Homes that are built off site and are on their own steel under carriage with wheels and axles and pulled to the site. They are usually doublewide or triplewide, but can be singlewide. If put on a permanent foundation with wheels and axles removed, it is taxed as “real property.”
Manufactured Construction Loan
A loan provided for the development of a manufactured property, specifically home transport, removal of the axles and wheels, permanent foundation development, etc…
Margin
(Also called 'Spread'). The number of percentage points a lender adds to the index value to calculate the adjustable rate mortgage (ARM) interest rate at each adjustment period. A representative margin would be 2.75%.
Market Approach
A method of appraising a property by comparing sales prices of similar properties that have recently sold.
Market Value
The price as determined by buyers and sellers in an open market.
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 without encumbrances.
Master Association
A homeowners' association in a large condominium or planned unit development (PUD) project that is made up of representatives from associations covering specific areas within the project. In effect, it is a 'second-level' association that handles matters affecting the entire development, while the 'first-level' associations handle matters affecting their particular portions of the project.
MAT
Monthly Average Treasury index.
Maturity
The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
Mechanic's Lien
Any payment owned to a contractor for work done on the property.
Merged Credit Report
A credit report that contains information from three credit repositories. When the report is created, the information is compared for duplicate entries. Any duplicates are combined to provide a summary of your credit.
Metes and Bounds
A way of describing the boundaries of land by courses, directions, distances, and monuments.
Mile
A linear measurement equal to 5280 feet on land and 6076 feet across water.
Mini Perm
Short-term financing, usually three to six years.
Mobile Home
Usually within a home park, and generally a single to doublewide. It can be a triple wide with wheels and axles not removed, therefore taxed as a moving vehicle.
Modular
Pre-fabricated at a factory, then moved to site and onto a permanent foundation (no under carriage, wheels, or axles).
Money Market Account
A savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions apply to the withdrawal of funds from a money market account.
Money Market Fund
A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and Treasury bills.
Monthly Payment Mortgage
A mortgage that requires payments once a month to reduce debt.
Mortgage
A legal document that pledges a property to the lender as security for a payment of a debt.
Mortgage Banker
A banker who originates, sells, and services mortgages in the secondary mortgage market.
Mortgage Bankers Association of America (MBA)
A trade organization of the mortgage bankers and brokers in the United States. They provide seminars and publications for its members and sponsors.
Mortgage Broker
An individual or company which brings borrowers and lenders together for the purpose of loan origination, but which does not originate or service the mortgage.
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 Correspondent
An authorized person who represents a financial institution in a certain area for the purpose of placing loans.
Mortgage Disability Insurance
A disability insurance policy which will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time.
Mortgage Insurance (MI)
Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. Usually required for loans with an LTV of 80.01% or higher.
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 principal 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 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 Reduction Programs
A type of accelerated payment program where payments are made more frequently (bi-weekly or weekly) rather than conventional monthly payments. The net result may be a savings on the total interest paid.
Mortgage Securities Pool
A method by which securities backed by the value of real estate mortgages are issued in the market for investment purposes.
Mortgage Servicing
The lender or company acting for the lender, for a service fee, that manages the mortgage by collecting payments, releasing the lien upon payment in full, foreclosing if in default, paying taxes and insurance, etc.
Mortgagee
The person or company who receives the mortgage as a pledge for repayment of the loan. The mortgage lender.
Mortgagor
The mortgage borrower who gives the mortgage as a pledge to repay.
Multi-dwelling Units
Properties that provide separate housing units for more than one family, although they secure only a single mortgage.
Multi-family Mortgage
A residential mortgage on a dwelling that is designed to house more than four families, such as a high-rise apartment complex.
(Also called 'Deferred Interest'). If the payments are too small to cover the interest due on a loan, the remaining interest owed is added to the outstanding loan balance, causing negative amortization.
Net Cash Flow
The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments.
Net Effective Income
Gross income less federal income tax.
Net Operating Income
Gross income less vacancy and collection loss, operating expenses and replacement reserves. (NOI)
Net Proceeds
The amount of cash received from the sale of the property, not including relevant expenses.
Net Worth
The value of all assets, including cash, less total liabilities.
Niche Lender
A specialized lender that offers particular products to make loans to borrowers.
Niche Lenders
Specialized lenders that offer particular products to make loans to borrowers.
NINA (no income no assets)
This is a type of loan documentation used when borrower's do not wish to disclose income or assets, usually due to the complexity of the borrowers income.
No Cash-out Refinance or Rate and Term Refinancing
A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them). No cash in hand allowed beyond 1% of loan amount.
No Income Verification (no-doc)
A loan that requires little to no income verification.
Non-Arms Length Transaction
When parties involved in a real estate transaction have some relationship with one another. ie; the borrower works for the lender.
Non-Assumption Clause
A mortgage clause prohibiting the transfer of a mortgage to another borrower without the approval of the lender.
Non-Conforming Loan
Also called a jumbo loan. Conventional home mortgages not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac (FHLMC) because borrower or property do not meet underwriting guidelines. Non-conforming loans usually incur a rate and origination fee premium. The current non-conforming loan limit is $252,700 and above.
Non-Liquid Asset
An asset that cannot easily be converted into cash.
Non-Owner Occupant
Investment ownership in which a tenant, and not the owner, occupies the property.
Non-recourse
A loan that is secured by collateral, usually property. If the borrower defaults, then the issuer can seize the collateral, and the borrower is not personally liable.
Nonbearing Wall
Any wall that separates areas, but is not a weight bearing wall, such as the outer walls.
Nonexclusive Listing
When a real estate broker has an exclusive listing, but the owner can sell his property without an agent and not be liable to pay a commission. This is also called an agency agreement.
Notarization
When a Notary Public certifies that someone signing a document has been properly identified. The content of the document is not certified, just the signature.
Note
A written agreement containing a promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand.
Note Rate
The interest rate stated on a mortgage note.
Notice of Cessation
Concerning a construction project, a notice given that work has stopped. This is done to accelerate the period for filing a mechanic’s lien.
Notice of Default (NOD)
A formal written notice to a borrower that a default has occurred and that legal action may be taken.
Notorious Possession
A requirement for adverse possession, which is so open that it is assumed that the owner has notice of the possession.
Nuncupative Will
A will given orally, usually in a deathbed situation, before witnesses who later testify to its authenticity.
An affirmation that binds someone legally and morally.
Offset Statement
A statement by a lien holder to a buyer stating the balance due on existing liens against the property being purchased.
One-Year Adjustable
A mortgage program where the annual rate changes yearly.
Open-End Mortgage
A loan amount that can be increased upon mutual agreement of the lender and the borrower.
Operations and Maintenance Plan Program
A plan set forth to mitigate and remedy a known or potential environmental issue for instance, asbestos contamination. Oftentimes referred to as an "O&M plan."
Option
The right to buy or sell property or sign a contract, based upon certain terms and conditions. Usually applicable to specific time frames during which the 'option' may be exercised.
Original Principal Balance
The total amount of principal owed on a mortgage before any payments are made and without added interest.
Origination Fee
A fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan. Usually a percentage of the amount loaned, such as one percent.
Owner Financing
A property purchase transaction in which the property seller provides all or part of the financing.
Owner Occupied
'Owner Occupied' means the property is the owner's primary residence.
Ownership
The right to enjoy and use property to the exclusion of others.
A mortgage where the lender receives a percentage of the gross proceeds along with the mortgage payments.
Participation Certificates
A mortgage security rather than a mortgage. The certificate is more readily marketable.
Payment Adjustment Period
The length of time, typically six months to a year, between changes to the AML borrower's P&I payment.
Payment Buy Down
Payment buy downs occur when a third party, typically a builder, pays part of the initial P&I payments for a year or two, so that the borrower has smaller payments and can qualify for the loan.
Payment Cap
A limit on the amount the payment can be changed at the end of each Payment Adjustment Period.
Payment Discount
In a payment discount, the lender reduces the first year's interest rate to make the mortgagor more attractive to borrowers.
Payoff
The full payment of an existing loan or any other type of lien.
Perfecting Title
The process of eliminating any adverse claims against a title.
Periodic Payment Cap
A limit on the amount that payments can increase or decrease during any one-adjustment period.
Periodic Rate Cap
A limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.
Personal Property
Any property that is not attached to real property.
Physical Assessment
Report Engineering and physical assessment of the property. Completed in addition to the appraisal.
PITI
Principal, Interest, Taxes and Insurance are components of a mortgage payment.
PITI Ratio
The ratio used in mortgage lending decisions that consists of the principal, interest, tax, and insurance payment to the total gross income.
Planned Unit Development (PUD)
A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.
Plat
A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.
Pledged Account Mortgage (PAM)
Money that is placed in a pledged savings account. This fund, and earned interest, is used to reduce monthly mortgage payments.
Points
Charges levied by the mortgage lender to obtain a better interest rate and usually payable at closing. One point represents 1% of the mortgage loan amount.
Possibility of Reverter
The term refers to the chance that an estate will exist as some future time. An example would be a property sold on the condition that it would be a park, but if not used for that, it would revert back to the seller who would then have a “possibility of reverter.”
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 process whereby a potential home buyer secures a conditional credit approval before making an offer on a home.
Pre-paids
Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, and interest.
Pre-qualification
The process of determining how much money a prospective homebuyer will be eligible to borrow before application.
Premium
The amount paid for a property above the expected price, or the value of a mortgage or bond in addition to its face amount.
Prepayment
Payment of mortgage loan, or part of it, before due date.
Prepayment Penalty (PPP)
A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.
Prescriptive Easement
An easement granted by a court based on the assumption that a written easement was given after a period of continuous use of the land, although none existed.
Prime Rate
The interest rates that banks charge to their preferred customers.
Principal
The amount borrowed or remaining unpaid. Also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
Principal Balance
The outstanding balance of principal on a mortgage, which does not include interest or any other charges.
Private Mortgage Insurance (PMI)
Insurance provided by nongovernmental insurers that protect lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.
Pro rate
The allocation of proportionate shares of certain expenses, such as interest, to be paid by the buyer and seller at closing.
Promissory Note
A written promise to repay a specified amount over a specified period of time.
Property Classification
A classification that a lender gives to a property according to its age and needed repairs.
Property Tax
Local tax assessed on the market value of a property
Public Auction
A meeting in an announced public location to sell property to repay a mortgage that is in default.
Purchase Agreement
See Agreement of Sale.
Purchase Money Transaction
The acquisition of property through the payment of money or its equivalent.
