Term
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Definition
| Long-term mortgage financing |
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Term
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Definition
| A special-purpose entity named on the note that generally has one asset, the mortgaged property. In the event of default, the only recourse the lender has is still the mortgaged property. Arrangement shields actual borrower from personal liability and makes loan nonrecourse |
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Definition
| Loans that relieve the borrower of personal liability but do not release the property as collateral for the loan |
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| Loans in which the borrower has personal liability and the lender has legal recourse against the borrower in case of default |
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Definition
| Locked in rate on mortgage, provides maximum stability |
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Term
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Definition
| The difference between the expected yield on an investment and the yield on a riskless Treasury security with a comparable maturity |
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Definition
| Market-determined interest rate that is the "moving part" in the adjustable interest rate |
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Definition
| Charges, designed to discourage prepayment, incurred when a mortgage is repaid before maturity |
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Definition
| Gradually declining penalty over term of loan |
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Definition
| A common index of interest rate for income producing property, the London Interbank Offering Rate is a short-term interest rate for loans among foreign banks based in London |
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Definition
| Lowest rate of interest at which money may be borrowed commercially |
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Definition
| stacking of debt obligations to reduce investors equity requirements and increase their return on investment added |
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Term
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Definition
| A loan characterized by an amortization term that is longer than loan term. Because the loan balance will not be zero at the end of the loan term, a balloon payment is necessary to pay off the remaining loan balance in full |
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Term
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Definition
| The sum of operating expenses, capital expenditures, and debt service divided by potential gross income, this ratio measures the ability of a property to cover its obligations |
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Term
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Definition
| Loans used to finance the costs associated with erecting the building or buildings |
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Term
| Correspondent relationship |
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Definition
| A business relationship in which a large lender agrees to purchase loans or to consider loan requests from a mortgage banker or mortgage broker |
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Term
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Definition
| A measure of the extent to which NOI can decline before it is insufficient to service the debt, defined as NOI/Debt Service |
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Definition
| A clause that may be contained in commercial mortgages to protect lenders from prepayments in a declining interest rate environment. A borrower who prepays must purchase for lender a set of US Treasury securities whose coupon payments exactly replicate cash flows the lender will lose as result of prepayment of the mortgage |
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Term
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Definition
| After a buyer and seller have agreed on purchase price, buyer is provided time to verify information that has been provided by seller. Buyer will want to verify magnitude of certain operating expenses, current rent charged to tenants, lack of environmental problems, etc. "Kicking the tires" before final closing |
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Definition
| The risk NOI will be less than debt service |
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Term
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Definition
| A debt instrument whose interest rate changes over life of loan based on market index such as prime rate or LIBOR |
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Definition
| Financing arrangement, commonly used to defer taxes due on sale of commercial property, where the seller allows buyer to pay purchase price over number of years |
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Term
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Definition
| Generally, an association of two or more persons or firms in order to carry out a single business project. In real estate, often a business partnership formed between lender and developer or investor to develop or purchase specific property or properties |
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Term
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Definition
| Loans to finance purchase of raw land; perhaps most risky of real estate loans |
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Definition
| Loans to finance installation of on-site and off-site improvements to land that are necessary to ready land for construction |
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Term
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Definition
| Written agreement that commits lender to make a loan to borrower provided that borrower satisfies the terms and conditions of the commitment |
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Term
| Loan underwriting process |
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Definition
| Process by which a prospective borrower submits a formal loan application and lender analyzes all relevant information and decides whether or not to commit to the loan |
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Term
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Definition
| Mortgage clause or provision prohibiting prepayment of mortgage for a specified period of time after origination |
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Definition
| Method of obtaining additional leverage on top of a traditional first mortgage. This debt is secured by pledge of an equity interest in borrower's partnership or business-usually not secured by a lien on property |
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Term
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Definition
| a loan from an interim lender that provides financing for the construction period, the lease-up period, and for several years beyond the lease-up stage |
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Definition
| Remaining balance, or outstanding principal amount of a debt |
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Term
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Definition
| agreement in which a loan applicant pays a nonrefundable deposit to protect against an interest rate increase before the loan is closed |
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Term
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Definition
| risk that lenders will need to reinvest the remaining loan balance at a lower rate when borrowers prepay mortgages with above-market rates |
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Definition
| agreements in which a property owner simultaneously sells property to a buyer and leases property back from buyer |
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Term
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Definition
| Like first mortgage lien, it is secured by borrower's property that has been pledged as collateral for the loan. However, lender holding this lien is second in line behind holder of first mortgage to receive sale proceeds from foreclosure sale |
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Term
| Yield-maintenance agreements |
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Definition
| Alternative form of prepayment penalty. With this agreement, penalty that borrowers pay depends on how far interest rates have declined since origination |
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Term
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Definition
| Real estate investment trusts that invest in and operate income-producing properties |
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Term
| Limited Liability Company (LLC) |
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Definition
| A hybrid form of ownership that combines the corporate characteristics of limited liability with tax characteristics of a partnership |
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Term
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Definition
| retirement savings accounts that now represent a major source of equity capital in commercial real estate markets |
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Term
| Real Estate Investment Trusts (REIT) |
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Definition
| corporation or trust that uses the pooled capital of many investors to purchase and manage income property and/or mortgage loans |
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Term
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Definition
| Investment instruments that pool investment assets, enabling investors to purchase a share in the pool of assets |
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Term
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Definition
| A group of persons or legal entities who come together to carry out a particular investment activity |
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Term
| Commercial Mortgage-Backed Security (CMBS) |
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Definition
| Long-term commercial mortgage funds, backed by a pool of commercial mortgages, or perhaps, a single large commercial loan |
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Term
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Definition
| residential or commercial mortgage that lender has issued to a borrower and that has not been securitized |
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Term
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Definition
| Individual or company that originates a loan to be sold into securitization market |
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Term
| Conduit loan, Conduit lender |
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Definition
| Agencies and private companies that pool mortgages and sell mortgage-backed securities, using the pool of mortgages originated or purchased as the collateral for the mortgage-backed security |
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