This Glossary is especially designed and focused to assist seller/beneficiaries and
buyer/borrowers to better understand the terms generally used in the Note and Trust
Deed Industry. It is not "all inclusive" in content. If you need assistance in
determining the definition of a word or the meaning of a clause in your note or contract,
we welcome your questions.
| Addendum | Something added to a document, escrow instructions, contracts etc. |
| Appreciation | Increase of property value. |
| Assessed Value | The taxable value placed upon property by the tax assessor. |
| Agent | The person who is acting on behalf of the principal or client. |
| Agreement of Sale | In some states it is synonymous with a purchase agreement (Purchase Agreement). In other states, it is synonymous with a land contract (Land Contract). |
| Alienation Clause | A clause calling for a debt under a mortgage or deed of trust to be due in its entirety upon transfer of ownership of the secured property. |
| Assumption of Mortgage | Agreement by a buyer to assume the liability of an existing mortgage or deed of trust. |
| Abstract | A written history of public records on a property. |
| Amortization | Repayment of a loan through scheduled installment payments. |
| Appraisal | A report made by a qualified person indicating the value of a property at a given date |
| Balloon Payment | The final payment on a note that is much larger than any specified installment. |
| Bankruptcy | A court proceeding to relieve the debts of an individual or business unable to pay its creditors. The insolvent debtor\'s assets are liquidated and the debtor is relieved of further liability. |
| Blanket Mortgage | A mortgage secured by more than one parcel of property. |
| Call | To demand full payment of a loan due to default. |
| Chain of Title | The chronological order of conveying of a property. |
| Closing Costs | Expenses incidental to closing a real estate transaction, such as loan fees, title fees, appraisal fees, commissions, etc. |
| Credit Report | History of the use of credit and the ability of a party to pay debts as agreed. |
| Deed | Instrument used to convey property. |
| Default | Failure to meet an obligation when due. |
| Depreciation | Loss in value from any source including physical deterioration, economic conditions, or functional obsolescence. |
| Discount Points | An amount charged to the borrower by the lender, the effect of which increases the effective yield of the loan, or generates fee income to the lender. |
| Escrow Encumbrance | A claim, lien, or liability that has been attached to the property. |
| Equity | The difference between the fair market value (appraised value) of your home and the outstanding mortgage balance, i.e. the portion of property you own. |
| Equity Loan | A loan based solely on the equity in the property as collateral for the loan. |
| Escrow | A neutral third party that acts upon the written instructions of the parties for the receipt and disbursement of funds and documents relating to a real estate transaction. |
| Fair Market Value | The most probable price that would be received for a property in a reasonable time on an open market. |
| Fixed Rate Mortgage | A loan having a fixed rate of interest for the life of the loan. |
| Grace Period | A period of time past the due date for a payment on a loan in which no late charges will be assessed. |
| Grantee | Buyer of property |
| Grantor | Seller of property |
| Interest Rate | The periodic charge, expressed as a percentage, for use of credit |
| Impounds | Funds collected and held by the lender for the future payment of taxes and insurance on behalf of the borrower. |
| Interest | A fee for the use of money. |
| Lien | A general term for a legal claim of a creditor on a property of another to secure a debt. |
| Loan Origination | The process whereby a new loan is created, covering the time from loan application to loan closing. |
| Lien | A legal claim on property used as security for a debt. |
| Loan-To-Value Ratio | The relationship (percentage), between a property\'s mortgage and value. For example, if you owe $50,000 on a $100,000 home, the ratio is 50%. |
| Mortgage | A legal document where the owner uses the new property as security to guarantee repayment of the loan. The mortgagee is also known as the lender. The mortgagor is known as the borrower. |
| Negative Amortization | An increase in a loan balance as a result of the lender receiving less than the full amount of the interest earned on a loan. |
| Nominal Rate | The rate stated in the note. |
| Promissory Note | Document signed and given to the lender by the borrower. It explains what is owed and how it will be paid. |
| Principal | The amount of the debt outstanding. |
| Recording | Filing documents with the county recorder. |
| Title | A document showing ownership of property. |
| Title Insurance | Insurance against defects in title. |
| Title Search | Report checks all records of a specific piece of real estate to guarantee there are no liens, encumbrances, ownership concerns, etc. |
| Transfer Tax | In some areas, city, county, or state taxes imposed when property passes from one person to another. |
| Underwriting | Assessing the risk of a loan to the lender. |
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