Loan Glossary

Commercial Mortgage Loan Glossary of Capital Finance Definitions

Defining Lending Terms and Loan Definitions in Helping to Understand the World of Commercial and Multifamily Loan Finance, Commercial Capital Mortgage Loan Markets, Investment Income property Loans and Commercial Funding in Today's Business Money Loan Solutions for the Commercial Financial Industry.

11th District Cost of Funds Index (COFI) Loan:

This slow moving index reflects the weighted-average interest rate paid by the 11th Federal Home Loan Bank District savings institutions for savings, checking accounts, and advances from the FHLB, and other sources of funds. The 11th District represents the savings institutions (savings & loan associations and savings banks) headquartered in Arizona, California and Nevada. Since the largest part of the 11^th District Cost Of Funds index is interest paid on savings accounts, this index lags market interest rates in both uptrend & downtrend movements. As a result, Adjustable loans or variable rate mortgage loans are tied to this index rise (and fall) more slowly than rates in general, which is good if rates are rising but not so good if rates are falling. COFI, which an abbreviation of "Cost of Funds Index, based on the Cost of Funds of the 11th District of the Federal Home Loan Bank. It is this market index that can used to determine the mortgage loan interest rate changes on variable rate or adjustable rate loans.

401k/403b Loan:

Finance Managers of these retirement saving type plans may at times allow client's to finance their loans against monies accumulated in their savings plans. The amount of monies borrowed must be repaid back in time in order to avoid any serious penalty finance charges. 401k/403b is an employer-sponsored retirement investment savings plan which allows individuals to set aside tax-deferred income for retirement savings or for emergency type purposes. These 401(k) savings plans are provided by small and large employers that are private corporations. The 403(b) savings plans are provided by small to large employers that are not-for-profit organizations.

A:

An S&P commercial real estate property rating for a long term issuer credit rating. Example, a borrower or obligor that has an investment property rated 'A' has a strong capacity to meet its financial commitments, but may be susceptible to the adverse effects of economic changes in circumstances and/or economic conditions for obligors in a higher rated category.

AA:

An S&P commercial real estate property rating for a long term issuer credit rating. Example, a borrower or obligor that has an investment property rated 'AA' has a much stronger capacity than 'A' to meet its financial commitments. It is the next positive step up in property worth from the highest rated.

AAA:

An S&P commercial real estate property rating for a long term issuer credit rating. Example, a borrower or obligor that has investment property rated 'AAA' has the highest capacity to meet its financial commitments. 'AAA' is the highest issuer credit rating that can be assigned by Standard & Poor's. These ratings range from 'AA' to 'CCC', and may be modified over time by the addition or subtraction sign to help show the relative investment standing within the major credit rating categories.

Ability To Pay Loan:

When a borrower fills out and completes loan application, lenders will review his or her financial ability to meet their past, current and future loan debt obligations.

Abstract Of Title Loan:

Title insurance companies offer a history of all title purchase transactions on real estate property. This is public information that can be found in the public records which can affect a particular tract of real estate. Lenders require a condensation or summary of the essential parts of all recorded instruments related to title that can affect a particular piece of real estate that is arranged in the lending order to which they were recorded.

Acceleration Clause Loan:

An acceleration clause is a contract by which the time for payment of a debt or loan is advanced, usually by making the financial debt obligation immediately due and payable because of a breach or negative condition, such as a failure to pay an installment debt on time or when due. It is a lender or bank provision written in a promissory note that specifies lender conditions that a lender may advance time when the entire mortgage loan debt is secured by the mortgage which becomes due. The loan acceleration clause, benefits lenders by giving them the right to demand capital loan payments of the entire outstanding loan balance, if monthly payments are late or missed.

Acceptance Loan:

An indication or manifestation by the offeree that he to she is willing to be bound by such terms and conditions of said offer. Acceptance is a buyer's or seller's agreement to enter into a contract and to be bound by the terms of the offer on both sides.

Accommodator Loan:

A holder of money, an intermediary who acts as the facilitator when a borrower sells a real estate investment property and has a profit. This profit will be taxed unless given to an accommodator to hold while the borrower goes out and purchases a new investment property. At which time, the accommodator returns the monies back to the borrower so that the profit can be shifted to a new investment property. The accommodator is necessary in facilitating the tax-deferred exchange aiding the borrower in acquiring and selling property in an exchange to aid the taxpayer in complying with Section 1031 exchange and all applicable tax rules.

Accounts Receivable Financing/Factoring Loan:

It is the selling or financing of a business's accounts receivables. If sold at a discount or not, lenders will factor this in and assume the company's credit risk to include account debt holders allowing the business to receive cash payments as the debtors settle their accounts. If financed, lenders will base their loan off of the income generated by the account receivables less expense when determining the loan structure as no real estate is involved.

Account Termination Fee Loan:

This fee is often charged when you pay in full and thereby terminate your loan, or home equity line of credit during before it is due. Paying the loan balance down to zero does not count as a termination.

Accrue Loan:

The build up or amass of interest, accumulating interest charges over time.

Accrued Interest Loan:

Interest is built up on a loan, which has accumulated to a specific date.

Acknowledgment Loan:

Primarily given by notary publics, such formal and legal declarations are issued by an authorized officers/notary publics who have signed a legal instrument that whomever is party to the loan documents are signing in the individual's act. This is a declaration made by a person or persons to a notary public, or by a public official authorized to take such acknowledgments, that an instrument/document was executed by the person who gave the declaration and that it was made in a free and voluntary act.

Acquiring Financial Institution Loan:

Merchants and business owners alike, who offer credit card transactions are required to maintain an account with an acquiring financial institution to receive or allow credit capital for credit card transactions. Credit card totals are deposited into the merchant's account minus any transaction fees.

Acquisition and Development Loan or A&D Loan:

An investment commercial financing loan that provides development and construction loans for subdivision projects. The capital used is for the real estate purchase and preparation of raw land or entitled land to build office buildings, shopping centers, hotels, industrial complexes, condominium developments, or residential home subdivisions. Acquisition and development A&D loans usually include capital financing for the development of the streets, curbs and utilities. The source of loan repayment is either from a take-out loan, or permanent loan once the project has been built, or by the sale of individual units.

Acreage Loan:

The real estate land mass covering 43,560 square feet which is a two dimensional measure of land equaling 160 square rods, 10 square chains and 4,840 square yards.

Additional Principal Payment Loan:

A loan payment made by a borrower of more than the scheduled principal amount due or required in order to reduce the outstanding capital balance of the loan, can save on interest over the life of the loan and/or pay off the loan early by making an additional Principal Payment. Extra money included with a loan payment in order to pay off the loan amount owed faster can also be considered this practice which reduces the amount of interest paid.

Adjustable Rate Loan:

Floating rate money or Variable rates offer more risk due to the possibility that the low interest rate could one day increase. However, because you are assuming some of the financial risk, the lender will generally reward you with a lower initial finance interest rate. These low payment loans are the best options for borrowers who do not plan on keeping the loan for the entire loan term. Adjustable rate mortgages (ARM's), give a home loan that permits lenders to adjust the interest rate periodically during the life of the loan on a semi-controlled basis of changes on a specified financial market index. Adjustable Rate Mortgages offer mortgage loans that are subject to changes in interest rates up or down; when rates change, ARM monthly payments may increase or decrease at intervals determined by the lenders loan documents; these changes in monthly payment amounts, however small or large, are usually subject to a Cap rate or ceiling. Adjustable rate mortgage loans, also known as ARM mortgages, floating rate money or a floating rate mortgage where the interest rate changes over time based on a specified index rate and margin. These loans can be for permanent loans such as a refinance or purchase, but are predominantly used for construction financing of residential and commercial real estate properties. Interest rate changes are made at prescribed times, intervals and within prescribed limits called caps or ceilings, which are defined in the mortgage contract documents. Adjustable rate mortgages are where the initial interest rate given can adjust periodically up or down following a specific market loan index given. Adjustable Rate Mortgage (ARM) is mortgage capital that permits a lender to adjust the rate of interest rate upwards or downwards in accordance with a specified index. Variable rate loans can fluctuate up and down, with interest rates that can shift quickly according to the market rate index that is selected when a loan issued. Most adjustable rates start off low(Teaser) for the first year or two, but then monthly interest rate payments can go higher or lower when the rates adjust. Interest rates Adjust periodically adjust in accordance to a specific market indicator.

Adjusted Available Income Loan:

This is income that is remaining in your pocket after your taxes and basic living allowances have been subtracted.

Adjusted Balance Loan:

This is a profit method by which credit card issuers subtract all finance payments made during the month and then add finance charges.

Adjusted Basis Loan:

The overall cost of a borrower's real estate property ownership in time. The adjusted basis formula allows for property cost based on the purchase price, capital improvements and depreciation. Calculating the adjusted basis is done by take the initial cost of the property, then add all cost done for capital improvements during ownership, and then subtract for depreciation on the real property during that period.

Adjusted Gross Income Loan:

The total gross income of a commercial real estate building, operating at a 100% occupied, less allowances for estimated vacancies based on its funding location.

Adjustment Date Loan:

The calendar date when the monthly interest rate changes on an adjustable rate loan or floating rate mortgage loan.

Adjustment Interval Loan:

A time period interval between interest rate changes in the interest rate for an adjustable-rate loan. Typically, adjustment rate intervals are within six months, to one, three, five and seven year interest rate adjustments.

Adjustment period Loan:

A period that elapses between the adjustment dates for adjustable rate mortgages, typically six months or longer. Adjustment intervals on adjustable rate mortgages are based on the time between changes in the interest rate or monthly payment within typically one, three, five or seven years, depending on the chosen index.

Administrator Loan:

A person legally appointed by a court of law to immediately take possession of real property of a person or persons who have either died or lost control without leaving a will. The administrator is required to make sure that the debts are being paid if possible, along with the distribution of property rights to those who are entitled by law.

Ad Valorem Loan:

A Latin word meaning "According to Value". This popular financial phrase is used to describe the mortgage tax base on the assessed value of real estate property.

Adverse Action Loan:

A negative financing decision to not grant credit towards the amount requested , or according to the loan terms requested.

Adverse Action Notice Loan:

A document with explanations/reasons as to why a borrower's credit application was denied or turned down.

Adverse Possession Loan:

A negative possession by one a party of real property, which belongs to another. This adverse manner is deemed unfavorable to the interest of the recorded real property owner. It is the A right of an occupant of real estate to acquire superior against a recorded land owner. This type of possession has been perceived as actual, hostile, visible and ultimately continuous for a required legal statutory period. The purpose is to promote the productive use of real estate and to give title to one who is putting the land to use.

Affiant Loan:

An admission of one who swears to, and affirms his or her statement is true in a legal affidavit.

Affidavit Loan:

A legal written instrument, stating that he or she has made this statement under oath before a notary public or other judicial court officer. A sworn statement or official declaration reduced to writing, and sworn to be affirmed before an officer who has authority to administer an oath or affirmation.

Affirmative Coverage Loan:

Legal provisions made by title companies that issue real estate title insurance policies. This coverage allows the insurer to agree to indemnify oneself against loss due to a specific risk, not generally covered by standard title policies.

Affordability Analysis Loan:

A pre-qualification or preliminary analysis, of the borrower's ability to afford a loan purchase. This pre-qualification or affordability income and expense analysis takes into consideration financial factors such as income, liabilities and available funds against the anticipated taxes and insurance for the home along with estimated closing costs.

Agency Loan:

A legal binding relationship resulting from an agreement or contractual obligation, implied or expressed, written or oral, whereby one person is called the agent and the other person is employed by another, usually called the principal to do certain acts in dealing with third parties.

Agent Loan:

Any one person, partnership, association or corporation which is authorized or employed by another, usually called the principal, to act for, on behalf of, and/or subject to the control of the latter.

Agreement Loan:

A legal and binding contract, which is made between two or more parties.

Alienation Loan:

A commercial or residential real estate property transfer of real property by one person to another.

All Inclusive rate Loan:

A financial premium for title insurance that includes the cost of real estate title search and title insurance examination, as well as risk premium. Title insurance is priced with an all inclusive rate, in others, the policy is priced with an insurance risk rate along with the cost of search and examination which is separately priced.

All Inclusive Trust Deed or AITD Loan:

Also know as a wraparound mortgage, results when an existing assumable loan is then combined with a new loan, ensuing is in an interest rate somewhere between the old interest rate and the new current market interest rate. Payments are usually made to a second lender or previous homeowner who then will forward the payment(s) to the first lender after taking his or her additional amount off the top.

Amenities Loan:

Amenities in real estate refer to a set of circumstances in regards to the specific location, outlook or access to a park, beach, lake, highway, view or the likeness in which enhance the pleasantness or desirability of said real estate and thereby contributes to the overall pleasure and enjoyment of the occupants. An amenity is a real estate feature of real property that enhances the attractiveness and increases the occupant's overall satisfaction. While these features may or may not be essential to the property's use, amenities can include pleasant or desirable locations near water, transportation, scenic views, etc. More common man-made amenities include swimming pools, tennis courts, community buildings, laundry rooms and other recreational type facilities. An amenity is a feature of the home or property area that serves as a benefit to the real estate buyer or renter that is not necessarily to its use, but may be natural such as water, location, forest or other man-made features such as a pool, spa, gym or flower garden.

American Land Title Association (ALTA):

This is known as the trade association of the insurance title policy industry for real estate, which adopts certain insurance policy forms to standardize insurance coverage on a nationwide basis in the U.S.A.

Amortization (Amortize)Loan:

A repayment over time of a loan, either a mortgage loan, auto loan, business loan, or student loan through monthly installment payments of principal and interest. It is the reduction of the principal of a debt in regular, periodic installments. Amortization is used as the retirement of the principal or capital on a loan over a specified time and at a specified interest rate. These monthly payments are based on the amount borrowed and due at specified schedule intervals to allow one to own his or her property at the end of the agreed upon amortized time period. Amortization is a process of time that calculates the annual principal and interest on a loan through regularly scheduled monthly installments over periods of 5, 10, 20, 25, and 30 year loans. It is the gradual repayment of a loan by periodic installments. This gradual repayment of installments is a guide to paying back the loan, and is a loan process of spreading costs over the term of a loan. Amortization is paying back and paying off over time the reduction of debt through regular payments of principal and interest over a designated period of time. A loan period or length of lending time over which the principal loan portion of a mortgage is scheduled to be paid down through periodic mortgage payments by a borrower. Amortization Schedule Loans are a simple timetable for loan payments. Amortization schedules show the loan amount from start to finish with each of the payments applied to principal and interest to the remaining monthly balance after each payment is made. A period of time in which the amount of time it will take to pay off the loan. Amortization terms are expressed as a number of months which may take place over 5, 10, 20, 25, or 30 years. A repayment of a loan or debt with regular monthly installments, these payments will cover both principal and interest. Paying off a loan or debt in monthly installments which include principal and interest in regular installments over a loan's established term.

Amount Financed Loan:

The amount of credit financed from a lender or financial institution. It is required to be broken down in the truth in lending act disclosure for consumer and real estate loans. This amount financed is calculated by starting with the entire loan amount borrowed, then subtracting out prepaid finance charges the borrower paid for in advance

Anchored (Retail) Loan:

A Commercial real estate property with a very large main tenant that rents most of the commercial space and is the primary main tenant that brings in the people to shop. Such large tenants are known as large franchises like big grocery chains stores, Wal-Mart or Target shopping centers.

Anchor (Retail):

Large national franchise commercial retail tenants with long term leases, known as credit-worthy tenants.

Angel Investor Loan:

A private individual who provides financial capital to a startup business. The individual is usually financially affluent and my require a financial stake into the success of such investment business. This type of financing is looked upon as a high level of risk and can potentially offer a large return on investment.

Annual Maintenance Fee Loan:

An amount charged annually each year that a credit line is available. This charge takes place on an annual basis whether or not a business line of credit, or commercial credit line is being used. The annual fee is a bank lender charge for use of a credit each year, and is billed directly to the borrower.

Annual Percentage Rate or APR Loan:

The Annual percentage of rate is described a yearly rate of interest. Lenders are required by law to disclose the Annual percentage rate which is calculated by taking the average compound interest rate over the term of the loan and closing cost to compare loan financing. The Annual percentage rate shows the cost of a loan, expressed as a yearly interest rate which includes the interest, points, mortgage insurance and other finance fees associated with the loan. It is the actual rate of interest on a loan including all other associated finance costs such as closing costs, points, and loan fees. A total finance charge expressed as a percentage of the amount borrowed or financed. The effective cost of a loan stated as a yearly interest rate taking into account such items as interest, mortgage insurance, closing costs, discount loan points and loan origination fees. This APR disclosure is required by the Truth-In-Lending Law to show borrowers the actual cost of a mortgage loans, auto loans, credit cards, business loans, student loans, commercial loans, etc., expressed as a yearly rate. The annual percentage rate will usually be higher than the interest rate stated because it includes all loan fees such as interest, points, origination fees, mortgage insurance and other related loan fees. The truth in lending act requires lenders to disclose the annual percentage rate to help borrowers measure and compare actual costs of acquiring a loan. It is a calculation of the cost of credit borrowed and shown as a yearly interest rate percentage. It's often a higher rate than the given interest rate because it includes all closing costs as well as prepaid finance charges. The Annual Percentage Rate (APR) is measured as the cost of credit expressed as a nominal yearly rate. Lenders in the US are legally required to disclose the APR. This interest rate is a benchmark for various loans borrowers come across broken down to a loan interest rate.

Apartment, Condo, and Hotel Conversion Loan:

With special financing, a rental apartment, office building or existing hotel can be converted into owned real estate property ownership. These popular conversions use special loans to rehab the units into individually owned units as an apartment, condominium or a condo hotel.

Apartment Rehabilitation Loan:

Loans are available for minor or extensive remodeling of older apartment buildings. These multifamily loans can be based on future income with a feasibility or market study to compare other apartment project rents in the area. Cash earn-outs through escrow are usually required during the construction loan process to make sure the cash-out money is allocated towards the apartment unit rehabilitation project.

Application Loan:

A financial document that a borrower would fill out stating his or her loan request, along with giving a lender their personal income, expenses, assets, and liabilities. The borrower or loan applicant writes down personal financial information about their employment, income, assets, debts and other pertinent financial information to obtain loan approval. Commercial loans or Apartment loans may require a popular loan document called a 1003, which some bank loan lenders use as the borrowers loan request and financial statement. The 1003 is Fannie Mae's standard loan application document. Applications are always a good first step in the qualifying loan approval process, by offering important financial information about a potential borrower to qualify for a loan approval.

Application Fee Loan:

An up front cost required by some commercial lenders to be paid at time of commercial application. The application fee is given to a investment lender for helping to review and complete a borrower's application. Depending upon the stage or time of application, lenders will request fees for an initial review, a credit report, or property appraisal and/or underwriting to determine loan approval.

Appraisal Loan:

An evaluation of an asset, a report documented to value a real estate property's market value. This assessment is generally required by a mortgage lender before a home loan approval is offered to ensure that the residential or commercial mortgage loan amount is not more than the assessed value of the property. An appraisal which can be multiple pages, is a written value, documenting the analysis or opinion of a licensed or qualified appraiser to evaluate an asset such as real estate. Multifamily appraisals are also not the same as a home property inspection, which looks more for mold, cracks, and safety issues. The word appraisal In commercial or residential real estate lending, is a fair estimate of the overall quality or project value of the subject property. The evaluation process concludes value by using like kind asset comparables together with the basis for such financial conclusions. There is a fee charged by appraisers to evaluate and document real estate property. The fee is included in the escrow closing statement when financing commercial loans, home loans, and usually the sale or refinance of business loans.

Appraised Value Loan:

A dollar amount offering the fair market value figure for an asset or real estate property's estimated worth. The value is certified from a licensed commercial or residential appraiser, whose knowledge, experience, and evaluation analysis of the asset or real property utilizes like kind comparables in and around the area. The appraised value is the basis in determining the asset's fair market value by an appraiser, based on sales analysis of the property's location and environment to other local real estate market conditions, along with and current up to date sales comparable data of other property.

Appraiser Loan:

A qualified licensed individual, through education, training and evaluation experience to assess value of an asset or real estate property. He or she is a qualified person who is usually licensed to prepare documents expressing the asset value or worth of property. Appraiser's are typically hired through lenders to provide an appraisal estimate before issuing a loan or offering financing.

Appreciation Loan:

An increase in the value of an asset such as a business or real estate due to environmental changes in market conditions or other positive causes. Inflation, increased supply & demand, home improvement and sweat equity are all good causes of appreciation. Appreciation is an increase in the value of an asset due to the changes in market conditions or other causes. It is the added or positive value of an asset gain or rise over a period of time.

Appreciation Rate Loan:

This interest rate is calculated as a yearly percentage rate that an asset or real property increases in value.

Approved Attorney:

Title insurance companies have attorneys which are approved by to offer real estate opinions of title and can be relied upon for the preparation of a real estate title insurance policy.

Appurtenance:

A legal right (Easement) or possibly a privilege that has been attached to another real property and is then conveyed or transferred with it during a real property sale.

Appurtenance Loan:

That which it is connected, or belongs to real estate property. It is what was intended to be a permanent addition to the subject real estate property. It may possibly belong to something else that adapted to the use of the land, which passes as an incident to the subject property giving the right of way.

ARM Loan:

See Adjustable/Variable Rate Mortgage Loan

Arbitration Loan:

A private trial conducted to resolve a legal dispute. Arbitrations can save money, time and are made to be binding or non-binding, to which an appeal may or may not be possible.

Assessed value Loan:

The assessed value is used to establish real estate property taxes, based the public tax assessor's opinion. The value is to determine what taxes will be paid by the taxing authority, for example a county tax assessor's job is to place a value on real estate property as a cost bases for computing state property taxes. This valuation is placed upon real property by a public or state tax assessor for purposes of property taxation.

Assessment Loan:

A fee or tax assessed on real estate property by local or state governments. An assessment which is given to real estate property owners and homeowner associations alike for the immediate funding of local and state projects. These fees are to cover maintenance costs for the improvement of sewer lines, drains and road upgrades. Government local assessments are levied against real estate property to cover disproportionate expenses and sudden costs needed to pay for street improvements and sewer upgrades.

Assessment Rolls Loan:

A government public record of the assessed commercial and residential real estate income property values from specific taxing jurisdiction.

Assessor Loan:

A local or state government official who's responsibility is to determine the real estate property value for the sole purpose of taxation. A public official, who's job is to assess, evaluate, and establish the real property value for taxation.

Asset Based Finance Loan:

A secured commercial business finance loan whereby a borrower will pledge business income collateral or any other business assets that are used to conduct business.

Asset Conversion Loan:

A short-term business loan whose repayment lending source is for the conversion of a company asset such as business inventory or accounts receivables.

Asset Loan:

An asset is something you own. Assets can be anything of financial or economic value that is owned. It is a monetary values placed on automobiles, real estate, personal belongings, banking accounts, stocks & bonds, life insurance policies, business equipment, mutual funds, inventory, etc. Assets are items of worth or value, an interest in real estate or personal property that is suitable for the payment of a debt. Asset Financing is to cover assets which are converted into working capital cash in exchange for a financial interest.

Asset Protection Allowance Loan:

This procedure is used by a financial aid office in connection with the U.S. Department of Education. It is used to establish an expected family contribution to which parental assets will be either ruled out, or rejected when calculating a parent's monetary role/contribution towards a student's education.

Assignment Loan:

A legal process of transferring a right or contract to another person or entity. Such rights may include terms of a commercial loan or residential home loan from one person to another giving them legal authorization.

Assignee Loan:

A receiving party in an assignment, who was given the legal authorization and right by the assignor via a transfer.

Assignor Loan:

The party who initiates the assignment by transferring his or her legal rights and authorization to the assignee.

Assisted Living Loan:

A property type of senior healthcare housing that offers independent living with and assistance to its elderly occupants.

Assumable Mortgage Loan:

A residential or commercial mortgage loan, that allows for a real estate owner to transfer or assign title to a buyer. For sellers, this financial benefit allows them get out of a loan that usually has a prepayment penalty. For buyers, the financial benefit is to purchase a real estate property and assume an existing mortgage that is below current interest rates. Once the assignee assumes the existing mortgage loan debt, the buyer or assignor, is no longer responsible or liable for repayment of the existing mortgage debt. Lenders will usually oversee and approve this assignment transfer, and may charge the buyer or assignor an assumption fee of 1.0%. Assumable mortgage loans can be transferred to new ownership if a commercial real estate or residential property is sold. The assumable option allows mortgages to be assumed or transferred to a new purchaser of real estate by allowing them to assume or take over the mortgage payment obligations of the current seller.

Assumption clause Loan:

This is the legal term that allows for the assumption of a sellers real estate loan to be assumed by a buyer. The buyer would assume the existing mortgage debt responsibility from the seller. This allows for the commercial loan or home loan the flexibility of not being required to be paid off in full by a seller upon property sale or the transfer of real estate.

Assumption Loan:

A real estate buyer's acceptance of a mortgage liability taking over a seller's existing loan debt. An assumption takes place through when the seller has an assumable loan on the property. It is a legal and binding agreement between a buyer (Assignee) and seller (Assignor) whereby a buyer can take over the mortgage loan payments on an existing mortgage from a seller. An Assumption can benefit both parties by saving the seller from any mortgage prepayment penalties and saving the buyer money by assuming a lower interest rate.

Assumption Fee Loan:

A lender fee charged to a buyer by the lender. The fee charged is usually 1.0% of the loan amount based upon the seller's loan documents. The assumption allows for a seller to transfer his or her mortgage debt and real property responsibility to a buyer. Once this has taken place, the lender will then begin to collect mortgage loan payments from the new buyer as it is now their responsibility.

Attachment Loan:

A legal document authorizing an impediment or barrier to be placed against real property by a defendant in a pending lawsuit. The encumbrance is legally permitted under special circumstances, and is placed against commercial or residential real estate by a defendant for monetary damages.

Attorney in Fact:

An individual who holds and has been given a specific power of attorney from another to execute specified documents on behalf of the real estate seller.

Attorney's Opinion Loan:

A written legal opinion drawn up by an attorney-at-law regarding to the marketability of title to a real estate property. In residential and commercial real estate, these written opinions by attorneys are used to view the sell or promote a title to real property based on review of public records and the abstract of title located in the county clerk and recorder's office.

Authorized User Loan:

A person or entity who is given the permission to utilize a credit card or banking account.

Automatic Payment Loan:

A monthly payment being taken out directly from a personal or business bank account. The monthly deduction allows consumers of personal and business banking to make quick and easy loan or financial payments to a lender. It is a payment structured that is now available online to contract an authorizing a financial institution to make his or her periodic withdrawals from a checking or savings bank account to pay bills. The bills can be for car payments, credit lines, phone bills, and more by simply setting a payment amount to automatically be taken out at a certain time or date of your account.

Automatic Stay Loan:

A legal injunction by an attorney to stop debt collectors, lawsuits, foreclosures, or debt garnishments against the person or business the moment a bankruptcy petition is filed.

Automatic Transfer Loan:

A banking contract to shift or move monies at specific times; weekly, monthly, or annually from an interest bearing checking or savings account into a non-interest bearing account such as a checking account for purposes of debt or loan payments.

Available Cash Loan:

A positive cash balance or amount of a borrowers liquid assets that readily available. This available cash is looked upon by residential and commercial mortgage lenders as cash reserves located in checking accounts, savings accounts, stocks, liquid mutual funds and CD's, etc., for the immediate use to cover the down payment, closing costs, and income real estate cash reserves for property upgrades and tenant improvements.

Average Annual Occupancy:

The amount of commercial property which is occupied by renters or tenants. It is the percentage of currently rented units in a commercial or multifamily building.

Average Daily Balance Loan:

The average daily balance is used by auto lenders, credit card lenders, real estate lenders and financial lenders worldwide to determine the amount fee to charge a customer. The fee is calculated by adding each days balance, and then dividing the full amount by the number of days in a billing cycle.

Average Daily Rate:

This term is used by commercial hotel loan lenders when determining the hotel rate charged. It is used to evaluate the average daily rate of what a hotel or motel is charging inclusive of room vacancy and seasons.

Average Interest Rate Loan:

The sum total of adding up the total business or personal debt taking in consideration of actual interest rates for each loan in combination of the financial loan debts based on a total weighted interest rate calculation. Using this total sum of each of the loan balances and interest rates, a calculator can then determine the weighted interest rate average for several loan obligations for a more defined lending period.

B:

S&P Long-Term commercial real estate property Issuer Credit Rating - Adverse financial, business, or economic property conditions that may impair the obligor's capacity or willingness to meet the financial commitment on the obligation. An obligor that is rated 'B' is much more vulnerable to nonpayment than obligors rated 'BB', but the obligor currently has the capacity to meet its financial commitment on the obligation.

'B' Billion Loan:

The letter 'B' Refers to a very large financial amount in US dollars standing for Billion. Lenders use the letter 'B' after a number to express the amount money or loans in question to be or have been financed. For example, $5B in commercial loans is defined as Five Billion Dollars in Commercial loans.

BB:

S&P Long-Term commercial real estate property Issuer Credit Rating - An obligor that is rated 'BB' may be less vulnerable in the short term than other lower rated obligors. An obligor rated 'B' is more vulnerable than if rated 'BB', but the obligor currently has the capacity to meet its financial loan commitments. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments. It also faces major ongoing property uncertainties and exposure to adverse financial, business, or economic conditions, which may lead to the obligor's inadequate capacity to meet its financial commitments.

BBB:

S&P Long-Term commercial real estate property Issuer Credit Rating - An obligor rated 'BBB' has adequate capacity to meet its financial loan commitments. 'BB' indicates that the least degree of speculation and 'CC' is the highest. While such obligors may have quality and protective characteristics, these outweigh large real property uncertainties or major exposures to adverse conditions. It also offers adverse economic real estate conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. These obligors rated 'B' 'BB', 'CCC', and finally 'CC' are highly regarded as having the most significant speculative characteristics.

Bad Debt Loan:

A financial debt that is owed, but is uncollectible due to a possible bankruptcy, the holder having zero assets or the demise of the debt holder, and is therefore completely worthless to a lender or creditor.

Balloon Loan:

A short term loan that the loan payment structure is based off of an amortization, but has a loan term that requires a lump sum financial payment of the entire loan principal balance at the end of a shorter term. These loans are common in the commercial real estate lending industry with standard commercial mortgage with thirty year amortizations and ten year loan terms.

Balloon Mortgage Loan:

A short term real estate term loan that allows for payments based on a longer amortization. Balloon mortgages are primarily used on income producing property. These investment loan are written to give borrowers a smaller mortgage payment in regular equal amortized monthly installments, but with a maturity date well before the debt is paid in full.

Balloon Payment Loan:

A final lump sum payment that is required to be pay the existing loan or mortgage debt with a sale or refinance of the asset. This happens at the end of the short term loan contract by paying the existing balloon loan balance in full. These loans are usually short-term lower fixed-rate loans that involve smaller loan payments through longer amortizations over a certain time period and one lump sum payoff for the remaining principal loan balance. The contract due date takes place at a specified time. Balloon mortgages typically offer lower fixed interest rates for an initial time period usually for three, five and ten year terms. After which the loan will either come due, or become an adjustable rate loan once the time period elapses. Again, loan balances that are due, are either refinanced, float to an adjustable, or paid off by the borrower. Balloon payments happen when the final principal loan balance lump is due after the sum payment is made at the maturity date. The scheduled payment is then due at the end of a loan term, requiring a substantial loan payoff. The short term balloon loan occurs when the regular monthly payments fail to pay off all interest and principal owing over the term of the mortgage or loan.

Balance Loan:

The remaining amount of debt owed on a account or due on a loan. Balances are looked at by lenders as either assets; such as in a checking or savings account, money in stocks, bonds and 401ks or as liabilities such as mortgage accounts, credit cards, etc. Lenders will review both when qualifying for a loan considering the actual amount saved verses the actual amount owing.

Balance Sheet Loan:

A financial statement usually prepared by an accountant, presenting a monetary measure of a business's assets, liabilities and net worth at a current point in time. Balance sheets allow lenders to underwrite these documents to qualify a loan request for the company's financial position at the end of an accounting period by listing an entity's assets, liabilities and owner's equity of a specific date and time.

Balance Transfer Loan:

A process usually conducted through a credit card companies to move loan accounts or credit card debts from one loan issuer to another.

Balance Transfer Fee Loan:

A fee usually charged to credit card customers for relocating or moving their outstanding loan balances from one credit card company to another. The fees charged can be either a flat fee or a percentage of the amount transferred.

Bank Loan:

A financial institution that works with people by helping them store cash money at bank rates to be deposited safe, offering checking, savings plans, credit cards, and loans to borrowers. Banks offer bank rates that are required to be chartered and to meet certain financial reserve obligations. Bank chartering is done by the Comptroller of the currency for foreign and national banks, either through the Federal Reserve System for state chartered member banks, the Federal Deposit Insurance Corporation for insured banks, and through the state regulatory agencies.

Bank Holding Company Loan:

An investment company that may control or own one or more banking institutions. These companies are connected with banking such as leasing companies, credit companies, and insurance companies. The majority of bank holding companies can be recognized by the words 'Banc' in their title.

Bankrupt loan:

A business, person, corporation, other entity that has become incapable financially, to make the required monthly finance payments, and subsequently is unable to compensate or reimburse the debt obligations owed. The debtor or defaulter then seeks out legal protection to stop the debt collectors through an attorney who initiates a court proceeding to work out a payment structure and/or erase the debts entirely. A judge will order the bankrupt debtor, by requiring a complete or partial surrender control of all or some of the personal or company's assets to a court ordered trustee.

Bankruptcy Loan:

A US federal law that allows financial relief for a person or business by taking their assets and turning them over to a court appointed trustee and then used to pay off any and all outstanding debt obligations. This negative act can occur when an entity owes debt far more than they have the ability for repayment. The US federal bankruptcy code is a more familiar name for Title 11 of the United States Code, which is the federal bankruptcy law. Bankruptcy proceedings take place in a federal court in which a defaulter or debtor is financially strapped, broker, and unable to make payment to debt collectors when due, and thereby is seeking debt relief to work out new lower financial payments and/or erase debts entirely.

Bankruptcy Trustee Loan:

This trustee can be a private individual or corporation that is appointed by the courts in all cases of bankruptcies for Chapter 7's, Chapter 12's, and Chapter 13's in legal cases that represent the financial interests of a bankruptcy estate along with its creditors seeking reimbursement.

Bargain and Sale Deed Loan:

A legal trust deed that warrants that the grantor has done nothing to harm or cloud the title. In this deed, the grantor recites a consideration and purports to convey the real estate as clear and equitable title with a covenant against the grantor's acts as legal and binding in a court of law.

Base Price Loan:

The term is related the purchase of an automobile and stipulates the cost of a car without any options. The base price comes with what you see, including standard factory equipment, with factory warranties and freight. This price is printed right on the Manufacturer suggested retail price (MSRP) sticker.

Base Rate or Point Loan:

It is an index used as the barometer on when or how the interest rate will adjust over time. The base or point rate which is more commonly called an index is used to determine fixed and adjustable rates. Indexes are used as the benchmark to set the interest rate tone for borrowers. Indexes are then compiled with a margin or spread over T-bills for home loans and commercial loans and prime rate Interest rates on credit cards. The base or index rate, is sometimes referred to as the repo rate, which is the minimum rate a bank is prepared to lend money on. This benchmark is a guide for other interest rates on business loans, student loans, personal loans and mortgages. Indexes used vary through out the world and change sporadically watching money markets, Wall Street operations unfold, or by changing the dealing rates at which banks buy bills from discount houses.

Basis Point (BPS) Loan:

Used primarily by commercial and residential mortgage capital lenders, these points are described as one hundredth of one percent (1/100^th of 1.0%). Then denomination amount is utilized as a spread or margin over an index such as the ten year Treasury bill. The spread is equal to one hundredth of one percent in yielding an investment of .01%. Basis points are determined by a given amount and then used as a margin or spread over an index interest rate. Basis Points will vary high and low by the overall quality of the real estate property from. An example would 4.0% + 200BPS = 6.0% interest rate.

B, C & D Lender or B, C & D Loan:

The letters indicate the quality and rating of either the borrower's credit when it is relating to home loan qualifying, or the commercial property type when relating to commercial real state mortgage loans. Mortgage lenders offer B, C & D credit loan programs based on the level of problem or troubled criteria. Residential B & C Loans that do not meet borrowers credit requirements based on Fannie Mae and Freddie Mac guidelines may be called or just considered B, C and D paper loans. These loans have negative credit issues and are offered to borrowers that may have had too many credit inquiries, charge offs, collections, filed for bankruptcy or in foreclosure. Commercial lenders primarily look at the loan size and property type when determining the B, C or D loan quality. Their purpose is to offer temporary or permanent financing to applicants to help better their credit or fix up the property to then qualify for better interest rate financing. The interest rates and programs will vary from fixed to adjustable, based on a variety of the borrower's financial stability, income property strength and overall credit history.

Beneficiary Loan:

A person or entity that receives a benefit, or will be the recipient from a benefactor of benefits resulting from acts such as inheritance, profits or advantages from whom such benefits a trust is then created.

Bill of Sale Loan:

A legal document which is drawn up by an attorney or written by and person to transfer title of personal property from willing seller to willing buyer. A written instrument by which one person conveys his or her right, title or interest in personal property to another. The statement will show the transaction details of a sale purchase.

Bill Presentment Loan:

Banks offer this service for business and personal banking. It allows for online payments through a trusted financial system to gives customers the authority to receive, view, and make payments to his or her bills on a computer Users can pay their bills electronically with a point and click method instantly and the money is transferred safely from a designated checking or savings account.

Billing Cycle Loan:

The number of days in a month calculated between the last monthly payment. The loan statement received should outline the dated date and the current loan payment date.

Billing Statement Loan:

A monthly bill, that documents principal and interest charges sent out by business lenders, home loan lenders, and credit card lenders to the borrower. It also gives borrowers a monthly to annual summary of loan payment activity on a specific loan account, including the balance, recent card purchases, mortgage payments and finance charges.

Binder Loan:

A written commitment issued by a title insurance company to insure title to the property. A preliminary agreement subject to the conditions and exclusions shown on the binder and is secured by an earnest money payment under which a buyer offers to purchase real estate property.

Biweekly Payment Loan:

This is a loan program used primarily for borrowers with home mortgages, designed to cut down mortgage interest faster by paying half of the regular monthly payment every two weeks. By making these required mortgage finance payments every two weeks, it significantly reduces the loan interest debt instead of paying on the usual monthly mortgage payment schedule. Over a year's time, the twenty-six biweekly loan payments made, possibly twenty-seven results to the borrower given a faster lending amortization leading up to a substantial interest rate savings with a faster principal mortgage reduction and can be drafted by the lender, in escrow, by the borrower's financial institution for automatic withdrawals from a bank account.

Black Book Loan:

An auto industry finance guide used by lenders as a reference appraisal guide to determine the auction value of used automotive vehicles. The publication is written by the National Auto Research industry.

Blanket Mortgage Loan:

A real estate mortgage loan that places a deed of trust (Mortgage note) on multiple real estate properties that a borrower owns. The loan can wrap up a variety commercial and residential real estate property, with a single mortgage covering two or more pieces of real property.

Blue Book Loan:

A publication known as the Kelley Blue Book is a financial reference guide for valuing used cars. Auto and car lenders like to use this guide when giving loan approval. It is one of several car appraisal reference guides used to evaluate used automotive vehicles. The assessment guide is sometimes called the Blue Book Value based on today's current market. The Blue book reports on the current wholesale market value and retail value for foreign and domestic automotive vehicles.

Bond Financing:

Used primarily for financing commercial real estate to obtain a high loan-to-value commercial loan. This type of special financing promises to repay the principal amount given or borrowed along with an interest on a specified date.

Bond Loan:

An interest-bearing financial certificate of debt with a maturity date of up to 30 years. A real estate bond is a written capital obligation usually secured by a mortgage loan or a deed of trust. Bonds are issued by a government agencies or businesses promising to repay bond holders a specified rate of return at a sum on a specified date.

Borrower Loan:

An individual requesting the use of a loan or credit to finance the refinancing or purchasing if an asset. A borrower is a person who applies for capital or funding, contributes income and credit history to the qualification process of a loan and whose names appear on all closing documents in order to receive a loan. Once the credit advance is accepted in writing, the borrower is then obligated to repay it back along with interest and fees according to the agreed lending terms. Borrower's, can also be considered Mortgagors, if the person receives a real estate loan and is obligated to repay the real estate loan in full. A mortgagor who receives loan funds has an obligation to repay the principal with interest. Each additional borrower or mortgagor is liable for the debt and condition of the real property.

Borrowing Loan:

In order to borrower, an individual would have to be given the use of money, or credit. The question is then how much to borrow and will you need a loan or short loan. The smaller amount, the better depending on what the money will be used for. Businesses use bank credit lines or a line of credit based account receivable income. Credit cards can also give instant cash money to the owner to increase purchasing power. If the borrowing is from a checking account, make sure you have an overdraft protect account on your atm or debit credit card.

Breach Loan:

A lawful violation written or unwritten of the specified terms of any legal obligation.

Break Even Point Loan:

A median income verses debt threshold point to which the total income equals the total expenses. An equal monetary balance where a lender will look at the borrow understanding the he or she is not gaining nor losing financial momentum.

Bridge Loan:

A short term loan that is offered mainly by commercial and home loan mortgage lenders for a brief amount of time. Bridge loans are quick, yet expensive to help borrowers finance a gap between one loan to another. Also known as a swing loans, these short-term bridge loans provide quick and fast temporary lender financing until more permanent financing can come along or a better take-out financing is available. Bridge loan financing are quick loans that expect to be paid back relatively quickly by a longer term loan. Because bridge loans are used for short term financing, lenders design them with little or no prepayment penalties, and are quick to fund to help real estate buyers, sellers, and commercial/residential developers. Bridge capital assists borrowers who need quick loans to pay off higher interest rate mortgage loans that may need more time to build up his or her real estate project. Bridging Loans offer quick and fast lender capital to be used by real estate developers of real property who need mortgage funds in a limited period of time. Major banking institutions and private real estate lenders can offer a variety of flexible shot term bridging finance. Land developers utilize fast bridge loans when financing is either come due or they do not have the time to develop or sell the project. The advantages to most bridge loans are that they can be prepaid at usually no cost with little or no prepayment penalty. Short term financing is popular for borrowers who don't have the time or patience to deal with traditional bank underwriting guidelines.

Broker Agreement Loan:

A written real estate document required to be signed by both parties to sell, buy, lease or finance real estate. The agreement is issued by a real estate sales office, or a mortgage broker looking to seek out financing for a borrower. The real estate contract is between a borrower and a broker describing the duties and requirements of all parties involved in what the broker will do for the borrower, along with the terms of the agreement, time frame and to including the brokers compensation if he or she produces the result.

Broker Fee or Broker Compensation Loan:

The amount of points charged by a mortgage broker based on the borrower's loan amount, or the amount of money a sales brokerage commission will be based on the sale price.

Broker Loan:

An intermediary, a go between for the borrower and lender. A financial loan consultant who brokers loans. A loan agent, identifying themselves a investment banker, mortgage brokers who help arrange loans between lenders and borrowers, business loan broker, a commercial loan broker, or a home loan broker, all with the objective to find a loan for the borrower. Brokers are not all required to be licensed in order to obtain financing for borrowers, but most are normally licensed within their residing state. A broker usually works for a commission or a charging a loan fee called 'points' by assisting in the negotiations of a real estate loan transaction. Brokers are intermediaries, also known as the middleman between two or more persons engaged in a business finance or real estate transaction. Real estate brokers however, arrange property sales and leasing between buyers, sellers and tenants of residential or commercial real estate property.

Budget Loan:

A detailed record of all income and expenses earned and spent for the period of time that is specific. A financial statement detailing the borrower's plan of income and expenses to run a business, expand, rehab, or developing of real estate budget expected over a certain period of time. A budget can provide the necessary guidelines for managing future investments and expenses when obtaining a loan.

Building Code Loan:

Local and national law enforcement to regulate the construction and building use that specify minimum structural safety requirements for the design of, lending construction of, and tree type materials that are allowed to be used on a residential home or commercial industrial and office building property. Building codes are regulations drawn up over time based on safety features and health hazard standards. These set of laws are designed to develop standard building codes universally agreed upon safety building and lending standards within specific tree line areas, with policy regulations that determines the design, construction, and materials used in the construction of buildings. It is a system of regulations established by local and national governments to set forth the structural requirements of building construction.

Business Plan Loan:

An important financial document required by lenders that describes a business organization's current financial status and income & expense plans for several years into the future. Business plans give lenders and investors a story line as to when, what, where and how the business will succeed by projecting future opportunities with resumes, maps and procedures to the financial operations, marketing and organizational strategies that will enable the business to achieve its projected goals.

Buy Down Account Loan:

This is an account where funds are to be held and then applied as part of the borrower's monthly mortgage loan payments as each monthly payment comes due during the loan period that the interest rate buy down mortgage plan is in effect. This is done by the borrower paying the buy down monies directly to the lender at closing. Buy down loans come in many forms based on mortgage lender home loan options.

Buy Down Loan:

Purchasing and paying for an interest rate reduction to lower a borrower's monthly mortgage payment. The reason borrowers request a buy down loan which may or may not be temporary, is to significantly lower their loan finance payments thereby qualifying more easily for mortgage funding. Interest rate buy downs give borrowers an added edge by initially qualifying for a loan at a lower income level for fixed periods before an interest rate will then climb back to market rate levels. Loan Buy downs come with many features, however the lender finance process of paying additional points or fees on a these loans remain the same. The goal is to reduce the borrower's monthly payments is common in the lending industry with the main two lender types; Permanent loan buy downs, and Temporary loan buy downs. Permanent loan buy down financing requires a sufficient amount fees or points paid upfront in prepaid interest. Temporary loan buy downs, require a much smaller amount out of pocket expense to interest being paid up front to lower mortgage payments. These buy down loans are used to qualify borrowers for a lending amount that they would not otherwise normally qualify for, but will be able to pay in subsequent years as his or her income increases. Mortgage lenders believe that offering capital in this type of financing arena, because it helps borrowers qualify their income now, but the payments will continue to increase along with their income. Mortgage loan Buy downs can also be available when a lender, developer or home builder subsidizes the mortgage by lowering the interest rate during the first few years of a loan to entice first time home loan buyers. While the mortgage loan payments are initially low for the first few years, home buyers income will increase when the special builder subsidy buy down funding expires.

Buyer Loan:

An individual or entity that requests loan financing to purchase real property, an automotive vehicle or car, or anything else listed for sale, and is then primarily liable for repayment of the loan.

Buyer's Agent Loan:

A real estate brokerage or salesperson usually identified as a Realtor, who is then engaged by a buyer to represent the buyer drawing up contract offers in a residential 1 thru 4 unit purchase or 5 units and above commercial real estate transaction. Once the buyer has the acceptance, then a loan may or may not be needed.

C:

S&P Long-Term Commercial Real Estate Issuer Credit Rating - A subordinated loan or preferred stock obligation rated 'C' is highly vulnerable to nonpayment. A 'C' may be assigned to a preferred stock issue in arrears on dividends or sinking fund payments. However, it is currently paying the debt. The 'C' rating is used to cover a loan situation where a bankruptcy petition has been filed or similar legal action has been taken, but that payments on this obligation are being continued.

CC:

S&P Long-Term Commercial Real Estate Issuer Credit Rating - An obligor that is rated a 'CC' is highly vulnerable.

CCC:

S&P Long-Term Commercial Real Estate Issuer Credit Rating - An obligor that is rated 'CCC' is vulnerable. The obligor relies upon favorable financial, business and economic real estate conditions to meet the financial obligations.

Call Option Loan:

A lender applies a funding provision in a loan, to allow for the bank or financial institution, to lend money out with the legal right to accelerate a borrower's capital debt payment. If a borrower is late on their monthly debt payments, a lender would be allowed to call the loan due, requiring a borrow to make full payment of the loan, usually with a sale or refinancing based on a specified finance period or per the lending guidelines.

Campus Based Aid Loan:

Student financial aid loans are funds which are provided to colleges from the government. Student lending programs are included in the campus based aid in conjunction with the Federal Work study program, Pell Grants and Federal Supplemental Education Opportunity Grants (FSEOG) programs. The student loan eligibility is given theses program options based on what the college has available to financial aid applicants looking to receive the academic funding.

Cancellation Loan:

A borrower may have the lender cancel his or her loan due to unforeseen negative circumstances, such as a death or financial disability.

Cap Loan:

A provision of an adjustable rate mortgage (ARM) giving the borrower a safeguard by limiting the adjustments to an ARM interest rate mortgage payments. The cap rate has a ceiling to limit how much the interest rate or loan payments may increase or decrease over time. Cap loans protect borrowers from large mortgage payment increases in a upward interest rate market. Cap loans offer borrowers loan options with ceilings based on periodic loan payment caps, lifetime loan rate caps and periodic loan rate caps. Thus, limiting the amount for risk placed on choosing adjustable rate financing, and consumers can figure on how much their monthly payment or interest rate can increase or decrease over time. It is also the maximum interest rate that an adjustable rate mortgage can increase, regardless of rate index changes. Periodic loan cap limits are popular to see how much rates can increase at adjustment periods, however the lifetime loan rate cap limits offer stability into how much rates can rise during the loan term. Payment caps are a smart option for residential and commercial mortgage loans, by limiting the finance risk of how much the monthly mortgage payments may increase.

Capital Loan:

The accumulated wealth or net worth of a borrower which can be seen on the financial statement by adding up the positive cash balances and assets that exceed the liabilities section. Capital is the asset amount of a borrower's money and other capital assets such as real estate that allows for financing personal and business goals. The money or assets are used to create income, by making the borrower an investor to purchase items of worth, gain funding leverage, or for capital investments into business opportunities or income producing real state. Capital is a borrower's fund, a positive resource by showing the wealth saved in savings accounts, owned in real estate or invested and used for personal or business.

Capital Expenditure Loan:

The cost of an improvement made to include replacements of major commercial and residential real estate building systems, such as roofs, walls, windows, landscaping and driveways. Capital expenditures are necessary to extend the useful life cycle for real property as well to add its worth, such as adding square feet for commercial tenants or a an extra room addition through a home equity loan. The cost of repairing real property may offer immediate value or may appreciate over time. These expenditures show as line items on a profit & loss statement that would be expensed over time as the repairs are done and then subtracted from the property's income for the current year on an annual basis helping real estate investors utilize tax write-offs.

Capital Improvement Loan:

Capital improvements are defined as constructing or building large scale structures such as walls, adding an entire commercial or residential floor, to a new building while improving a residential or commercial real estate property. The improvements are permanent structures erected as a permanent foundations to expansion to real property that adds to its property value.

Capital Market Loan:

Wall Street loan capital with certain loan funding guidelines that are being traded, purchased and sold through financial markets, institutions and individuals that that buy and sell large pools of commercial and residential real estate loans exchanging commercial mortgage back securities, in particular long term Wall Street real estate conduit debt instruments.

Capital Services Loan:

Capital services are business loans estimated as the capital weighted income average of the financial growth business rates of each capital asset. Capital services finance assets such as company equipment and business software to provide additional services, not so much on real property. It is services that flow like for financing account receivable loans and asset based lending derived the physical assets and software. Capital service assets are comprised of a company's office equipment, software packages and business inventory lines.

Capitalization Loan:

Long term permanent real estate finance debt that includes the existing mortgage. Capitalization is the amount of capital financed by a borrower and is required to repaid back to the lender including overall interest charges. It is considered by a lender as the loan capital of a loan fund based on preferred stock and net worth.

Capitalization Rate Loan:

Better know as Cap rate, it is a commercial real estate investment process used to estimate the property value based on the rate of return on investment. An investment guide for real estate investor's to see what their net cash income yield would be on owning real property. The cap rate is used as a barometer tool when purchasing investment property. Cap rates give the marketplace a gauge of costs, sales prices, and commercial loan options in the current market approach valuing of an investor's cash on cash return. The income produced can be decided quickly by knowing the sellers cap rate, and what it would take to buy and finance that piece of income producing property along with the income it will yield.

Carry-Back Loan:

A real estate loan that allows for the seller to finance part of the buyer's down payment in order to complete the purchase of real property. First time home loan buyers can put down little or no down payment with the seller carry back a second trust deed on the property to help the buyer avoid the cost of Private Mortgage Insurance (PMI). Investment loans may allow buyers to put down 15% when purchase an apartment complex, and having the seller carry back 10% qualifying for a 25% down payment and 75% loan to value from the mortgage lender.

Carve-Out Loan:

A lender requirement in loan documents that are used for the inclusion of recourse for any fraud or misrepresentation from the borrower.

Cash Advance Fee Loan:

This happens when credit card holders use their credit cards or debt cards at ATM machines to obtain quick cash. The upfront fee charged is due not using his or her own bank to pull out the necessary cash. Fee is stated on the information screen as a flat per transactional fee or as a percent of the amount of the cash being advanced. Cash advance fee loans are at elevated costs with interest rates begging to accrue from the moment the money is withdrawn.

Depending on the financial institution who issued the debit or credit card, the cash proceeds will most likely be deducted from the cash advance loan or borrower's money received.

Cash Available for Closing Loan:

A borrower's liquid cash assets available to fund the real estate lenders required down payment and estimated closing costs. Lenders will look at borrower financial statement to determine whether or not he or she has the necessary monies needed to purchase the subject property. Lenders also require borrowers to have cash reserves in the bank, as the required borrower's cash available for closing does not include cash reserves for after the loan closes, in making sure the borrower is able to upkeep the real estate property in good living/working condition. Usually, lenders like to see the borrower have 10% of the loan amount is cash reserves, which could be in savings, stocks, bonds, 401k's so long as the money is liquid.

Cash Flow Financing Loan:

A short term business loan based primarily off of a company's accounts receivables to facilitate funding for the company's cash flow needs. Cash flow lending gives a business the additional capital needed to take care of any shortfall in the budget, by foreseeing higher cash revenue in the near future.

Cash Needed Loan:

It is monies required to complete to loan purchase or refinance and close the financing loan in escrow. Cash needed is usually based on an estimated HUD I closing statement outlining the total cash dollar amount necessary to cover the down payment, payoff of lenders and third party closing costs to include first loan installment.

Cash Out Refinance Mortgage Loan:

A refinance transaction that allows borrowers to pay-off existing mortgage loan debt as well as to take excess cash money from the real estate equity. Cash out refinance loans are used in commercial and residential home loan transactions for property upgrades, improvements, lender and broker closing costs, debt consolidation and/or to purchase additional real estate property in which the new mortgage loan amount will be greater then the trust deed(s) payoff amount. Real estate owners borrow against the equity in their real estate to provide them with additional cash funds.

Cash Reserves:

A cash amount that lenders require to be held in reserves above and beyond the down payment and loan closing costs. It is the amount of available cash remaining after closing of the loan to make their mortgage payments and for emergencies.

Caveat Loan:

A stipulation in loan documents or legal preceding that constitutes a warning, a limitation, or caution to the prospective borrower.

Caveat Emptor:

This phrase comes from Latin meaning "let the buyer beware." It essentially means that a buyer of an income producing property such as an apartment or multifamily project buys it at his or her own risk. Caveat Emptor "Let the purchaser beware" holds the real property purchaser as their duty to examine the real estate property that is being purchased and thereby assumes the real estate condition which should be known upon view. The seller, however is not under obligation to disclose defects, but cannot actively conceal a known property defect or lie if requested by the purchaser.

CC&R's:

Articales, Bylaws and CC and R's are usually written up by a home owner's association as governing covenants, conditions and restrictions to the subject property being purchased. These property ownership rules establish the rights and obligations of an owner of real property within a set guidelines of a housing tract, subdivision, town home or condominium tract of land with relation to other real estate owners within that same tract. It is made up of an association of property owners organized by a board of directors for the sole purpose of operating and maintaining real property owned by multiple or individual owners.

Ceiling Rate:

A maximum interest rate charged on a variable or adjustable mortgage rate loan that can accrue over a lifetime loan rate cap.

Certificate of Deposit Index (CODI)

A bank or S&L instrument representing the investment of funds for a guaranteed return. A Certificate of Deposit Index (CODI) is based off the 12 month average of the monthly average yields on the nationally published 3-Month Certificate of Deposit rates. Banks and Savings and Loans calculate the average by adding the 12 most recently published monthly yields together and dividing the result by 12. Information on monthly yields on 3-month certificates of deposit in the secondary market are published by the US Federal Reserve Board. These loan indexes are averages of the secondary loan market interest rates on nationally traded Certificate of Deposits, more commonly known as CDs, which are issued by savings banks and financial banking institutions. CD rate indexes can be volatile, generally considered to move up or down quickly with market changes.

Certificate of Taxes Due:

A property tax statement of the condition of the taxes on a piece of real property written by the county treasurer of the subject county where the real property is located.

Certificate of Title:

A legal document issued by a title insurance company outlining a real estate property's legal ownership, belongings and real estate boundaries. This takes place during a property or land sale allowing title to be transferred at escrow closing giving the buyer free and clear property of all liens, encumbrances or other claims. In some states this document can be provided by an abstract company or attorney at law transferring title to said real estate based on public records. This written legal opinion is vital in setting forth the legal status of title ownership to real property as shown in the public records. It states the current condition of a property title.

Chain Link:

A property survey of real estate land measurements. These meets and bounds are made of a chain which is 66 feet in length or 100 links with each link at 7.92 inches in length.

Chain of Title:

It shows the property ownership history of all of the legal documents affecting said title to a specific parcel of real estate property, starting with the very earliest existing legal held title documents. It gives the buyer a chain of events in relation title ownership showing the transfership from grantor to grantee in the public land records. A real estate property history of consecutive ownerships and transfer of ownerships in title to a tract of real property land.

Chapter 7:

A bankruptcy code providing for the personal liquidation of assets, such as the sale of a debtor's nonexempt property and the distribution of the proceeds to payoff collectors and creditors.

Chapter 11:

A bankruptcy code allowing a business company to reorganize debt usually involving small to large corporations or LLC partnerships. The purpose is to allow a business to keep operating while a plan of reorganization gets in place keeping creditors at bay. Corporations, businesses or individuals seek bankruptcy relief to reorganize their business operations so that they can remain in remains in control of the business and its operations.

Charge Off:

Shown on a credit report, charge offs happen when a debt creditor does not expect a debt to be paid and essentially gives up. However, it does not mean that the amount is no longer owed or that there will not be future attempts to collect the debt.

Chattel:

Is any item on real property other than actual real estate, which is usually referred to as personal property. It can be larger or small so long as it is movable.

Clear Title:

Real property ownership that is 100% title which is marketable and free and clear of any and all liens, defects, encumbrances, claims or legal questions as to the title ownership of real property.

Clearance:

When building a commercial real estate property, this term is used to determine the distance between the commercial building's floor and effective storage ceiling height.

Climate Control:

Commercial industrial and self-storage facilities utilize this term to represent climate temperatures that are controlled in commercial property space.

Closed Account Fee:

Escrow companies and lenders may charge this fee when earn-outs are required, construction loans or servicing charged for shutting down and closing an account. In some cases, this fee can be charged if an account is requested to be closed down before a certain time period has passed known as a prepayment penalty.

Closed-end Mortgage Loan:

Also called a closed mortgage, it is a commercial mortgage in which the repayment may not be made prior to a maturity date. This loan may also require repledging of similar assets if not the same type of collateral with the bondholder's authorization.

Closing:

Also known as a settlement, this is a meeting usually held in escrow, title or attorney's office where all legal property documents are signed, notarized and all expenses are paid for the real property transfer of ownership.." A closing or settlement, is when real property is legally sold and transferred from one seller to a buyer. It is at this time that the borrower will then take possession of real property and more than likely initiate debt on the property in the place of a mortgage loan, closing costs, receiving title from the seller. Closing is construed as a meeting between the buyer, seller and lender (or their agents) where the property and funds legally. The meeting requires borrowers, sellers, and any legal documents involved in the commercial real estate property transfership to be present. Closings include the delivery of a trust deed, signing of legal notes along with a disbursement and collection of deposits and mortgage funds necessary to complete the property sale. It is the final meeting where a property sale and transfership.

Closing Costs:

Closing costs are a consortium of fees when purchasing or selling commercial investment property. Fee's range from real estate broker commissions, loan discount points, lender origination fees, attorney's charges, taxes, title insurance premiums, third parties for obtaining appraisals, inspections and surveys, escrow agent fees, etc. A general financial term when describing fees that sellers and buyers pay are called "settlement fees." Closing costs in real estate property sale are paid upfront and or closing during the transfer of real property ownership while involved in closing real estate transactions over and above the price of the real estate.

Cloud on Title:

A problem claim or lien, revealed by the title insurance search, that negatively impacts an owner's title to real estate. It is an outstanding claim or encumbrance that may affect a buyer's goal of achieving clear title from the seller. A cloud on title is removed legal means by which a quitclaim deed is drawn up to release, or court action is required. Real estate having an irregularity or claim, or negative encumbrance that impairs it.

CLTV:

Combined Loan to Value by adding up all debts of 1^st, 2^nd and possible 3^rd trust deeds subtracting from the appraised value.

CMBS Loan:

Commercial Mortgage Back Securities. Wall Street securitization issuing bonds or other financial obligations secured by a pool or group of commercial mortgage loans.

Co-Borrower:

A secondary guarantor who helps the borrower qualify for a commercial loan. Co-borrower's help by contributing their expertise, resume and income for the qualification mortgage process of obtaining a loan. Co-borrowers are responsible and liable for the loan and property condition.

COFI (Cost of Funds Index):

A market index which is primarily used by apartment and multifamily/apartment lenders when offering adjustable rate mortgage loans. It is a good slow moving index to use when deciding on a variable rate mortgage loan. See 11th District Cost of Funds.

Collateral:

An asset made of real and personal property that is used as security for a repayment of a commercial loan. These assets pledged are to secure the lenders repayment of a loan. Commercial lenders need real property for security as a funding guarantee that the borrower will repay the loan. SBA loan lenders like the additional security to obligate the borrower incase the loan goes into default. It is a value based on real or personal property which the borrower agrees to pledges as additional security for a loan. Commercial mortgage lenders like to be trust deeds, by giving them the right of title to property to take over and sell if a borrower does goes into default with their mortgage payments.

Combined Loan-to-Value (CLTV):

A commercial loan value ratio based on the total amount borrowed on all mortgages against a property, and comparing it to the appraised value of the subject property. This amount equals all of the debt secured by the security as a percentage of the total amount estimated value of the property.

Commercial Bank Loan:

A commercial financial banking institution can provide private portfolio commercial mortgages as well as a broad range of conduit commercial loans, business loans, construction loans and commercial lines of credit.

Commercial Conduit Loan:

Conduit loans are known as the most competitive commercial fixed rate loans. The low rates, fixed terms and stability is the main reason, but prepayment of this loan will not happen unless a buyer assumes the existing loan. Mortgage Bankers are the main source in offering borrowers long term fixed rate commercial and multifamily loans. Banking institutions are also good funding sources for conduit loans when securitizing commercial real estate.

Commercial Land Loan:

Zoned commercial, the real property allows developers the option to build commercial real estate development investment grade use in the form of office buildings, shopping centers, hotels, and apartment financing.

Commercial Lender:

Commercial banking institutions that finance permanent, construction and bridge loans on investment properties. These commercial lenders can including local and national commercial banks, commercial mortgage bankers, credit unions, mutual savings banks, private commercial lenders, savings and loan associations, savings banks, REIT's, insurance and trust companies.

Commercial Loan:

A business loan that can be used for short or long term goals to finance a company's funding needs primarily for working capital. Commercial loans come in a variety of lending programs to fit each business objectives. These loans may be secured by the business or by real estate as collateral.

Commercial Mortgage Loan:

A trust deed secured by investment real estate. A mortgage loan placed on income producing real estate or other related business type purposes such as land development loans, apartment loans, golf course finance, etc.

Commercial Mortgage Backed Securities (CMBS):

The CMBS market is where Wall Street issues bonds or other financial obligations secured by a mortgage portfolio of mortgage loans. Conduit lenders, banks and mortgage bankers buy and sell these mortgage investment pools to own, trade, or servicing of the commercial real estate loans. Securitization is what allows these investment mortgage pools to be comprised or hotel loans, apartment loans, office building loans, etc., which are all pooled together into large sums comprising of commercial real estate investment loans on multifamily, hotels, office, self storage, retail, mobile home parks, industrial, etc., that are securitized and sold off to usually large intuitional investors. Wall Street securities offer mortgage pools that are collateralized by a variety small to large commercial mortgages.

Commingling:

It is the mixing of investor monies belonging to others with personal or business funds. Investment funds whereby investors can withdraw funds at any time, or whereby investors can be committed once they have invested. Commingled funds can be used to attract foundations or endowment monies. Commingled Funds can be set up by lender to attract pension fund dollars into real estate. On the other side, commingling can be illegal if someone is using the money of one beneficiary for the benefit of another, or failure to maintain the money in the proper escrow account.

Commission:

A percentage amount, based on either the property sales price if a real estate sales broker, or loan amount if a mortgage broker or banker funding the loan. Commissions are usually collected by a the lender or real estate professional as a fee for negotiating the loan or sales transaction.

Commitment Loan:

A pledge or promise by a commercial lender to make good on funding a loan on specific lending terms or finance conditions to a buyer or home builder. Also known as a commercial loan commitment, it is a formal written letter by a banker outlining terms and conditions agreeing to lend money. An obligation by an commercial mortgage lender to fund the investor's real estate purchase based on specified loan terms or funding conditions. A mortgage loan document issued by a direct lender that contains the loan conditions and under which a title policy of insurance will be issued. A lender agreement in writing, between a commercial lender and an investment borrower to loan money at a future date, subject to the completion of paperwork or compliance with stated conditions. A commitment letter from a mortgage lender stating in writing that the borrower's loan has been approved, specifying loan terms for which the commercial lender agrees to make a mortgage loan.

Comparables (Comps):

Lenders require MAI appraisals to utilize Sales comps in the subject property area. Sales comparables help commercial MAI appraisers to determine the approximate fair market value of the subject property. Comparable investment properties are used for comparative real estate purposes in the appraisal value process. Comparables are commercial investment properties that have close to the same size, location, and property amenities that have recently been sold.

Comparative Market Analysis:

A property value estimate of income producing real estate that is based on an analysis of commercial sales with similar property characteristics.

Compound Interest:

Mortgage Interest which is paid on the principal loan balance, and is accrued and unpaid interest. It is paid on a loan's principal and on any unpaid interest. Also known as capitalization, it can increase the amount of money a borrower must repay to a lender and can increase the monthly payments.

Condominium Conversion Loan:

Rehabbing an apartment or office building into the condominium form of real estate ownership.

Condominium Hotel Loan or Condotel Loan:

A condominium real estate project that is a rental property with hotel style registration desks, food and telephone services. Usually cleaning services are offered operating as a hotel while the units are owned.

Conduit Mortgage Loan:

The financial intermediary that sponsors the conduit between the lender(s) originating loans and he ultimate investor. The conduit makes or purchases loans from third party correspondents under standardized terms, underwriting and documents and then, when sufficient volume has been obtained, pools the loans for sale to investors in the CBMS markets.

Convertible Loan:

An option available on some adjustable rate mortgages (ARM's) that allows the loan to be converted to fixed rate mortgage. Conversion usually involves paying a one-time fee and conversion may be limited to within a certain time - frame.

Cosigner:

Someone who is willing to sign mortgage loan obligation with you in case you default on your monthly payments. Normally, the cosigner is required to go through the same application and approval process as the original signer of the loan.

Credit Company:

A lending organization that obtains it source of funds from the commercial market.

Credit Enhancements:

A loan to provide improvements to the property.

Credit Report:

A search through your existing credit history by a qualified credit bureau to determine if, and the number of times, you may have been delinquent making monthly payments on previous debts. Even when a credit report is for the most part positive, many lenders require written explanation for any negative comments within the credit report. This type of report is usually required to obtain a mortgage loan.

Debt Service Coverage Ratio (DSC):

A 1.0 means breakeven. The ratio is calculated by taking the net operating income and dividing it by the mortgage payments. Most lenders look for a ratio of 1.25 or higher.

Debt Service Loan:

The periodic payments (principal and interest) made on a loan.

Debt Ratio Loan:

One of several financial calculations performed by your lender to determine if you can afford a particular monthly payment. The debt ratio (also known as the obligations ratio) is the sum of all your monthly debt payments including your total monthly mortgage payment divided by your total monthly income. Typically acceptable debt ratios for Conventional Loan are 36 - 38%, FHA Loans are 41 - 43%, and VA Loans Are 41%.

Discount Rate:

Many lenders may offer you a lower "teaser" rate on an adjustable rate mortgage for the first adjustment period. After this period is over, the lender will adjust your loan according to the normal lenders margin rate.

Down Payment:

The amount of money you put down, normally anywhere from 5 - 25%.

Due Diligence:

The legal definition: a measure of prudence, activity or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent person under the particular circumstances. In CMBS: due diligence is the foundation of the process because of the reliance securities investors must place on the specific expertise of the professionals involved in the transaction.

Engineering Report:

Report generated by an architect or engineer describing the current physical condition of the property and its major building systems, i.e., HVAC, parking lot, roof, etc. The report also determines an amount for calculating replacement reserves, if needed.

Environmental Report:

Report generated by an qualified environmental firm to determine potential environmental hazards in a building's region or within the building itself.

Environmental Risk:

Risk of loss of collateral value and of lender liability due to the presence of hazardous materials, such as asbestos, PCB's, radon or leaking underground storage tanks (LUSTS) on a property.

Equity Loan:

1.The difference between the fair market value and current indebtedness, also referred to as "owner's interest". 2. The difference between the amount owed on the loan and the current purchase price of the home or property

Equity Capital Loan:

Capital raised from owners. In a commercial real estate case, a lender will also provide equity capital for a percentage of ownership.

Escrow:

1. A special account set up by the lender in which money is held to pay for taxes and insurance. 2. A third party who carries out the instructions of both the buyer and seller to handle the paperwork at the settlement.

Fair Market Value:

An appraisal term for the price which a property would bring in a competitive market, given a willing seller and willing buyer, each having a reasonable knowledge of all pertinent facts, with neither being under any compulsion to buy and sell.

Fannie Mae Loan:

A congressionally chartered corporation which buys mortgages on the secondary market from Banks, Savings & Loans, Etc; pools them and sells them as mortgage-backed securities to investors on the open market. Monthly principal and interest payments are guaranteed by FNMA but not by the U.S. Government.

FHA Loan:

Federal Housing Administration, a government agency.

Fixed Rate Mortgage Loan:

A mortgage with an interest rate that remains constant for the life of the loan. The most common fixed-rate mortgage is repaid over a period of 30 years; 15-year fixed-rate mortgage are also available.

Floating Rate Mortgage Loan:

See Adjustable Rate Mortgage.

Floor - To - Area Ratio (FAR):

The relationship between the total amount of floor space in a multi - story building and the base of that building. FAR's are dictated by zoning laws and vary from one neighborhood to another, in effect stipulating the maximum number of stories a building may have.

Foreclosure Loan:

The process by which a lender takes back a property on which the mortgagee had defaulted. A servicer may take over a property from a borrower on half of a lender. A property usually goes in to the process of foreclosure if payments are no more than 90 days past due.

Forward Commitment Loan:

A written promise from a lender to provide a loan at a future time.

Freddie Mac (Federal Home Loan Mortgage Corporation):

Entity buys loans from conventional lenders and packages them for sale to investors as securities.

Government Loans:

One of two loan types called FHA or VA loan. These loans are partially backed by the government and can help veterans and low-to-moderate income families afford homes. The advantages of these types of loans in that they often have a lower interest rate, are easier to qualify for, have lower down-payment requirements, and can be assumed by someone else if the home is sold. Many mortgage bankers can obtain these type of loans for you.

Graduated Payment Mortgages:

A type of mortgage where the monthly payments start low but increases by a fixed amount each year for the first five years. The payment shortfall or negative amortization is added to the principal balance due on the loan. The advantages if this type of loan is a lower monthly payment at the beginning of the loan term. This disadvantages are typically a slightly higher rate than traditional fixed rate mortgage loan and lenders usually require a larger down payment. In addition, the negative amortized amount increases the balance due on the total loan which can be a problem if the value of the home declines.

Gross Income:

Total income, before deducting taxes and expenses. The scheduled (total) income, either actual or estimated, derived from a business or property.

Growing Equity Mortgage:

A type of mortgage loan where the monthly payments start low but increase by a fixed amount each year for the entire life of the loan as compared to five years with a Graduate Payment Mortgage. The advantage of this type of loan is that the loan can usually be paid off in a short duration than a traditional fixed rate loan. This disadvantage of this loan is that the payment continues to go up irrelevant of the income of the borrower.

Hard Equity, Hard Money Real Estate Loan:

High interest rate financing.

Housing Ratio:

One of several financial calculations performed by your lender when applying for a conventional loan to determine if you can afford a particular monthly payment. The housing ratio(also known as the income ratio) is your total monthly payment including taxes and insurance divided by your total monthly income. Typically acceptable housing ratios for Conventional Loans are 28 - 33% and FHA Loans are 29 - 31%.

HUD Loan:

Housing and Urban Development, a federal government agency.

Index:

An economic indicator, usually a published interest rate, that determines changes in the interest rate of an adjustable - rate mortgage. ARM rates are adjusted to reflect changes in the index. The margin is the amount a lender adds to the index to establish the actual interest rate on an ARM.

Interest Rate:

The sum paid for borrowing money, which pays the lender's costs of doing business.

Interest Rate Loan:

The sum charged for borrowing money, expressed as a percentage.

Interest Rate Cap:

Limits the interest rate or the interest rate adjustment to a specified maximum. This protects the borrower from increasing rates.

Interest Shortfall:

The aggregate amount of interest payments from borrowers that is less than the accrued interest on the certificate.

Investment Banker:

An individual or institution which, acts as an underwriter or agent for corporations and municipalities issuing securities, but which does not accept deposits or make loans. Most also maintain broker/dealer operations, maintain markets for previously issued securities, and offer advisory services to investors also called investment banker. See also bank, commercial bank, and originator, syndicate.

Jumbo (Non - Conforming) Commercial Loans:

A mortgage loan that exceeds the amount that is acceptable by some commercial mortgage apartment lenders (on the secondary market) to Fannie Mae and Freddie Mac.

Lease Assignment:

An agreement between the commercial property owner and the lender that assigns lease payments directly to the lender.

Leasehold Improvements:

The cost of improvements for a leased property. Often paid by the tenant.

Lender Margin:

This is simply the profit the lender expects to receive from the loan. You can ask your lender what the margin is on an adjustable rate mortgage. Typically, lenders use a discount rate initially as a "teaser" rate. You must be sure to get the normal margin after the discount period is over.

Lines of Credit:

An arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period.

Loan origination Fee:

The fee charged by a lender, to prepare all the documents associated with your mortgage.

Lock - In:

The process of fixing the interest rate for a specific period of time irrelevant of future or impending economical changes to the interest rate. This process may require a fee or premium as it reduces your risk that the monthly payments will change while the loan paperwork is filed.

Lock - Out Period:

A period of time after loan origination during which a borrower cannot prepay the mortgage loan.

London Interbank Offered Rate (LIBOR):

The short - term rate (1year or less) at which banks will lend to each other in London. Commonly used as a benchmark for adjustable - rate financing.

LTV Loan to Value:

Proposed loan amount divide by the value of the property.

Margin:

The amount that is added to an index rate to determine the total interest rate.

Maturity:

1. The termination period of a note (e.g., a 30 - year mortgage has maturity of 30 years.) 2. In sales law, the date a note becomes due.

Mezzanine:

Late-stage venture capital financing.

Mini-perm Loan:

Short term permanent financing, usually 3 to 5 years.

Mortgage Banker:

An entity that makes loans with its own money and then sells the loan to other lenders.

Mortgage Broker:

An entity that arranges loans for borrowers.

Mortgage Insurance:

A type of insurance changed by most lenders to offset the risk of your loan when your down payment is less than 20% of the value of the home.

Mortgage Reduction Programs:

A type of Accelerated payment program whereby payments are made more frequently usually bi - weekly or weekly rather than the traditional monthly payment. Making more frequent and accelerated payments reduces the amount of principal more quickly which interest accumulation is based on. The net effect can be a savings on the total interest paid

Multi - Family Property Class A:

Properties are above average in terms of design, construction and finish; command the highest rental rates; have a superior location, in terms of desirability and / or accessibility; generally are professionally managed by national or large regional management companies.

Multi - Family Property Class B:

Properties frequently do not possess design and finish reflective of current standards and preferences; construction is adequate; command average rental rates; generally are well maintained by national or regional management companies; unit sizes are usually larger than current standards.

Multi - Family Property Class C:

Properties provide functional housing; exhibit some level of deferred maintenance; command below average rental rates; usually located in less desirable areas; generally managed by smaller, local property management companies; tenants provide a less stable income stream to property owners than Class A and B tenants.

Negative Amortization Loan:

Occurs when interest accrued during a payment period is greater that the scheduled payment and the excess amount is added to the outstanding loan balance (e.g., if the interest rate on ARM exceeds the interest rate cap, then the borrower's payment will be sufficient to cover the interest accrued during the billing period - the unpaid interest is then added to the outstanding loan balance).

Net Effective Rent:

Rental rate adjusted for lease concessions.

Net Operating Income (NOI):

Total income less operating expenses, adjustments, etc., but before mortgage payments, tenant improvements and leasing commissions.

Net - Net Lease (NN):

Usually requires the tenant to pay for property taxes and insurance in addition to the rent.

Notice of Default (NOD):

To initiate a non - judicial foreclosure proceeding involving a public sale of the real property securing the deed of trust. The trustee under the deed of trust records a Notice of Default and Election to Sell ("NOD") the real property collateral in the public records.

Non Recourse Loan:

A finance term. A mortgage or deed of trust securing a note without recourse allows the lender to look only to the security (property) for repayment in the event of default, and not personally to the borrower. A loan not allowing for a deficiency judgment. The lender's only recourse in the event of default is the security (property) and the borrower is not personally liable.

Operating Expense:

Periodic expenses necessary to the operation and maintenance of an enterprise (e.g., taxes, salaries, insurance, maintenance). Often used as a basis for rent increases.

Participation Loan:

A type of mortgage where the lender receives a percentage of the gross revenue in addition to the mortgage payments.

Percentage Lease:

Commonly used for large retail stores. Rent payments include a minimum or "base rent" plus a percentage of the gross sales "overage." Percentages generally vary from 1% to 6% of the gross sales depending on the type of store and sales volume.

Phase I:

An assessment and report prepared by a professional environmental consultant who reviews the property - both land and improvements - to ascertain the presence or potential presence of envir