Real Estate Dictionary Continued...
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Fair Market Value - The price at which property is transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent data and neither of whom is under any compulsion to buy or sell.

Federal Home Loan Mortgage Corporation (FHLMC) - A private corporation authorized by Congress to provide secondary mortgage market support for conventional mortgages. Also know as Freddie Mac.

Federal Housing Administration (FHA) - A division of HUD. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA does not lend money.

Federal National Mortgage Association (FNMA) - A privately owned corporation created by Congress to support the secondary mortgage market. Also known as Fannie Mae.

Fee Simple - An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. The greatest interest a person can have in real estate.

Fiduciary - A person in a position of trust and confidence for another.

Firm commitment - A lender's agreement to make a loan to a specific borrower of a specific property.

First mortgage - A mortgage having priority over all other voluntary liens against certain property.

Foreclosure - A legal term applied to any of the various methods of enforcing payment of the debt secured by a mortgage, or deed of trust, by taking and selling the mortgaged property, and depriving the mortgagor of possession.

General Warranty Deed - A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.

Graduated Payment Mortgage - Residential mortgage which has monthly mortgage payments that start at a low level and increase at a predetermined rate.

Grantee - That party in the deed who is the buyer or recipient.

Grantor - That party in the deed who is the seller or giver.

Hazard Insurance - Protects against damages caused to property by fire, windstorms, and other common hazards.

Holdback - That portion of a loan commitment not funded until some additional requirement such as rental or completion is attained. In construction it is a percentage of the contractor's draw held back to provide additional protection for the interim lender, often in an amount equal to the contractor's profit.

HUD - U.S. Department of Housing and Urban Development. Office of Housing/Federal Housing Administration within HUD insures home mortgage loans made by lenders and sets minimum standards for such homes.

Index - An economic measurement that is used to measure periodic interest rate adjustments for an adjustable rate mortgage.

Interest - A charge paid for borrowing money. (See mortgage note)

Interest rate - The percentage of an amount of money which is paid for its use for a specified time. Usually expressed as an annual percentage.

Investor - An person or institution investing in mortgages.

Involuntary lien - A lien imposed against property without consent of an owner. Examples include taxes, special assessment, federal income tax liens, mechanics liens, and materials liens.

J Factor
Factor used by appraisers and investors to determine the changes needed in operating income to obtain a desired rate of return. This factor is determined after consideration of the location, rental, similar properties and cost of maintenance.

J Hook
Electrical wire in which a hook like bend in its end helps to shape and fit it around an electrical terminal.

Job Site
Construction location.

Jogging
Another term for inching, which is the movement of a crane hook, bridge or trolley when they are moved in short, jerky increments, such as stop and start.

Joint
Used to indicate a common property ownership interest in real estate. Indicates a shared liability in terms of a contractual relationship.

Joint and Several Liability
Situation wherein each borrower, on the same note, is held fully liable for the entire amount of the debt, not just a portion. The creditor may demand full repayment from any individual.

Joint Clearance
Gap between surfaces to be joined by welding, where the gap will help ensure that the weld filler penetrates to the needed depth in the base metal.

Joint Liability

Two or more people sharing the responsibility of fulfilling the terms of a debt.

Joint Note
More than one maker on a note where if one or more of the makers default on the note, all of the makers are sued jointly, rather than just one or all, to make restitution.

Joint Ownership
Ownership of real estate with two or more individuals having equal ownership with, upon the death of one owner, the property is transferred to the survivor.

Joint Tenancy
Equal ownership, by two or more people, each of whom has an undivided interest, with the right of survivorship.

Joint Venture
An agreement between two or more parties to invest in a specific single business or property. Although not a continuing relationship, it is treated as a partnership for income tax purposes.

Judgment
Decision, by a court, that a party must repay a debt and a lien may be placed against property owned by that party.

Judgment Creditor
The party to whom the court awarded a financial judgment against a debtor.

Judgment Debtor
The party against whom the court has placed a financial judgment.

Judicial Foreclosure

Property of a defaulted borrower is sold under court order and the amount received is ratified by the Court.

Keystone
Angular block, in a header or mantle, centered over a door or window or at the top of a masonry arch.

Kick-out Clause
Sales contract clause, which allows a seller to accept a contingent offer and then back out to accept a second and better offer without penalty.

Kicker
Payment required by a mortgage in addition to normal principal and interest. Also called an equity kicker or participation loan, it allows the mortgagee to participate in income from the mortgagor.

Kiosk
An independent stand from which merchandise is sold, often placed in the common area of a shopping center.

Kit Home
Structure containing prefabricated parts, which is assembled by a contractor.

Kitchenette
Tiny kitchen area that is often built into the end of another room such as a room in an efficiency apartment.

Land contract - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer. This financing vehicle is often used when property is sold on a small down payment.

Lease - A written document containing the conditions under which the possession and use of real or personal property are given by the owner to another for a stated period and for a stated consideration.

Legal description - A property description recognized by law which is sufficient to locate and identify the property without oral testimony.

Lessee (tenant) - The person or persons holding rights of possession and use of property under terms of a lease.

Lessor (landlord) - The one leasing property to a lessee. Licensed Mortgage Broker - The licensed person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. A firm or individual bringing the borrower and lender together and receiving a commission. A mortgage broker does not retain servicing.

Lien - A claim by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor.

Limited partnership - A partnership that consists of one or more general partners who are fully liable and one or more limited partners who are liable only for the amount of their investment.

Loan - A sum of money loaned at interest to be repaid.

Loan Processing - (1) A System by which a Buyer is evaluated for loan approval. The system compares the stated income, debt, savings and credit against documentation provided by the buyer (or alternative Federal documents). Calculations of Debt-To-Income, Loan-To-Value, Net Worth, Cash Reserves and Compensating Factors are used to develop and Underwriting Opinion.

(2) The system of structuring a Buyer's financial situation and documentation in such a way that an Underwriting Opinion can be reached.

Loan submission - A package of pertinent papers and documents regarding specific property or properties. It is delivered to a prospective lender for review and consideration for the purpose of making a mortgage loan.

Loan-to-value ratio - The relationship between the amount of the mortgage loan and the appraised value of the security expressed as a percentage of the appraised value.

Margin - The number of basis points a lender adds to the index to determine the interest rate of an adjustable rate mortgage.

Marketable Title - A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.

Metes and bounds - A description in a deed of the land location in which the boundaries are defined by directions and distances.

Mortgage - A lien or claim against real property given by the buyer to the lender as security for money borrowed. Under government-insured or loan-guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, water charges, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off.

Mortgage Commitment - A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.

Mortgage Insurance Premium - The payment made by a borrower to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance program and to provide a reserve fund to protect lenders against loss in insured mortgage transactions. In FHA insured mortgages this represents an annual rate of one-half of one percent paid by the mortgagor on a monthly basis.

Mortgage Life Insurance - A type of term life insurance often bought by mortgagors. The amount of coverage decreases as the mortgage balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds.

Mortgage Note - A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.

Mortgage (Open-End) - A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges. Open-end provisions often limit such borrowing to no more than would raise the balance to the original loan figure.

Mortgagee - The lender in a mortgage agreement.

Mortgagor - The borrower in a mortgage agreement.

Real Estate Dictionary ... A - E

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Real Estate Glossary of Terms ... Canada