Abstract of Judgment - A summary of money obtained in court. (When this summary of abstract is recorded in the county recorder's office in some states the judgment becomes a lien on the debtor's property, both presently owned or after acquired.)

Accrued Interest - Interest on a note, bond, etc. which has been earned but not yet paid. Since interest is usually paid in arrears, accrued interest does not necessarily indicate a delinquency in payment.

Adjustable Mortgage Loans (AMLS) - Mortgage loans under which the interest is periodically adjusted to more closely coincide with current interest rates. The amounts and time of adjustment are agreed to at the inception of the loan. Also called: Adjustable Rate Loans, Adjustable Rate Mortgages (ARMS), Flexible Rate Loans or Variable Rate Loans.

ALTA -(American Title Association) - An organization, composed of title insurance companies, which has adopted certain insurance policy forms to standardize coverage on a national basis.

Amortization - Payment of debt in regular, periodic installments of principal and interest, as opposed to interest only payments.

Annual Percentage Rate (APR) - The yearly interest percentage of a loan, as expressed by the actual rate of interest paid. The A.P.R. is disclosed as a requirement of Federal Truth in Lending statutes.

Appraisal - An opinion of value based upon a factual analysis. Legally, an estimation of value by two disinterested persons of suitable qualifications.

Appraisal Report - A written report by an appraiser containing his opinion as to the value of a property and the reasoning leading to this opinion. The factual data supporting the opinion, such as comparables, appraisal formulas, and qualifications of the appraiser, will also be set forth.

Appraised Value - An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings.

Appraiser - One who is trained and educated in the methods of determining the value of property through analysis of various factors which determine said value.

Arrears - (1) Payment made after it is due is in arrears. (2) Interest is said to be paid in arrears since it is paid to the date of payment rather in advance, as is rent. Example: A rental payment made July 1 pays the rent to August 1. An interest payment made July 1 pays the interest to July 1.Assets - Everything owned by a person or corporation which can be used for the payment of debts.

Backdate – Deceptive and sometimes illegal act of dating a document with a time before that of the actual signing or execution.

Balloon Note - A note calling for periodic payments which are insufficient to fully amortize the face amount of the note prior to maturity, so that a principal sum known as a "balloon" is due at maturity.

Borrower- someone who owns a piece of property or is buying a piece of property and is borrowing or getting money from a lender

Broker, Real Estate - One who is licensed by the state to carry on the business of dealing in real estate. A broker may receive a commission for his or her part in bringing together a buyer and seller, landlord and tenant, or parties to an exchange.

Cap - The maximum increase of an Adjustable Rate Mortgage. Example: the original loan is made at 10% with a 5% cap. The interest rate on the loan may not exceed 15% regardless of index changes.

Certification- a written statement showing money that has been paid and money that is still due. Certifications are generally ordered for real estate taxes and water and sewer accounts.

Closing - In real estate sales, the final procedure in which documents are executed and/or recorded and the sale (or loan) is completed.

Closing Agent – also known as Settlement Agent, Escrow Officer, Title Agent. The licensed individual or firm handling the closing transaction after a signing has taken place. Typically this entails the legal transfer of title and ownership in the case of a sale, disbursing of funds and recording of documents.

Closing Costs - Expenses incidental to a sale of real estate, such as loan fees, title fees, appraisal fees, etc.

Closing Protection Letter- letter issued to a lender that states that title company will not steal their with their money and that if we do our underwriter will take responsibility for it.

Combined Loan To Value (CLTV) - The combined loan amounts as a percentage against the value of the property.

Compound Interest - Interest paid on accumulated interest as well as on the principal.Condominium - A structure of two or more units, the interior space of which are individually owned; the balance of the property (both land and building) is owned in common by the owners of the individual units. The size of each unit is measured from the interior surfaced (exclusive of paint or other finishes) of the exterior walls, floors, and ceiling. The balance of the property is called common area.

Construction Loan - Short term financing of real estate construction. Generally followed by long term financing called a "take out" loan, issued upon completion of improvements.

Conventional Loan - A mortgage or deed of trust not obtained under a government insured program, (such as FHA or VA).

Conveyance - Transfer of title to land. Includes most instruments by which an interest in real estate is created, mortgaged, or assigned.

Credit - The financial worthiness of a borrower. The history of whether this borrower has met financial obligations on time in the past.

Credit Report - A report on the past ability of a loan applicant to pay installment payments. Several national and local companies make such reports.

DBA (Doing Business As) - An identification of the owner or owners of a business and the business name. Not a partnership or corporation.

Debit - An accounting term used to designate a payment or owing, as opposed to a credit which is a receiving or being used.

Debtor - One who owes a debt.

Decree - The judgment of a court.

Deed - Actually, any one of many conveying or financing instruments, but generally a conveying instrument, given to pass free title to property upon sale.

Deed In Lieu Of Foreclosure - A deed given by an owner/borrower to a lender to prevent the lender from bringing foreclosure proceedings. The validity of the deed depends to some degree on "fairness" under the circumstances, and adequacy of consideration will be considered.

Deed of Trust - An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), and reconveyed upon payment in full. (Pennsylvania does not use these.)Defective Title - (1) Title to a negotiable instrument obtained by fraud. (2) Title to real property which lacks some of the elements necessary to transfer good title.

Deferred Payments - (1) Payments to begin at a future time. (2) Installment Payments.

Deficiency Judgment - Commonly, the amount for which the borrower is personally liable on a note and mortgage if the foreclosure sale does not bring enough to cover the debt. Actually the judgment is for the total amount and not for the deficiency, the recovery from the foreclosure sale being deducted from this amount.

Demand - (1) The quantity of goods which can be sold at a specified price, in a given market, at a particular time. (2) A letter from a lender showing the amount due in order to pay off a mortgage or trust deed.

Department of Real Estate - That department of the state government responsible for the licensing and regulation of persons engaged in the real estate business. The person heading the department is usually called The Real Estate Commissioner. Other names for the department are the division of Real Estate and The Real Estate Commission.

Depreciation - (1) Decrease in value to real property improvements caused by deterioration obsolescence, (2) A loss in value as an accounting procedure to use as a deduction for income tax purposes.

Equity - The market value of real property, less the amount of existing liens.

Escrow – Money, documents or other items held by a neutral third party until a specified event takes place.

Escrow Account - Account held by a lender for payment of taxes, insurance, or other periodic debts against real property. The mortgagor or trustor pays a portion of, for example, the yearly taxes, with each monthly payment. The lender pays the tax bill from the accumulated funds.

Escrow Company – Neutral third party that handles all funds in a real estate transaction. 

Escrow Instructions - Instructions which are signed by both buyer and seller, and which enable an escrow agent to carry out the procedures necessary to transfer real property, a business, or other assignable interest.

Escrow Officer – see Closing Agent and Escrow CompanyFair Credit Reporting Act - A federal law giving one the right to see his or her credit report so that errors may be corrected. A lender refusing credit based on a credit report must inform the buyer which company issued the report. The buyer may see the report without charge if refused credit. or for a charge if just curious.

Fair Market Value - Price the property would be negotiated between a willing seller and willing buyer in a reasonable time. Usually arrived at by comparable sales in the area.

Federal Home Loan Mortgage Corporation (FHLMC-Freddie Mac) -A semi-governmental purchaser of mortgages in the secondary market. The trading of mortgage securities (Participation Certificates) for mortgages in its guarantor program has been highly successful.

Federal Tax Lien - A lien attaching to property for nonpayment of a federal tax (estate, income, etc.). A federal tax lien differs from other liens in that it is not automatically wiped out by foreclosing on a mortgage or trust deed recorded before the tax lien (except by judicial foreclosure).

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. Commonly, a synonym for ownership.

Fixed Rate Mortgage - A mortgage having a rate of interest which remains the same for the life of the mortgage.

FNMA (Fannie Mae) - A private corporation dealing in the purchase of first mortgages at discounts.

Foreclosure - A proceeding in or out of court, to extinguish all rights, title, and interest, of the owner(s) of property in order to sell the property to satisfy a lien against it.

GNMA (Ginnie Mae) - Government National Mortgage Association. A federal association, working with FHA, which offers special assistance in obtaining mortgages, and purchases mortgages in a secondary capacity.

Grantee - One to whom a grant is made. Generally, the buyer of a property.

Grantor - One who grants property or property rights. Generally, the seller of a property.

Gross Income - The scheduled (total) income, either actual or estimated, derived from a business or property.

Hazard Insurance - Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

Home Owner's Association - (1) An association of people who own homes in a given area, formed for the purpose of improving or maintaining the quality of the area. (2) An association formed by the builder of condominiums or planned developments, and required by statute in some states. The builder's participation as well as the duties of the association are controlled by statute.HUD-1 Settlement Statement: A document that provides an itemized listing of the services provided and the fees charged for the transaction.

Independent Contractor – A person who earns a livelihood other than as an employee on salary. Often receives a 1099 tax form at the end of the year and pays self-employment taxes rather than receiving a W-2 and having taxes withheld from the paycheck.

Independent Contractor Agreement – An agreement that defines the business relationship between a signing service or a closing agency and a Notary Signing Agent

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.

Judgment - The decision of a court of law. Money judgments, when recorded, become a lien on real property of the defendant.

Judicial Foreclosure - Foreclosure through court action rather than by a power of sale. Judicial foreclosure is sometimes necessary to remove certain tax liens.

Judicial Sale- sale in which the property is being sold by court order generally because a lien holder has foreclosed

Junior Lien - A lien which is subordinate to a prior lien.

Junior Mortgage - Any mortgage of lesser priority than a first mortgage.

Lender- a company or individual who is lending money. Also known as a Mortgagee

Lien - An encumbrance against property for money, the property acts as collateral

1st Lien Position- the individual or company in this position is the first to be paid if the property goes to judicial sale

2nd Lien Position- the second to be paid

Lien Holder- individual or company to whom money is due in which real property is the collateral

Listing Agent- Real Estate Agent who represents the seller

Liquid Assets - Cash or assets immediately convertible to cash.

Loan Origination Fee - A one time set up fee charged by the lender.

Loan To Value Ratio (LTV) - The ratio expressed as a percentage, of the amount of a loan to the value or selling price of real property. Usually, the higher the percentage, the greater the interest charged. Maximum percentages for banks, savings and loans, or government insured loans, is set by the statute.Maintenance Fee - As applied to condominiums and planned developments, the amount charged each unit owner to maintain the common area. Usually a monthly fee paid as part of the budget.

Manufactured Home - Factory-built or prefabricated housing, including mobile homes.

Margin - In adjustable rate mortgages, the amount added to an index to determine the adjusted interest rate (also known as spread).

Market Value - The highest price a willing buyer would pay and a willing seller accept, both being fully informed, and the property exposed for a reasonable period of time. The market value may be different from the price a property can actually be sold for at a given time (market price).

Mortgage – A legal instrument that pledges a property to the lender as security for payment of a debt. Used in some states instead of a deed of trust. (Pennsylvania uses these.)

Mortgage Banker - A company providing mortgage financing with its own funds rather than simply bringing together lender and borrower, as does a mortgage broker. Although the mortgage banker uses its own funds, these funds are generally borrowed and the financing is either short term or, if long term, the mortgages are sold to investors (many times insurance companies) within a short time.

Mortgage Broker - One who, for a fee, brings together a borrower and lender, and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust as security. Also called a loan broker.

Mortgage Company - A company authorized to service real estate loans, charging a fee for this service.

Mortgagee- Lender

Mortgage Insurance - Insurance written by an independent mortgage insurance company (referred to as an "MIC") protecting the mortgage lender against loss incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sale price. The Federal Government writes this form of insurance through the FHA.

Mortgage Insurance Premium - The amount paid by a mortgagor for mortgage insurance.

Mortgage Note - A written promise to pay a sum of money at a stated interest rate during a specified term. It is secured by a mortgage.

Mortgage Warehousing - A system whereby a mortgage company will hold loans which would ordinarily be sold, in order to sell later at a lower discount. These mortgages are used as collateral security with a bank to borrow new money to loan.

Mortgagor- Borrower

Negative Amortization - A condition created when a loan payment is less than interest alone. Even though payments are made on time, the amount owing increases.

Notary Signing Agent - Notary Public who specializes in loan document signings.

Note - A unilateral agreement containing an express and absolute promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified rate or on demand. Usually provides for interest and, concerning real property, is secured by a mortgage of trust deed.

Notice of Default (NOD) - A notice filed to show that the borrower under a mortgage or deed of trust is in default (behind on the payments).

Notice of Right to Cancel – A loan document that informs the borrower of their right to cancel the loan within three business days following the signing of the documents.

Payoff- written statement of amount of money needed to pay a loan or a lien in full in order to have the lien removed from the property

Per Diem - Daily interest.

Piggyback Loan - A loan made jointly by two or more lenders on the same property under one mortgage or trust deed. A 90% loan, for example, may have one lender loaning 80% and another (subordinate) lender loaning the top 10% (high risk Portion).

Planned Unit Development (PUD) - A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more parcels. The lots are generally small, being the exact size of the improvements, or slightly larger.

Point - One percent of the amount of the loan.

Postdate – deceptive and sometimes illegal act of dating a document with a time after that of the actual signing or execution.

Prepaid Interest - Interest paid before becoming due.

Prepayment Penalty - A penalty under a note, mortgage, or deed of trust, imposed when the loan is paid before it is due.

Principal - (1) The person who gives authority to an agent or attorney (See attorney-in-fact). (2) Amount of debt, not including interest. The face value of a note, mortgage, etc.Private Mortgage Insurance - Insurance against a loss by a lender in the event of default by a borrower (mortgagor). The insurance is similar to insurance by a government agency such as FHA, except that it is issued by a private insurance company. The premium is paid by the borrower and is included in the mortgage payment.

Quitclaim Deed - A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor.

Real Estate - (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 which would be personal property, although in some states a fine distinction may be made. (2) May refer to rights in real property as the property itself.

Real Estate Agent – A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real Estate Settlement and Procedures Act (RESPA) – A consumer protection law that requires lenders to give borrowers advance disclosure of closing costs.

Reconveyance - An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt. Most commonly used upon payment in full of a trust deed. Also called a deed of reconveyance or release.

Recording - Filing documents affecting real property as a matter of public record, giving notice to future purchasers, creditors, or other interested parties. Recording is controlled by statue and usually requires the witnessing and notarizing of an instrument to be recorded.

Refinance - (1) The renewing of an existing loan with the same borrower and lender. (2) A loan on the same property can be either the same lender or borrower. (3) The selling of loans by the original lender.

Rescission - The cancellation or annulment of a transaction or contract by the operation of law or by mutual consent.

Second Mortgage - A mortgage which ranks after a first mortgage in priority. Properties may have two, three, or more mortgages, deed of trust, or land contracts as liens at the same time. Legal priority would determine whether they are called a first, second, third, etc. lien.

Seller- owner of a property wishing to transfer ownership to another individual or company

Selling Agent- Real Estate Agent who represents the buyerSettlement Agent – see Closing Agent

Settlement Statement - A statement prepared by broker, escrow, or lender, giving a complete breakdown of costs involved in a real estate transaction. Sometimes a separate statement is prepared for the seller and buyer. The HUD-1 form is the most commonly used Settlement Statement.

Simple Interest - Interest computed on principal alone, as opposed to compound interest.

Signing Company – A company that serves as a middleman between closing agents and Notary Signing Agents in setting up a loan document signing.

Sole Proprietorship - Individual ownership of a business as opposed to a partnership or corporation.

Subordinate - To make subject or junior to.

Subordination Agreement - An agreement by which an encumbrance is made subject (junior) encumbrance. For example: A loan on vacant land is made subject to a subsequent construction loan.

Title - The evidence one has of right to possession of land.

Title Agent – licensed individual who provides the Title Commitment and Title Policy. Often acts as an Escrow Officer and Closing Agent as well.

Title Commitment- information from the title search is used to draw up a Title Commitment. The Title Commitment is an agreement or commitment to insure a property if all conditions are met.

Title Company – A company that specializes in examining and insuring titles to real estate.

Title Insurance Policy - A contract by which the insurer, usually a title insurance company, agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee, or otherwise.

Title Search- a search of county records to provide a report about a property

Townhouse - Originally a house in a city as opposed to a country estate. More recently the term is applied to certain types of row houses, whether planned unit developments or condominiums.Transfer Tax – Taxes due to the state and local government when real property is transferred. In Pennsylvania, this is typically 2% of the sale price. Some exceptions do apply.

Truth in Lending Act (TILA) – A consumer protection 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.

Underwriter - (1) A person who reviews and approves/declines loans. The analysis of risk and the matching of it to an appropriate rate and term. (2) The large company, represented by title agents, which provides the actual title insurance and is responsible to resolving any claims that arise.

Vested - Present ownership rights, absolute and fixed. Modernly, ownership rights, even though on a land contract are subject to a mortgage or deed of trust.Misc. Abbreviations 1003Loan Application

1040'sPersonal Federal Tax Returns

1065'sFederal Partnership

1120'sFederal Corporate Returns

W-2'sWage and Tax Statement

1099'sIndependent Contractor Wage Statement

K1'sPartnership Wage and Tax Statement

4506IRS form requesting copy of tax return