| acord form: |
A form utilized by the insurance industry for
use between an Agency and a Company for Organization. Research, and Development. |
| ADA compliance: |
Compliance with the provisions of the Americans
with Disabilities Act which establishes minimum requirements for facilities
with public access to accommodate physically handicapped persons. |
| after tax cash flow: |
The cash flow remaining after deduction of an allowance for
taxes attributable to that income. |
| aggregate deductible: |
A provision whereby the policyholder agrees to self assume
the payment of claims incurred up to a specific amount or limit, with the
insurer paying all claims after such limit is attached |
| aggregate limit of liability: |
A provision whereby the policyholder agrees to self assume
the payment of claims incurred up to a specific amount or limit, with the
insurer paying all claims after such limit is attached. |
| agreed amount: |
An agreement whereby the coinsurance clause is
waived If the insured agrees to carry a specific amount of insurance which
represent at least 90% to 100% of total values at risk. Also known as "stated
amount coinsurance." |
| agreed amount endorsement: |
An insurance endorsement used with a policy containing a coinsurance
clause. It binds the insurance company to an agreement that the amount of
insurance carried under the policy is sufficient to meet the requirements
of the coinsurance clause in the policy. Addition of the agreed amount endorsement
eliminates the risk of the coinsurance penalty |
| agreement for deed: |
A contract for the sale of property in which transfer
of title to the buyer is contingent on the fulfillment of certain conditions.
|
| alternative mortgage instrument: |
A mortgage that differs from the typical mortgage instrument
either in the amount of principal, the interest rate, the periodic or monthly
payments, or terms for repayment. |
| annuity: |
Periodic fixed payments to be received for a specified period
of time or for life, in consideration for prior lump sum or installment
payments made to the other party in the annuity contract. |
| attornment agreement: |
A letter acknowledging a new owner as a landlord or a new
organization as a loan servicer |
| back to back escrow: |
An escrow set up to facilitate the simultaneous purchase
of one property and the sale of another property by the same party. |
| back to back settlement: |
Transactions involving selling one home and purchasing another
on the same day, usually within hours of one another. |
| blind pool: |
A securities offering of interests in a property or group
of properties that have yet to be acquired. |
| bond loan: |
A state sponsored method of assisting low income borrowers
and first time homeowners in the purchase of a home at a reduced interest
rate. |
| bondable net lease: |
A long term absolute net lease with a tenant who has a very
high credit ceiling. The lease must be noncancellable and must call for
a net rental equal to or above the amount of debt service. |
| capital market: |
The financial market for buying and
selling long term investments (those with maturities of greater than one
year), such as mortgages, Treasury bonds, and certificates of deposit |
| capitalization: |
The conversion of a future net income
stream into present value by using a specific desired rate of earnings as
a discount rate. |
| capitalization analysis: |
The analysis based on the conversion of a future net income
stream into present value by using a specific desired rate of earnings as
a discount rate. |
| capitalization rate: |
The rate of return on net operating income considered acceptable
for an investor and used to determine the capitalized value. This rate should
provide a return on, as well as a return of, capital. Also known as "cap
rate." |
| capitalized value: |
The estimated market value of business assets in terms of
the present value of anticipated earnings |
| capped rate: |
A rate commitment by a lender which locks in a maximum rate
but allows the borrower to relock if market rates decrease. Also referred
to as cap and float. |
| cash equivalent value: |
A method of calculating the appraised value of a property
that considers sales and financing concessions when evaluating comparable
properties. There is no standard in the appraisal industry for measuring
cash equivalent value, but investors and mortgage insurers sometimes insist
that cash equivalency be incorporated in appraised values. |
| cash flow (after taxes): |
Cash received less cash paid out, including income taxes paid. |
| cash flow (before taxes): |
Cash received less cash paid out, before any consideration
for income taxes. |
| cash market: |
: A market where mortgages and/or mortgage backed securities
are bought and sold for immediate delivery and cash payment. Also called
spot market. |
| cash on cash return: |
The rate of return on an investment as measured by cash returned
to the investor, based on the investor's cash investment and without regard
to income tax savings or the use of borrowed funds. |
| debt coverage ratio: |
A ratio of effective annual net income to annual principal
and interest payments. Also called "debt service coverage." |
| debt/equity ratio: |
The proportion of capital borrowed to the amount of capital
invested outof?pocket or obtained through the sale of common stock. Also
called "leverage ratio." |
| dry funding: |
Any advance of new funds to a mortgage banker for funding
or purchasing mortgage loans where the collateral package is in the possession
of the collateral agent and is free of lien or bailment |
| environmental impact statement (EIS): |
A document required by many federal, state, and local environmental
land use laws, containing an analysis of the impact that a proposed change
may have on the environment of a specific geographic region. It examines
a wide variety of physical, social, and economic conditions that would be
affected by the proposed development. The analysis covers effects that cannot
be avoided, alternatives to the proposed change, short?term versus long?term
uses and long term productivity, irreversible commitments of resources,
and the benefits to be derived from the proposed change. |
| environmental impairment insurance: |
A special form of insurance desired to protect an insured
against claims for liability and clean up costs related to pollution. Coverage
may be granted for gradual and sudden and accidental pollution, and is always
written on a claims made form. |
| Environmental Protection Agency (EPA): |
The agency responsible for enforcing environmental liability. |
|
exculpatory clause:
|
A clause in a contract holding a specified party harmless
in the event of default. For example, the provision in a note that the debtor
will not be held personally liable in the event of default |
|
force majeure insurance:
|
A specialized form of coverage for owners and contractors
to protect against damage or delays caused by unpredictable events such
as war, strikes, or those perils not normally insured under "all risk" policies. |
| haircut: |
The difference between the market value of a mortgage and
the amount of money a lender will advance against it. |
| hazard waste risk: |
A financial or health risk that is created due to any substance
such as asbestos, urea formaldehyde foam insulation, transformers containing
polychlorinated biphenyls (PCBs) in excess of 50 parts per million, lead
paint, or any substance deemed hazardous, toxic, or required to be disclosed,
reported, treated, removed, disposed of, or cleaned up by any applicable
hazardous material law. |
| internal rate of return (IRR): |
A method of determining investment yield over time, assuming
a set of income, expense, and property value conditions. |
|
| nonrecourse loan: |
Type of loan which prohibits the lender from attempting to
recover against the borrower (personally) if the security value for the
loan falls below the amount required to repay the loan |
| overall capitalization rate: |
A market?derived capitalization rate based on sales prices
and rentals of comparable properties. The rate is calculated by dividing
the net operating income of a property by its sales price. |
| preforeclosure sale: |
Settlement of a mortgage default where the borrower allows
the mortgage insurance company or servicer to sell the property securing
the mortgage rather than foreclose on it. |
| present value: |
The current value of cash received
at a definite point or points in the future. |
| private conduit: |
A private market entity (without
ties to the federal government) that increases the availability of real
estate financing by purchasing and selling mortgages and mortgage backed
securities. Private conduits match lender and investor needs, allowing for
the sale or securitization of loans by mortgage bankers to a national market. |
| strict foreclosure: |
A type of foreclosure proceeding
used to some states in which title to the foreclosed property is invested
directly in the mortgagee by court decree, without holding a foreclosure
sale |
| subordination (lease) provision: |
A clause in a lease by which the tenant acknowledges
that its interest in the lease premises is inferior to the interest of the
lender whose mortgage encumbers the leased premises |
| subrogation: |
The right of a party to proceed against another
for recovery. |
| submortgage: |
The use of one mortgage as collateral to obtain
another. |
| subordinate lien: |
A lien or encumbrance (for example a second mortgage
or mechanic's lien) on real estate whose priority is inferior to another's
recorded interest in the same property. |
| subordinated ground lease: |
A lease in which rights of the lessor of the
ground are junior to the rights of the holder of the first mortgage. |
| subordination: |
: The act of a party acknowledging.
by written record, that a debt is inferior to the interest of another in
the same property. Subordination may apply not only to mortgages, but to
leases, real estate rights, and any other types of debt instruments. |
| subordination agreement: |
A document by which parties acknowledge, by written
record, that the debt of one is inferior to the debt or interest of another
in the same property. Subordination may apply not only to mortgages, but
to leases, real estate rights, and any other types of debt interests. |
| superfund: |
The term "Superfund" is frequently used to refer
to the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA), enacted in 1980, and modified by the Superfund Amendments
and Reauthorization Act (SARA) to 1986. Under this federal statutory framework,
the U.S. Environmental Protection Agency (EPA) is empowered to determine
which locations are contaminated by hazardous waste, respond appropriately
to protect public health and the environment, and allocate liability for
associated response costs. |
| weighted average coupon (WAC): |
The weighted average of the gross interest rates
of the mortgages in a mortgage pool, as of the issue date, with the balance
of each mortgage used as a weighing factor. |
| weighted average maturity (WAM): |
The weighted average of the remaining terms to
maturity of the mortgages in a mortgage pool as of the issue date. |
| wet funding: |
Any advance of new funds to a mortgage banker
for funding or purchasing mortgage loans where the collateral package is
not in possession of the collateral agent or is not free of lien or bailment. |
| wraparound mortgage: |
A refinancing technique involving the creation
of a second mortgage which includes the balance due on any existing mortgages,
plus the amount of the new secondary or junior lien. |
| yield curve: |
The ratio of investment income to the total amount
invested over a given period of time. |
| yield curve: |
A graphic representation of market yield for
a fixed income security plotted against the maturity of the security. |
| yield maintenance: |
The prepayment premium which will equal the present
value of any costs to the lender resulting from the difference in interest
rates between the date of the note and the date on which the prepayment
is made. |
