You are hereGlossary Q - S

Glossary Q - S

qualified lender:  a bank or lending institution which is qualified under specific local or government programs to underwrite the loans. 

qualify:  meeting of mortgage lenders criteria for approval of a loan. 

qualifying:  that process of doing the due diligence which determines if an individual has the financial ability to meet the terms of a loan. 

qualifying guidelines:  elements a lender will consider when deciding whether to grant a specific mortgage loan.  Two of the biggest considerations are monthly mortgage costs which is PITI.  The other big one is total monthly costs including housing  and other debts.  Lenders tend to follow these two in particular because they believe these factors allow homeowners to pay off their mortgages comfortably without the pressures of loan defaults and or foreclosure. 

qualifying ratios:  comparisons of a borrower's debts and gross monthly income. 

quid pro quo:  this for that. 

quiet title suit:  lawsuit filed to ascertain the legal rights of an owner to a parcel of real property which will remove a defect or cloud on title. 

quitclaim deed:  deed that conveys whatever ownership interest the transferor has in a particular property.  This type of deed does not guarantee or state anything about what is being transferred.  As an example, a divorcing spouse may quitclaim their interest in a particular real estate property to their ex-spouse which officially gives up whatever legal interest there is in the property.  Sometimes a quit claim deed is also used to clear up a cloud on title in cases where there is a question of a possible ownership claim.   

rate cap:  in the case of an adjustable rate mortgage(ARM) this is the maximum allowable interest rate on the monthly payment during the adjustment period and or the life of the loan. 

rate-improvement mortgage:  loan that entitles the borrower to a one-time only interest-rate cut without refinancing.  Very seldom if ever used. 

rate lock:  a lender’s commitment to a borrower which guarantees a specific rate for a certain period of time.  An example of that would be a 15 day lock on an interest rate of 6% which means as long as the loan closes within the 15 days, the rate remains as stated. 

rate type:  this type of loan determines how and if payments adjust over the course of the loan.  Rate types include fixed-rate(non adjusting), adjustable-rate and balloon. 

ratio:  the proportion of one value to another distinct yet related value. 

ready, willing, and able buyer:  a buyer who is capable of buying on the seller's terms and has the financial capacity to do so. 

real asset:  an asset that has intrinsic value as a result of its utility.  A good example of that is real estate. 

real estate:  land and anything which is permanently affixed to it such as buildings or any other improvements. 

real estate agent:  a person who is licensed by a state to represent a buyer or seller in the course of a real estate transaction and is compensated by a commission at the conclusion of that sale.  They must work in association with a real estate broker. 

real estate board:  non-profit organization which represents the local real estate agents and brokers with services to its members related to the field of real estate.  They also operate the multiple listing service(MLS). 

real estate broker:  person, corporation or partnership which is licensed by a state to represent a buyer or seller in a real estate transaction with their earned commission being the compensation for the representation services they provide.  The broker supervises licensed agents who are acting on behalf of the broker who is legally the principal agent in any real estate transaction. 

real estate commission:  the compensation received by a real estate salesperson and agency for the sale of a real property. 

real estate counselor:  paid individual who provides advice about real estate. 

Real Estate Educators Association:  professional organization composed of teachers specializing in real estate in colleges and proprietary license preparation schools. 

Real Estate Inspector, licensed:  someone who is licensed by TREC who holds himself out to the public as being trained and qualified to inspect properties and carries the liability of the profession. 

real estate investment trust(REIT):  publicly traded companies which own, develop or operate commercial and residential properties. 

real estate owned(REO):  a property which is acquired by a lender through a foreclosure process which is maintained in the lenders inventory. 

real estate property tax:  annual tax assessed on real estate by a government entity such as the state or county. 

Real Estate Salesperson, licensed:  a person who applies for a real estate Salesperson License who must complete core education courses in Principles of Real Estate , Law of Agency and Law of Contracts.  The applicant must also pass the state required Real Estate Salesperson's exam, and then continue to maintain his or her license with mandatory periodic continuing education courses.   

Real Estate Settlement Procedures Act(RESPA):  federal law which is designed to make sellers and buyers aware of settlement fees and other transaction related costs.  It also prohibits kickbacks in the real estate business. 

real estate valuation:  professional opinion of the market value of a home or property. 

real income:  the income which is adjusted for inflation. 

real interest rate:  the interest rate which is adjusted for inflation. 

realized gain or loss:  the net profit or loss realized from the sale of a property which is the difference between the sale price and the adjusted basis of that property. 

real property:  land and anything permanently affixed to it such as building and improvements. 

REALTOR:  designation for a real estate broker or an associate who holds membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS and adheres to a strict code of ethics. 

realty refers to land and buildings and other improvements from a physical standpoint.  

reassessment:  revision or reappraisal of the tax value of a property. 

recapture:  a contract clause which might allow a prior owner to a property to recover the property under certain circumstances.  Another definition is the return of an owner’s investment through among other things depreciation allowance. 

recasting:  a loan term that is sometimes made if a borrower is having difficulty meeting their obligation of payment which might result in extension of term, or modification of the principal or interest or both. 

receipt:  receiving of something or a written acknowledgement that something such as cash or documents has been received. 

receiver:  a court-appointed custodian who holds property for the court, pending final disposition of the matter before the court. 

recession:  the classic example of which is defined as two consecutive quarters of negative economic growth.  This is part of the business cycle in a deteriorating economy. 

reciprocity:  a situation where individuals or entities grant certain rights to each other in exchange for reciprocating rights being given them. 

recission of contract:  if a contract is cancelled for certain reasons such as illegality or fraud, it is  referred to as a recission. 

reclaim:  the conversion of property from an unusable condition(contaminated, flooded, etc) to a useful more valuable condition. 

reclamation:  the process of converting a property from unusable to usable. 

recognized gain:  taxable income portion of the proceeds of the sale of real estate. 

reconciliation:  related to an appraisal this is the process of adjusting like or comparable property sales for an estimated value of a subject property by using cost, market comparison, and income approaches. 

reconveyance:  the conveying of property by a lender back to the borrower once the property is completely paid off. 

reconveyance deed:  this is the deed which is issued that conveys the property to the now owner once the loan is paid off. 

recordation:  the recording of deeds and other instruments in a public registry to give which gives notice of ownership or legal and financial claims to the public. 

recorded plat:  the map which is located in the county recorders office for a specific land area showing the parameters of individual properties. 

recorder:  public official responsible for maintaining records of all real estate transactions. 

recording:  the filing of property related transactions for the public record. 

recording fee:  the charge to convey the sale of a property into the public record. 

recourse loan:  a loan that allows a lender to access capital above and beyond the pledged collateral which secures the loan.  Should the borrower default on the loan, the lender has the right to pursue those other assets to recover the loan in full. 

redemption period:  the period of time during which a property owner can pay all defaulted payments and charges and redeem the defaulted mortgage or land contract.  The time frame will vary based on the state laws. 

red lining:  the illegal practice of refusing to finance home loans in certain neighborhoods based on ethnic or racial demographics. 

reduction certificate:  written certification by the lender which spells out the remaining balance, maturity date and interest rate on a mortgage. 

refinance:  modification of an existing debt or debts which includes mortgages to be replaced with a new loan or loans.  Usually done when a person can benefit from getting a better interest rate or the borrower wishes to take money out of their property. 

registrar:  individual who maintains official records such as mortgages, deeds, etc. 

rehabilitate:  restoration of a building or property to a good condition. 

rehabilitation mortgage:  a mortgage which provides for funds to repair and or improve a resale home or building.   

release clause:  provision in a purchase contract that allows a seller to continue to market their home and accept offers. 

release of lien:  removal of encumbrances of a mortgage from a piece of property. 

remaining term:  original term minus the term when payments were already made. 

remediation:  cleanup of an environmentally contaminated site. 

remodel:  updating or altering the appearance and utility of a building. 

renegotiated rate mortgage(RRM):  this mortgage expires at pre-established intervals.  This allows for renegotiation of the terms of that mortgage.  Most of the time these have a balloon payment. 

renovate:  a general term to cover changes and upgrades of an existing property. 

replacement value:  the value of an asset as determined by the estimated cost of replacing it. 

reserves:  amounts of money set aside by a mortgage company to assure payment of property taxes, homeowners' association dues, and insurance premiums.  The money is kept in an escrow account and usually added to with each subsequent payment. 

return on investment(ROI):  the profit generated by a property which translates as a percentage of the total investment for a specified period of time. 

reuse appraisal:  an appraisal to determine the resale value of a vacant or improved property in an urban market that is now or will be under development which is done in accordance with the National Housing Act. 

revaluation:  the reconsideration of the value or worth of a property. 

reverse mortgage:  a loan available to older property owners who have need for cash and have equity in their houses.  In this type of mortgage, monthly payments are made to the owners instead of by them.  These loans are regulated by the government. 

reversion:  an interest or estate in which an individual has a consistent future interest such as the remainder after obligations are paid which would revert for distribution. 

rider:  amendment or attachment to a contract or in the case of insurance, a modification to a policy. 

right:  a just claim to power or privilege or something that belongs to a person by law, nature, or tradition among other events. 

right of access:  a right a property owner has to go to and return from an adjoining street without interference. 

right of dower:  the right of a wife whose husband died intestate(without a will) to the use of all his lands and assets for the support of her and her children.  That interest is one-third of the estate of her deceased husband.  May vary from state to state. 

right of rescission:    the right to cancel within three business days a contract which uses the home as collateral.  This only applies to the case of a refinance, a purchase has no right of rescission. 

right of survivorship:  the right of a surviving joint tenant to acquire ownership of a deceased joint tenant's share of the property. 

riparian owner:  a person who owns land which bounds on a river or water course and has rights to the water that flows through his or her property. 

riparian rights:  the rights of an owner to use a river, stream or other body of water that is on or borders their property. 

rollover mortgage:  mortgage with a constant interest rate but is renegotiated or rolled over after a specified period of time. 

rule against assignments:  the legal rule that a borrower may not give away or assign the payment obligation to a debt without the lender’s permission. 

Rule of 72:  this calculation is an approximation of the amount of time it would take for an investment to double by using the interest rate and dividing it into 72.  As an example if you had a return of 6% annually on your investment, you would divide 72 by 6 and you would arrive at the time to double of 12 years. 

Rule of 78:  a commonly used accounting method which is used primarily by banks to formulate a loan amortization table.  Sometimes referred to as the Rule of the Sum of the Digits this method of computing unearned interest is used on installment loans which use add-on interest.  The number 78 is based on the sum of digits from 1 to 12. 

run with the land:  an expression that indicates a right or a restriction that will affect all current and future owners. 

Rural Housing Service(RHS):  a division of the U.S. Department of Agriculture that helps rural areas and individuals living in those areas by providing loans and grants for housing and community facilities.  They provide funding for single family residences, apartments for low-income or the elderly, housing for farm laborers, childcare centers, and more infrastructure. 

sale-leaseback:  a sale in which a seller deeds a property to a buyer for a consideration and the buyer simultaneously leases the property back to the seller.  Most often done in commercial or land transactions. 

sales-assessment ratio:  sales price of a property divided by the appraisal value.  As an example if a property sells for $500,000 and its assessed value is $475,000 that ratio is 1.053%. 

sales comparison approach:  a method of appraising real estate which is based on a market comparison of adjacent and neighboring properties which are similar to the subject property that helps establish the value. 

sales concession:  a situation in which the seller of a property will pay a cost or costs which are normally paid by the buyer.  There may be limits as to the amount the seller can contribute to the sale depending on the loan. 

sales contract a written agreement stating the terms of a sale which is agreed to by both the buyer and seller.  

sales deposit receipt:  the receipt which is given for the partial payment made on the sale of a property. 

sales expenses:  the cost incurred during the sale of real estate shich may include commissions, escrow fees, etc. 

salesperson:  an individual employed to sell a product or service. 

sales price:  the amount of money that is paid by a purchaser to a seller for property that is bought. 

sales price list:  list of prices being asked for homes that are for sale. 

sales ratio analysis:  an evaluation of the factors which might cause a difference between the requested selling price and the appraised value of a property.  Factors might include unexpected deterioration of conditions, desperation of seller, timing and a poor appraisal amongst other factors. 

sales value:  the price a property would bring on the open market at any particular point in time. 

satisfaction of lien:  release or discharge of a lien which secures a loan on a property

and assuming the terms of that lien have been met. 

satisfaction of mortgage:  a written statement of the lender which states the buyer of real estate has paid off their entire mortgage. 

seasoned loan:  loan which proves a borrowers credit worthiness by showing a consistent record of timely payments as agreed. 

seasoning:  the period of time which an asset or property has been under the direct control of a party such as a borrower or owner.  In other words, how long it’s been in your possession. 

secondary financing:  any loan that is subordinate to a primary loan and thus is in a second position in the case of a liquidation.  Seconds and Home Equity lines of credit would fall into this category. 

secondary mortgage market the buying and selling of existing mortgage loans, which provides additional liquidity for lenders.  Mortgage bankers act as intermediaries in this process. 

second deed of trust:  a deed of trust or mortgage in which the lender  subordinates their loan to another lender who has first priority if there is nonpayment on the part of the borrower. 

second home:  a residence which is not one’s principal residence.  There may be restrictions on what is considered a second home depending on the investors. 

second lien:  the lien which secondary financing takes that is a subordinate to the first position lien. 

second mortgage:  a  second loan that uses an already mortgaged property as the collateral for that loan.  In the case of a liquidation, the first loan will have priority over the second as far as the proceeds. 

secured loan:  a loan backed by collateral. 

secured note:  written obligation of a borrower that is backed by collateral in the event of a default. 

secured party:  the lender that possesses the collateral of the borrower upon default of the loan. 

securitization:  process of the borrower giving the lender security to obtain the loan. 

security:    that property which will be pledged as collateral for a loan. 

security agreement:  legal contract in which the lender controls the pledged property which is being financed.  In case of default the lender sell the collateral. 

security instrument:  known as a security deed, mortgage or trust deed. 

security interest:  the interest that a lender takes in a borrower’s property which assures satisfaction of the debt. 

self-amortized loan:  a loan which will retire itself through the making of regular principal and interest payments. 

self-contained appraisal report:  written appraisal report that contains all the information required by USPAP 

seller financing:  type of real estate purchase where the seller of the property provides the financing to the buyer.  Often times for specified periods such as five years with a balloon, etc. 

seller’s market:  a real estate market which is very strong and fives the advantage to sellers as the demand out paces the supply of available properties. 

seller take back:  similar to seller financing in that the seller provides financing most often in combination with an assumable mortgage. 

seller vs. buyer closing costs:  the negotiation of the closing costs between the buyer and seller during the purchase negotiations. 

senior mortgage:  primary mortgage on a property which has priority over any other liens and will be satisfied before any secondary liens are taken care of. 

Senior Residential Appraiser(SRA):  designation granted by the Appraisal Institute for Residential Appraisers based on established criteria and experience. 

separable or separate property:  property which is wholly owned by one spouse or the other that was acquired or inherited prior to the marriage.  The property legally belongs to that spouse and cannot be taken away to satisfy a debt against the other spouse.  Check state requirements. 

servicer:  organization which collects payments of principal and interest and also manages the borrowers impounds account.  Can also service loans that have been purchased by investors in the secondary market. 

servicing a loan:  the ongoing process of collecting monthly mortgage payments from borrowers.  The other services include accounting for and paying of your property taxes and/or homeowners insurance renewals if required by the lender. 

settlement:  final step in the escrow process prior to the buyer getting the keys to their new property.  Also referred to as the closing.   

Settlement Cost(HUD) guide:  HUD published booklet which provides an overview of the lending process and is given to a potential buyer at the time of application for a loan. 

settlement document:  the final document which details what has been paid, by whom and to who. 

settlement fees:  the fees that are paid to the escrow agent for carrying out the written terms of the agreement between the buyer and seller and lender, if there is one.  In certain states the escrow agent may be an attorney or even a title insurance company. 

settlement statement:  a document which details the final financial settlement costs and anything else associated with the agreement between the buyer and seller of a property. 

severalty:  ownership of real estate by only a single person.  Often referred to as sole ownership

shakeout:  this term refers to the overall decline in real estate values as a result of economic turbulence such as a recession or depression.  The result is usually huge losses in that market with some real estate owners declaring bankruptcy. 

shared appreciation mortgage:  a mortgage situation where a borrower will receive a below-market interest rate in exchange for letting the lender participate in part of the future appreciation of the property. 

shared equity mortgage:  a home loan in which the lender participates in the equity of the home in exchange for providing a portion of the down payment.  At the time the property is sold or refinanced the lender is entitled to a part of the proceeds. 

shared equity transaction:  situation where two buyers purchase a property and one of the buyers becomes the resident with the other buyer acting as the investor. 

short sale (of house):  sale of a house in which the sale price fall short of what the owner still owes the mortgage company.  Some lenders will agree to accept the lower price and forgive the balance of what is owed on the mortgage if the owner cannot make the mortgage payments. The major difference between a short sale and foreclosure is that title never passes back to the lender but instead they are actually the party who makes a decision on whether a sale is approved or not. 

simple assumption:  a loan which keeps the original borrower liable should the new borrower default on that loan. 

simple interest interest computed only on the original principal balance.  

single-family dwelling:  a free standing home which is designed for use by a single family. 

single-family properties:  one to four unit properties which include detached homes, town homes, condominiums and cooperatives. 

single-property syndicate:  group of equity investors involved in the purchase of a single property with the total money raised being used for that purpose. 

site:  a property where a development will take place. 

site analysis:  evaluation of an area to determine its feasibility for proposed projects. 

site assessment(environmental):  prior to acquiring a property a potential buyer might to a site assessment to check for the existence of potential hazardous waste. 

site built home:  a home that is constructed on a piece of property which is chosen by the potential homeowner. 

site plan:  basically a set of plans which will lay out how a particular parcel of land will be improved which will include all structures and infrastructure. 

situs:  the particular economic location of a parcel of land. 

Society of Industrial and Office Realtors(SIOR):  an organization affiliated with the National Association of Realtors whose members deal primarily with the sale and resale of warehouses, factories and other heavy industrial properties. 

soft market: a real estate market where the supply exceeds the demand for properties making it advantageous to buyers versus sellers. 

special assessment:  a charge levied against property owners to finance an improvement benefiting the homeowner or commercial business.  May be made by private management boards or local government bodies. 

special deposit accounts:  accounts that retain monies for rehabilitation mortgages that hold the funds needed as portions of the work are completed. 

special use permit:  a right granted by a local zoning authority which allows certain activities to occur within a zoning district.  Sometimes referred to as a conditional use permit. 

special warranty deed:  a property deed which limits the title warranty by the grantor to the grantee.   The grantor doesn’t warrant the property from title defects prior to the time of the grantees ownership. 

specific lien:  a lien on a specified piece of property or group of properties which is used as collateral for a loan. 

specific performance:  a legal action for carrying out of the precise terms agreed upon in a contract in the case of a person who has refused to live up to the obligations of the contract.  

speculation:  high-risk which might allow for a high return on a business transaction which also does not have a guarantee of success. 

speculation home:  house built without having a buyer on the anticipation of being able to make a profit by the resale of it.  The builder speculates a buyer will be found.  The availability of speculation homes depends on the real estate market. 

speculative value:  the future value a speculator feels his investment will reach at some point in the future. 

speculator:  investor who is willing to take a risk to make a financial gain. 

spread:  difference between the price offered by a buyer and the price asked for by the seller of real estate. 

stagflation:  increasing prices during a stagnation in the economy. 

standard payment calculation:  the method used to calculate the minimum monthly payment which will repay the balance of a mortgage in equal installments over the remaining term of that mortgage at the current interest rate. 

standby commitment:  lender commitment  to loan an amount of money based on specified terms for the financing of a project.  This requires the borrower to pay a fee for that privilege. 

standby fee:  the fee charged by a lender to provide the standby commitment. 

standby loan:  short-term loan that is made to bridge the term between the end of one loan and the beginning of another. 

start rate:  sometimes referred to as a teaser rate, it’s the beginning interest rate for an adjustable rate mortgage(ARM).  This rate is for a specified period of time such as two years, then goes into adjustment. 

statutory dedication:  owners of a subdivision file a plat that results in granting some of their project to become public property.  An example would be roads or green areas, etc. 

statutory foreclosure:  this is a foreclosure which is not conducted under court supervision. 

statutory liens:  charges resulting in involuntary encumbrances against real estate which is derived from legislation versus debts owed to organizations or individuals. 

statutory redemption period:  a limited period of time a borrower who is in foreclosure has to try and reclaim their property. 

statutory right of redemption:  a legal right of the mortgagor to a foreclosed property to redeem it after it has been sold at a foreclosure sale.  This period of time will vary from state to state. 

step loan:  an adjustable rate mortgage(ARM) for which the interest rate adjusts only once during the term of the loan.  Has some of the characteristics of both a fixed and adjustable loan. 

step-rate mortgage:  a mortgage that allows for the interest rate to increase according to a specified schedule.  At the end of that period the rate remains the same for the balance of the term of the loan. 

stipulations:  requirements or conditions which must be met in order to proceed with a loan as dictated by the underwriter. 

straight note:  a loan agreement which is interest only payments over the term of the loan but has a balloon payment which is the entire principal amount of the loan due at the end of the term. 

straw man:  an action which in most cases is illegal or at the very least unethical.  A person who purchases a property for another individual with the intent of concealing the identity of the real buyer from the seller or lender. 

strict foreclosure:  not necessarily applicable to all states this is a premise where a lender owns a property and in the case of foreclosure may simply evict the borrower for non-payment and gain title by waiting for a borrower’s right to redeem to end. 

subject property:  term referring to a property that is being appraised. 

subject to mortgage a situation where a buyer of an already mortgaged property makes the payments, but is not personally liable for the loan. Should the mortgage be foreclosed and the property sold for a lesser amount than is owed, the grantee-buyer is not personally liable for the deficiency, but the grantor-seller is.  

subordinate:  to reduce the priority of payment of a debt or lien. 

subordinate financing:  a mortgage that has a  priority that is lower than that of the first mortgage on the property. 

subordinate mortgage:  a mortgage which is inferior in position to another mortgage loan.  In the case of a foreclosure, this loan will only get paid after satisfaction of mortgages which have more priority like a first mortgage. 

subordination:  a change of position which is more inferior such as going from first position to second. 

subordination clause:  a clause that permits a mortgage recorded at a later date to take priority over an existing mortgage. 

subsequent rate adjustments:  the period a loan can adjust in an adjustable rate mortgage(ARM) after the initial fixed period is over.  It can vary depending on how the loan terms specify. 

subsequent rate cap:  the maximum interest rate increase which can be realized at each regularly scheduled rate adjustment date. 

subsidized housing:  rental payments which are aided by grants either by government, private, or individuals to provide a reduced cost. 

subsidy:  grant of money made by the government to private enterprise or another government. 

substitution:  in the valuation of a piece of real estate, substitution is the principle that market value can be determined by accurately estimating the market value of similar properties in the same general area in the recent past. 

succession:  the passing of property or legal rights such as inheritance. 

suit for specific performance legal action brought by either a buyer or a seller to enforce performance of the terms of a contract. 

summary appraisal report:  a moderately detailed written appraisal report. 

superadequacy:  expensive addition which is normally not a part of more comparable cost-efficient properties.  An example would be a glassed-in atrium at the entrance to a property. 

surface rights:  the right to use and modify the surface area of a property. 

survivorship:  situation in which a joint tenant is entitled to property ownership after another joint tenant dies. 

sweat equity loan:  a loan given based on the buyer’s promise to do some work on that property. 

swing loan:  a short term loan that allows a purchaser to acquire a home before they sell their former residence.  Sometimes referred to as a bridge loan.