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.

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).

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.

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 Owned - The real estate owned by a lending institution.
Handled by its R.E.O.

Rebate - A discount or reduction in price of a product or interest, not given
in advance, but handed back because of prompt payment or other reason. Many states regulate gifts and educational aids given to real estate brokers by supporting companies such as title companies, calling these in effect, a price discount (rebate).

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.

Seasoned - A term referring to a land contract or mortgage, indicating that payments have been made regularly over a period of time, and that the contract or mortgage is not a new one.

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.

Senior Mortgage - A first mortgage.

Settlement Statement - A statement prepared by broker, escrow, or
lender, giving a complete breakdown of costs involved in a real estate transaction. A separate statement prepared for the seller and buyer.

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

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 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.

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.

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.

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