down, the balance of a loan.
Gable Roof - one with a triangle, with the ridge forming an angle at the top and each eave forming an angle at the bottom.
Gain - an increase in money or property value.
Garden Apartments - a housing complex whereby some or all tenants have access to a lawn area.
General Contractor - one who constructs a building or other improvement for the owner or developer.
General Lien - a lien that includes all of the property owned by the debtor, rather than a specific property.
General Warranty Deed - a deed in which the grantor agrees to protect the grantee against any other claim to title of the property.
Gentrification - the displacement of lower income residents by higher income residents in a neighborhood.
Graduated-Payment Mortgage(GPM) - A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until year three or five, then remains fixed.
Grantee - the party to whom title to real property is conveyed.
Grantor - the party who gives the deed.
Gross Debt Service - the amount of money needed to pay principal, interest and taxes, and sometimes energy costs. If the dwelling unit is a condominium, all or a portion of common fees are excluded, depending on what expenses are covered.
Gross Monthly Income - Income before deductions for taxes, social security, saving plans, court ordered child support, etc.
Gross Rent Multiplier - the sales price divided by the gross annual rental rate.
Ground Lease - one that rents the land only.
Habendum Clause - The \"to have and to hold\" clause that defines the quantity of the estate granted in the deed.
Hard Money Loan - A loan that is underwritten with the condition and value of the property as the primary criteria for approval. Secondary issues may include the credit of the borrower, the ability of the borrower to repay the loan and/or the ability of the borrower to manage the property or successfully complete a rehab and sell the property. Owner occupancy, debt ratios and other issues are seldom a factor. Appraisals rather than purchase prices are used to determine value. Cash out purchases are often allowed and are another key benefit. These loans are usually approved within days and are often funded in two weeks or under with times as short as two or three days not uncommon. The cost for the benefits of speed of funding, lax underwriting and other advantages is typically a moderately high interest rate (usually low to mid teens) and high points (usually 5 to 10). (See definition of "underwriting" below.)
Hazard Insurance - Insurance to provide compensation if the improvements are damaged or destroyed. It is almost always a requirement of loans.
Hereditaments - property, personal and real, capable of being inherited
Hiatus - A gap between two parcels of land that is not included in the legal description of either property.
Highest and Best Use - the use that is most likely to produce the greatest net return to the land and/or building over a given period.
Holdover Tenant - a tenant who remains in possession of leased property after the expiration of the lease term.
Home Equity Loan - In the most literal sense, this expression applies to virtually all loans (first mortgages and second mortgages, fixed and adjustable interest rates, credit lines and fully amortizing loans, etc.) placed on an owner occupied property when the loan-to-value after the Home Equity Loan closes is no higher than 100%. That is, it is a loan secured by the available equity of an owner occupied residential property.
Homeowner Association (HOA) - an organization of the homeowners in a particular subdivision, planned unit development, or condominium created to enforce deed restrictions and manage common elements of the development.
Homeowners’ Warranty - A special insurance policy that covers certain home repairs for a specified amount of time.
Homeowner’s Insurance (Hazard Insurance) - insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards. The policy typically combines personal liability insurance and property hazard insurance coverage for a dwelling and its contents. See also homeowner\’s insurance.
Homestead - status provided to a homeowner’s principal residence by some state statutes to protect the home against judgments up to specified amounts.
Homestead Exemption - in some jurisdictions a reduction in the assessed value allowed for one’s personal residence.
Housing and Urban Development (HUD) - a federal government agency established to implement certain federal housing and community development programs.
Housing Code - local government ordinance that sets minimum standards of safety and sanitation for existing residential buildings.
Hypothecate - to pledge somehing as security without having to give up possession of it.
Glossary of Terms
A - D, E - H, I - L, M - P, Q - T, U - Z
