An accommodation party is an individual who signs an agreement or promissory note without receiving any value in return, for the sole purpose of lending their name to help another person secure a loan or other arrangement.
An Adjustable-Rate Mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The rate initially remains fixed for a period before adjusting at preset intervals.
A blanket mortgage is a single mortgage that covers more than one parcel of real estate, often used by developers to finance multiple properties under a single loan.
Call provisions are clauses in a loan agreement that grant the lender the right to accelerate the debt and demand full repayment upon occurrence of a specific event or agreed-upon date.
Contingent interest refers to an interest payment on a loan that is due only if certain pre-specified conditions are met. It often acts as an incentive for the borrower to perform well and achieve specific financial metrics.
In the context of real estate, a debtor is a person or entity obligated to repay a debt. The debtor obtains a loan or other form of credit, typically used to purchase property, and is legally responsible for repaying the borrowed amount according to the agreed terms. The opposite of a debtor is a creditor, who provides the loan or credit.
Delinquency Rate is a critical metric in real estate finance, used to gauge the risk of loan defaults within a portfolio. It measures the percentage of loans that are past due for a specified period, typically 90 days or more.
A disbursement refers to the act of paying out money, often seen in contexts like loan origination or the dissolution of investment ventures.
A Dry Mortgage, also known as a Nonrecourse Mortgage, is a type of financing where the borrower is not personally liable beyond the collateral securing the loan. In these agreements, the lender can seize the property used as collateral to satisfy the loan, but cannot pursue the borrower for any remaining balance if the collateral does not cover the full liability.
In real estate, a 'Floor' is a provision in the contract of an adjustable-rate mortgage (ARM) that sets a minimum interest rate for the loan, ensuring it does not fall below a specified level regardless of market conditions.
A graduated-payment mortgage is a home loan characterized by low initial monthly payments that gradually increase over time according to a predetermined schedule.
An Indexed Loan is a long-term loan where the term, payment, interest rate, or principal amount may be adjusted periodically in accordance with a specific index.
Institutional lenders are financial intermediaries that provide loans and other financial products, primarily funding these activities through deposits or customer investments and operating under regulatory guidelines to minimize risk.
Long-term financing, also known as permanent mortgage, involves a loan with a long repayment period, typically extending over several years or decades. This form of financing is commonly used for purchasing real estate or significant capital investments, and provides borrowers with stability and predictable payment schedules.
A mortgage note is a legal document that outlines the terms of a loan agreement secured by real estate property. It details the borrower's obligation to repay the lender, the loan amount, interest rate, repayment terms, and other provisions.
A nonassumption clause, also known as a due-on-sale clause, is a clause in a mortgage contract that prevents the transfer of the mortgage terms to another borrower in the event of a sale. This clause is used to protect lenders from the potential risks of new borrowers who might be less creditworthy than the original borrower.
Nonrecourse financing refers to loans secured by collateral, typically real estate, where the lender's ability to recover the debt is limited to the proceeds from the sale of that collateral alone, with no further recourse to the borrower's other assets.
An open-end mortgage is a type of loan that allows the borrower to secure additional funds from the lender, with a ceiling amount set on the maximum borrowing limit typically based on a percentage of the property's appraised value.
Originate refers to the process by which a lender creates and funds a loan. Loan origination encompasses assessing and approving an applicant's creditworthiness, as well as disbursing funds to initiate the lending transaction.
A prepayment clause permits a borrower to pay off a loan before its maturity date, sometimes incurring a penalty for the privilege of early payment.
In real estate, 'Priority' refers to the order in which creditors will be repaid in the event of a foreclosure. This can significantly impact which stakeholders are paid first and who might not receive any repayment if funds are exhausted.
A rehabilitation mortgage is a unique kind of loan designed to cover both the purchase price of a property and the costs associated with its repair or improvement. The FHA’s 203(k) loan is a popular example of this type of financing.
An underlying mortgage refers to the first mortgage secured by a property when there's also a wraparound mortgage. It forms the basis of the total debt, while the wraparound mortgage includes additional financing layered on top of it.
