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 refin