- Amortized
Mortgage
A mortgage loan in which the
principal, as well as the interest, is payable in monthly or periodic
installments during the term of the loan.
- Assignment
The transfer in writing of
an interest in a lease, mortgage or other instrument. The assignor,
or lessee, transfers the entire remainder of the term created by
the lease, and the assignee becomes liable to the original lessor
for rent. Assign or may or may not retain secondary liability for
performance under the lease, depending upon the terms of the lease
pertaining to assignment.
- Bridge
Loan
A loan that "bridges" the
gap between the purchase of a new property and
the sale of the borrower's current property. The borrower's current
property is used as collateral and the money is used to close on
the new property before the current property is sold. Some are
structured so they completely pay off the old property’s
first mortgage at the bridge loan's closing, while others pile
the new debt on top of the old. They usually run for a term of
six months.
- Broker
An individual or firm who
acts as an intermediary between a buyer and seller, usually charging
a commission.
- Commercial
Conduit Lenders
Relatively new to the lending
industry, these conglomerates combine assets from different sources
and sell them to other lenders or investors. This creates an intermediary
to a mass vast funding based on the equity in a large property or
collection of exclusive collateral.
- Commercial
Lender
An entity that lends money
to individuals or businesses as part of its normal business operations.
- Commercial
Raw Land Loans
Raw land loans are an agreement
in which a lender (usually a bank) gives money to a business that
is performing a raw land development project. The business agrees
to repay the money with interest, at some future point in time. Raw
land loans are very flexible and come in a variety of terms to meet
the borrower’s specific needs. Money issued for raw land loans
are usually distributed in increments as the raw land development
project meets certain milestones.
- Estoppel
Certificate
A signed statement certifying
that certain statements of fact are correct as of the date of the
statement and can be relied upon by a third party, including a prospective
lender or purchaser.
- Fed
Rate
The interest rate that banks
charge each other for the use of Fed funds. It changes daily and
is a sensitive indicator of general interest rate trends. The Fed
funds rate is one of the two interest rates set by the Fed, the other
being the discount rate.
- Foreclosure
Legal process by which a mortgagor
of real property is deprived of his interest in that property due
to failure to comply with terms and conditions of the mortgage.
- GSE
Lenders
Government Sponsored Enterprise
Lenders. Privately held corporations with public purposes created
by the U.S. Congress to reduce the cost of capital for certain borrowing
sectors of the economy. Members of these sectors include students,
farmers and homeowners.
- Hard
Money
Real estate is the primary
collateralized asset for a hard money loan. Hard money refers specifically
to the asset used to guarantee repayment. In the event of a default,
hard money is repaid by the borrower with the collateralized property.
- Hard
Money Lender
Hard money lenders are commercial
real estate lending companies offering a specialized type of real-estate
backed loan. Hard money lenders provide short-term loans (also called
a bridge loan) that provide funding based on the value of real estate
that has been collateralized for the loan. Hard money lenders typically
have much higher interest rates than banks (between 11 and 16%) because
they fund deals that do not conform to bank standards.
- Hard
Money Loan
A hard money loan is a specific
type of financing in which a borrower receives funds based on the
value of a specific parcel of commercial real estate. Hard money
loans are typically issued at much higher interest rates than conventional
commercial or residential property loans and are almost never issued
by a commercial bank or other deposit institution. Hard money is
similar to a bridge loan which usually has similar criteria for lending
as well as cost to the borrowers. The primary difference is that
a bridge loan often refers to a commercial property or investment
property that may be in transition and not yet qualifying for traditional
financing. Whereas hard money often refers to not only an asset based
loan with a high interest rate, but can signify a distressed financial
situation such as arrears on the existing mortgage or bankruptcy
and foreclosure proceedings are occurring.
- Letter
of Intent
A formal method of stating
that a prospective developer, buyer or lessee, is interested in property.
Not an offer and creates no obligation.
- LIBOR
London Inter-Bank Offer Rate.
The interest rate that the banks charge each other for loans (usually
in Eurodollars).
- Loan
Origination Fee
Fee charged by a lender for
processing a loan, usually expressed as a percentage of the loan
(or points), which pays for the work in evaluating and processing
the loan.
- Loan
Originator
A mortgage lender who creates
a mortgage secured by some amount of the mortgagor's real property.
- LTV
- Loan to Value
Loan To Value. The ratio of
the fair market value of an asset to the value of the loan that will
finance the purchase. Loan-to-value tells the lender if potential
losses due to nonpayment may be recouped by selling the asset.
- Market
Price
A security's last reported
sale price (if on an exchange) or its current bid and ask prices
(if over-the-counter); i.e. the price as determined dynamically by
buyers and sellers in an open market. Also called market value.
- Market
Value
The highest price that a buyer
would pay and the lowest price a seller would accept on a property.
Market value may be different from the price a property could actually
be sold for at a given time.
- Non-Conforming
Loan
A loan that does not conform
to Federal National Mortgage Association (FNMA) or Federal Home Loan
Mortgage Corporation (FHLMC) guidelines because the loan amount is
too high or FNMA/FHLMC underwriting or other criteria are not met.
Jumbo loans are non-conforming. Also called sub-prime or BCD.
- Notary
Public
A licensed public officer
who administers oaths, certifies documents and performs other specified
functions. A notary public's signature and seal is required to authenticate
the signatures on many legal documents.
- Prepayment
Penalty
Money charged for an early
repayment of debt. Prepayment penalties are allowed in some form
(but not necessarily imposed) in many states.
- REIT
Real Estate Investment Trust.
A company, usually traded publicly, that manages a portfolio of real
estate to earn profits for shareholders.
- SBA
Small Business Administration.
As the government's small business advocate, the SBA oversees various
federal procurement initiatives, and serves as an information resource
for small businesses looking to learn more about contracting.
- Valuation
Assessment of the value of
a property given in a written report by a registered valuer.
- Zoning
Ordinance
An exercise of police power
by a municipality to regulate and control the character and use of
property.
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