Glossary of Terms: U – Z

An employee of a mortgage banking company or lending institution, who reviews a loan application, verifies all information is accurate and makes a recommendation to a loan committee as to the desirability and risk of making the loan. The underwriting process is an critical part of the overall lending process.

In mortgage banking, the analysis of the risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves the evaluation of the property as outlined in the appraisal report and of the borrower’s ability and willingness to repay the loan.

Only treasuries with an original term of 30 years are Bonds.  All treasuries with original terms of 2-10 years are Notes.  Everything shorter than two years are Bills.

A written agreement from a Lender to provide permanent financing following construction of a planned project. The takeout commitment usually contains specific conditions for occupancy and income, such as a certificate of occupancy and/or a certain percentage of unit sales or leases in place and paying rent. Most construction lenders require takeout financing prior to beginning construction.

Properties with rent and occupancy restrictions which meet or exceed the following requirements:

1. at least 20 percent of all units have restricted rents affordable to households earning no more than 50 percent of area median income as adjusted for family size; or
2. at least 40 percent of all units have restricted rents affordable to households earning no more than 60 percent of area median income as adjusted for family size.

An account required by a mortgage lender and established at the time of closing to fund annual property tax assessments and hazard insurance premiums for the mortgaged property. Funded through monthly contributions and maintained by the Lender.

An account required by a mortgage lender and established at the time of closing for the purpose of reserving funds estimated to be necessary to improve retail and office space. Funded through monthly contributions and maintained by the Lender.

Reports required by a mortgage lender prior to funding a loan that include MAI Appraisal, Phase I Environmental and Physical Condition reports.

(1) A combination of all the elements that constitute a legal right to own, possess, use, control, enjoy and dispose of real estate or a right or interest therein. (2) The rights of ownership recognized and protected by the law.

Insured statement of the condition of title or ownership of real property. For a one-time-only premium, the named insured and their heirs are protected against title defects, liens and encumbrances existing as of the date of the policy and not specifically excluded from it. In the event of a claim, the title company provides legal defense from the policyholder and pays any covered losses incurred as a result of such claim.

A review of all recorded documents affecting a specific parcel of land to determine the present condition of title. An experienced title officer or attorney reviews and analyzes all material relating to the search, then determines the sufficiency and status of title for insurance of a title insurance policy.

A commercial lease in which the tenant is required to pay all operating expenses of the property and the landlord receives a net rent amount each month.

A conveyance of real estate to a third party to be held for the benefit of another. Commonly used in some states in place of mortgages that conditionally convey title to the lender.

The process by which a mortgage banker assembles mortgages that they have made and prepares the mortgages to be sold in the secondary mortgage market. By selling these mortgages the originator now has additional capital that can be used to make more mortgages which in turn may also be sold in the secondary mortgage market.

A method of acquiring additional financing on real estate by placing the additional funds in a secondary or junior position to the existing debt. As its name implies, a wraparound mortgage ‘wraps around’ an existing first mortgage plus the amount of the new secondary or junior lien. This method of obtaining additional capital is often used with commercial property where there is substantial equity in the property and where the existing first mortgage has an attractive low interest rate. By obtaining a wraparound, the borrower receives dollars based on the difference between current market value of the property and the outstanding balance on the first mortgage.  Thus, the borrower reduces the equity and at the same time obtains an interest rate lower than would be possible through a normal second mortgage. The lender receives the leverage resulting from an interest rate on the wraparound greater than the interest paid to the holder of the first mortgage.

Refers to landscaping and gardening in ways that reduce or eliminate the need for supplemental water from irrigation. It is promoted in regions that do not have easily accessible, plentiful, or reliable supplies of fresh water, and is gaining acceptance in other areas as climate patterns shift.

Refers to landscaping and gardening in ways that reduce or eliminate the need for supplemental water from irrigation. It is promoted in regions that do not have easily accessible, plentiful, or reliable supplies of fresh water, and is gaining acceptance in other areas as climate patterns shift.

The prepayment premium which will equal the present day value of any costs to the lender resulting from the difference in interest rates between the date of the note and the date on which the prepayment is made.  In other words, the borrower must pay the lender enough money so that the lender can theoretically replace the loan’s future cash flows using Treasury Securities.

The act of city or county or other authorities specifying the type of use to which property may be put in specific areas.