REAL ESTATE GLOSSARY

Accredited Buyer’s Representative (ABR)	A real estate designation indicating a higher level of training for representing buyers.
Abstract	A history of all transactions shown in the public records affecting a particular tract of land.
Acceleration clause	A clause in a mortgage that allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
Adjustable Rate Mortgage (ARM)	Mortgage loans under which the interest rate is periodically adjusted, in accordance with some market indicator, to more closely coincide with the current rates. The extent and number of these adjustments are agreed to at the inception of the loan.
Adverse Possession	The possession, by one person, of land belonging to another in a manner deemed adverse to the interest of the owner. Inmost states, by operation of law, title to the land becomes vested in such person after a fixed number of years if the owner fails to assert his or her rights.
Affidavit	A written statement made under oath before a notary public or other judicial officer
ALTA (American Land Title Association)	The trade association of the title insurance industry, which has adopted certain insurance policy, forms to standardize coverage on a national basis.
Amortization	Payment to reduce the principal of a debt in regular, periodic installments.
Amortization schedule	A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.
Annual percentage rate (APR)	This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual note rate on your loan.
Appraisal	A report from an independent third party detailing the estimated value of real estate
Appraised value	An opinion of a property’s fair market value,based on an appraiser’s knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales,and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.
Appraiser	An individual qualified by education, training,and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders,most are independent.
Appreciation	The increase in the value of a property due to changes in market conditions, inflation, or other causes.
Appurtenance	A right or privilege that is a part of the ownership of property, such as a right of way to a highway across the land of another. Water rights are also an example.
Assessed value	The valuation placed on property by a public tax assessor for purposes of taxation.
Assessment	(1) The valuation of real estate for purpose of taxes or special improvement charges. (2) The amount of taxes or special improvement charges. Special improvement charges are usually for the costs of streets, sidewalks, sewers, etc.
Assessor	A public official who establishes the value of a property for taxation purposes
Asset	Items of value owned by an individual. Assets that can be quickly converted into cash are considered “liquid assets.”These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.
Assignment	(1) The act of transferring an interest, such as a loan secured by a mortgage, from one person to another. (2) The instrument or paper by which one person transfers such ownership to another.
Assumable mortgage	A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must “qualify” in order to assume the loan.
Attorney’s Opinion	A statement by an attorney as to the validity of a title arrived at after investigation of the history of the title as recorded in the public records.
Bill of Sale	A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds.
Binder	Sometimes called “preliminary certificate” or”commitment.” (1) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a certain manner when certain conditions are met. (2) A deposit in escrow of a small part of the purchase price of real estate as evidence of good faith and to bind an agreement to purchase.
Broker	Broker has several meanings in different situations. Most Realtors are “agents” who work under a “broker.” Some agents are brokers as well, either working form themselves or under another broker. As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.
Celebrity Realtor	A realtor who is very well known and is believed to possess special powers. They do a lot of business because they get a lot of business and usually charge full commission.
Certificate of Title	A certificate issued by a title examiner stating the condition of a title.
Chain	In real estate measurements (surveying), a chain is 66 feet long or 100 links, each link being 7.92 inches. The measurement may change when used in fields other than surveying
Chain of Title	The successive ownerships or transfers in the history of title to a tract of land
Certified Home Marketing Specialist (CHMS)	A real estate designation indicating special training for marketing homes.
Claim	An adverse right or interest asserted by one party against another or against an insurer or indemnitor. Claims may arise from unpaid debts or taxes, as well as from hidden title defects such as fraud, forgery, missing heirs, etc.
Clear Title	Real property ownership free of liens, defects,encumbrances or claims.
Closing	Also called “settlement.” A meeting of all parties involved in a property transaction during which the transaction is consummated
Closing Costs	Closing costs are separated into what are called”non-recurring closing costs” and “pre-paid items.” Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. “Pre-paids” are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.
Clouded Title	An irregularity, possible claim or encumbrance that, if valid, would adversely affect or impair the title
commission	Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives,attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies,insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. Realtors generally earn the largest commissions, followed by lenders, then the others.
Comparable Sales	Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as “comps.”
Condemnation	(1) The taking of private property for a public purpose, with compensation to the owner under the right of eminent domain. Governmental units, railroads and utility companies have the right to condemn and take private property. (2) The destruction by government of private property that imperils the life, health or safety of the public.
Contingency	A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
Contract	An oral or written agreement to do or not to do a certain thing.
Conventional Loan	A loan secured by a mortgage or deed of trust for which the loan-to-value ratio is within an acceptable range for a particular lending institution.
Conveyance	The transfer of title to property from one person to another
Cooperating Commission	The commission paid by the seller to the real estate agent that delivers the buyer.
Courtesy	A right that a husband has in his wife’s property at her death. It does not exist in all states.
Covenant	A formal agreement or contract between two parties in which one party gives the other certain promises and assurances,such as covenants of warranty in a warranty deed.
Credit	An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date. (top)
Deed Restriction	A covenant contained in a deed imposing limits on the use or occupancy of the real estate or the type, size, purpose or location of improvements to be constructed on it
Deed-in-lieu	Short for “deed in lieu of foreclosure,” this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and become a matter of public record.
Default	Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.
Defect	A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
Delinquency	Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a “late fee” for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus.
Deposit	A sum of money given in advance of a larger amount being expected in the future. Often called in real estate as an”earnest money deposit.”
Depreciation	Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.
Devise	A gift of real estate made by a will
Discount points	A “point” is one percent of the loan amount.
Dominant Estate	The property for the benefit of which aright-of-way easement exists across another’s adjoining piece of land is said to be the dominant estate. The land across which the easement runs is said to be the servient estate.
Dower	A right that a wife has in her husband’s property at the time of his death. Does not exist in all states.
Down Payment	The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Dual Agency	An agency relationship where one agent simultaneously represents both sides of the transaction – potentially a conflict of interest.
Earnest Money	A deposit of funds by the purchaser of a piece of real estate as evidence of good faith.
Easement	A right to use all or part of the land owned by another for a specific purpose. An easement may, for example, entitle its holder to install and maintain sewer or utility lines.
Encroachment	Any building, improvement or structure located on one property (such as a wall, fence or driveway) that intrudes upon the property of another.
Encumbrance	Any interest, right, lien or liability attached to a parcel of land (such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden or charge upon
Equal Credit Opportunity Act (ECOA)	A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity	A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
Escheat	The reversion of property to the state when an owner dies leaving no legal heirs, devisees or claimants.
Escrow	A method of closing a real estate transaction in which all required documents and funds are placed with a third party for processing and disbursement.
Estate	The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death
Exclusive Listing	A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
Execute	To sign a legal instrument. A deed is said to be executed when it is signed, sealed, witnessed and delivered.
Fannie Mae (FNMA)	Federal National Mortgage Association. A private corporation dealing in the purchase of first mortgages.
Fannie Mae’s Community Home Buyer’s Program	An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family’s buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
Federal Housing Administration (FHA)	An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
FHA mortgage	A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.
Fixed Rate Mortgage	A mortgage having a rate of interest that remains the same for the life of the mortgage.
Fixtures	Personal property that is attached to real property and is legally treated as real property while it is so attached. Examples: medicine cabinets, window blinds and chandeliers.
Flood Insurance	Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
Foreclosure	A legal proceeding in which real estate secured by a mortgage or deed of trust is sold to satisfy the underlying debt.
Freddie Mac (FHLMC) Federal Home Loan Mortgage Corporation	A federal agency that purchases both conventional and federally insured first mortgages from members of the Federal Reserve System and the Federal Home Loan Bank System.
Ginnie Mae (GNMA) Government National Mortgage Association	A federal association working with the FHA that offers special assistance in obtaining mortgages and purchases mortgages in the secondary market
Grant	To bestow or confer, with or without compensation,a gift such as land or money by one having control or authority over the gift.
Hazard Insurance	Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards.
Home Inspection	A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.
Homeowners’ Association	A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
Homeowners Insurance	Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc., depending on the terms of the policy. Also includes coverage such as personal liability and theft away from home
HUD (Department of Housing and Urban Development)	The federal department responsible for the major housing programs in the United States.
HUD-1 settlement statement	A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions; loan fees, points, and initial escrow(impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller’s net proceeds and the buyer’s net payment at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the “closing statement” or “settlement sheet.”
Lease	A written agreement between the property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.
Lease Option	An alternative financing option that allows home buyers to lease a home with an option to buy. Each month’s rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price
Leasehold	The right to possession and use of land for a fixed period of time. The lease is the agreement that creates the right.
Legal Description	A property description, recognized by law that is sufficient to locate and identify the property without oral testimony.
Lender	A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as “lenders.”
Lessee	A tenant holding leasehold.
Lessor	A landlord; one who gives leasehold to a lessee.
Lien	A monetary charge imposed on a property, usually arising from some debt or obligation.
Loan	A sum of borrowed money (principal) that is generally repaid with interest.
Loan officer	Also referred to by a variety of other terms, such as lender, loan representative, loan “rep,” account executive, and others. The loan officer serves several functions and has various responsibilities: they solicit loans, they are the representative of the lending institution, and they represent the borrower to the lending institution.
Loan Origination	The process of obtaining new loans.
Loan Servicing	After you obtain a loan, the company you make the payments to is “servicing” your loan. They process payments, send statements, manage the escrow/impound account, provide collection efforts on delinquent loans, ensure that insurance and property taxes are made on the property, handle pay-offs and assumptions, and provide a variety of other services.
loan-to-value (LTV)	The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).
Lock-in	An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.
Lock-in period	The time period during which the lender has guaranteed an interest rate to a borrower.
Lot	Generally, any portion or parcel of real property. Usually refers to a portion of a subdivision.
Margin	The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.
Market Value	The average of the highest price that a buyer,willing but not compelled to buy, would pay and the lowest price a seller, willing but not compelled to sell, would accept.
Mechanic’s Lien	A lien on real estate created by operation of law,that secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvements on the real estate.
Metes and Bounds	A land description in which boundaries are described by courses, directions, distances and monuments.
Mortgage	A conditioned pledge of property to a creditor as security for the payment of a debt.
Mortgage Banker	A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae. However, firms rather loosely apply this term to themselves, whether they are true mortgage bankers or simply mortgage brokers or correspondents.
Mortgage Broker	A mortgage company that originates loans, then places those loans with a variety of other lending institutions with which they usually have pre-established relationships.
Mortgage Insurance (MI)	Insurance that covers the lender against some of the losses incurred as a result of a default on a home loan. Often mistakenly referred to as PMI, which is actually the name of one of the larger mortgage insurers. Mortgage insurance is usually required in one form or another on all loans that have a loan-to-value higher than eighty percent. Mortgages above 80% LTV that call themselves “No MI”are usually a made at a higher interest rate. Instead of the borrower paying the mortgage insurance premiums directly, they pay a higher interest rate to the lender, which then pays the mortgage insurance themselves. Also, FHA loans and certain first-time home buyer programs require mortgage insurance regardless of the loan-to-value.
Mortgage Insurance premium (MIP)	The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
Mortgagee	The holder of a mortgage. The party to whom a mortgage is made, generally the lender.
Mortgagor	The borrower in a mortgage agreement.
Multiple Listing	The pooling in a central bureau of listings of properties for sale. These listings are held individually by members ofa group of real estate brokers, with the agreement that any member of the group may sell the properties and, in the case of a sale, the commission will be divided between the broker making the sale and the broker who filed the listing.
No-cost loan	Many lenders offer loans that you can obtain at”no cost.” You should inquire whether this means there are no “lender”costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a “no-point” loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.
Note	Also called “promissory note.” A written promise to pay a sum of money, usually at a specified interest rate, at a stated time to a named payee.
Notice of Default	A formal written notice to a borrower that a default has occurred and that legal action may be taken.
Original Principal Balance	The total amount of principal owed on a mortgage before any payments are made.
Origination Fee	On a government loan the loan origination fee is one percent of the loan amount (see point), but additional points maybe charged which are called “discount points.” One point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.
PITI	The four components of a monthly mortgage payment on impounded loans. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.
PITI reserves	A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance(PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
Plat	Also called “plat map.” A map dividing a parcel of land into lots, as in a subdivision. A plat book contains the plat maps for a given area.
Pocket Listing	A listing that is kept in the listing agent’s pocket instead of being distributed on the MLS. It may sound sexy but it’s a really bad idea. Why would you not want the broadest possible distribution of your property?
Point	Also called “commission points” or “discount points.” One percent of the amount of the loan.
Power of Attorney	A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
Pre-Approval	A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification
Premium	The amount payable for an insurance policy.
Prepayment	Any amount paid to reduce the principal balance ofa loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner’s decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.
Prepayment Penalty	A fee that may be charged to a borrower who pays off a loan before it is due.
Pre-qualification	This usually refers to the loan officer’s written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.
Prescriptive Easement	A right to use another’s property that is not inconsistent with the owner’s rights and that is acquired by an open,notorious, adverse and continuous use for the statutory period, for example 20 years.
Prime Rate	The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.
Principal	The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
Principal Balance	The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.
Private Mortgage Insurance (MI)	Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
Procuring Cause	A clever concept created by real estate agents in order to allow them to stake a claim on a client and restrict competition. It is defined as the uninterrupted chain of causal events that leads to a successful transaction. It’s the basis for determining which realtor is entitled to a commission – i.e. the one who can establish procuring cause.
Promissory Note	A written promise to repay a specified amount over a specified period of time.
Pumpkin Dropoff	A really lame marketing technique employed by some realtors who drive around giving pumpkins away at Halloween in order to ingratiate themselves with prospects. Some realtors even dress up in a costume.
Purchase Agreement	A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Purchase Money Mortgage	A mortgage given by a purchaser to a seller on the subject property to secure payment of a part of the purchase price.
Qualifying Ratios	Calculations that are used in determining whether a borrower can qualify for a mortgage. There are two ratios. The “top”or “front” ratio is a calculation of the borrower’s monthly housing costs (principle, taxes, insurance, mortgage insurance, and homeowner’s association fees) as a percentage of monthly income. The “back” or”bottom” ratio includes housing costs as will as all other monthly debt.
Quit Claim Deed	A deed that does not imply that the grantor holds title, but that surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property
Rate Lock	A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.
Real Estate	Also called “real property.” (1) Land and anything permanently affixed to the land, such as building, fences and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items that would be personal property if not attached. (2) May refer to rights in real property as well as the property itself.
Real Estate Agent	A person licensed to negotiate and transact the sale of real estate.
Real Estate Settlement Procedures Act (RESPA)	A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
Real Property	Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest,benefits, and inherent rights thereof.
Realtor®	A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.
Recorder	The public official who keeps records of transactions that affect real property in the area. Sometimes known as a “Registrar of Deeds” or “County Clerk.”
Recording	The noting in a public office of the details of a legal document – such as a deed or mortgage – affecting the title to real estate. When such an instrument is properly recorded, it is considered to be a matter of public record. Legally, that means that all subsequent purchasers are deemed to have constructive knowledge of that information.
Release	(1) To relieve from debt or security or abandon aright, such as the release of a mortgage lien from a part or all of the land mortgaged. (2) The instrument effecting a release.
Restrictions	Limitations on the use of property imposed or created by deeds or other documents in the chain of title. A restriction, for example, may prohibit the placement of trailer or the construction of a commercial structure on the property.
Right of First Refusal	A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
Right of Survivorship	In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant
Secured loan	A loan that is backed by collateral.
Security	The property that will be pledged as collateral for a loan.
Shadow inventory	The overhang of distressed properties, not yet on the market, but threatening to come on the market in the near future.
Short sale	A sale of a property where the proceeds from the sale is insufficient to pay off the mortgages and the lender(s) agree to accept this lesser amount to satisfy the debt.
Sphere of influence	A realtor’s relatives, friends, acquaintances, and anyone he/she has even casually met for 10 seconds who might be pressured to do business with the realtor or provide a referral, just because they know each other, without regard for the realtor’s capabilities.
Subdivision	A housing development that is created by dividing a tract of land into individual lots for sale or lease.
Subordination	The act or process by which a person’s rights are ranked below the rights of others. For example, a second mortgagee’s rights are subordinate to those of the first mortgagee
Surety	(1) A person who agrees to be responsible for a debt or obligation of another. (2) The pledge or agreement by which one undertakes responsibility for the debt or obligation of another.
Survey	A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements,rights of way, encroachments, and other physical features.
Tenancy in common	As opposed to joint tenancy, when there are two or more individuals on title to a piece of property, this type of ownership does not pass ownership to the others in the event of death
Third-party origination	A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.
Title	(1) A combination of all the elements that constitute the highest legal right to own, possess, use, control, enjoy and dispose of real estate or an inheritable right or interest therein.(2) The rights of ownership recognized and protected by the law.
Title Company	A company that specializes in examining and insuring titles to real estate.
Title Covenants	Covenants ordinarily inserted in conveyances and in transfers of title to real estate for the purpose of giving protection to the purchaser against possible insufficiency of the title received. A group of such covenants known as “common law covenants”includes: covenants against encumbrances; covenants for further assurance (in other words, to do whatever is necessary to rectify title deficiencies); covenants of good right and authority to convey;covenants of quiet enjoyment; covenants of seisin; covenants of warranty. (See Warranty or Covenant.)
Title Defect	(1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.
Title Insurance Policy	A contract of title insurance under which the insurer, in keeping with the terms of the policy, agrees to indemnify the insured against loss arising from claims against the insured interest.
Title Search	A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
Transfer of Ownership	Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property “subject to” the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device
Transfer Tax	State or local tax payable when title passes from one owner to another.
Treasury Index	An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury’s daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.
Trustee	A fiduciary who holds or controls property for the benefit of another.
Truth-in-Lending	A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
VA mortgage	A mortgage that is guaranteed by the Department of Veterans Affairs (VA).
Variable Interest Rate	Also called “flexible interest rate.” An interest rate that fluctuates as the prevailing rate moves up or down. In mortgages, there are usually maximums as to the frequency and amount of fluctuation.
Veterans Administration (VA)	An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.
Waiver	The voluntary and intentional relinquishment of a known right, claim or privilege.
Warranty	A type of insurance often purchased by home buyers that will cover repairs to certain items, such as heating or airconditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.