Terminology

Private Money Terminology

Below is a list of terms often used in the loan business.

Appraisal	Statement of value as of a certain date. It is prepared by a licensed and/or credentialed expert who has complied with the training requirements of the state and/or one of several recognized appraisal institutes.
Assignee	One to whom a transfer of an interest is done.
Assignment	Written document by which an interest, other than real property, is transferred from one entity/person to another.
Clear Title	Title that is not encumbered or burdened with defects.
Closing Costs	Fees charged to a purchaser by a bank, lawyer, etc. for services related to a sale, such as a title search, appraisal, etc.; any expenses over the purchase price of a house, land, business, etc., that is paid by the purchaser or seller at the completion of the sale.
Clouded Title	Any claim, encumbrance or defect that contradicts the title record as understood by the property owner or interested party
Contingent	Dependent upon an uncertain future event or condition
Deed	A written document that transfers ownership of land from one party to another. The seller is called the “grantor” and the buyer is called the “grantee”. Deeds may be of many kinds. Depending upon the language of the deed, the legal capacity of the grantor, and other circumstances.
Deed of Trust	A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The owner is called the “Grantor”. The neutral third party to whom the bare legal title is conveyed is the “trustee”. The lender is the “beneficiary”. When the loan is paid off the trustee is directed by the beneficiary to issue a deed of reconveyance to the Grantor, which extinguishes the trust deed lien.
Due on Sale Clause	Provision in a deed of trust calling for the total pay-off of the loan balance in the event of a sale or transfer of title to the secured real property.
Escrow	An impartial third party that acts on behalf of either seller/buyer or borrower/lender in carrying out the principals’ instructions through to an eventual “closing”. Escrow acts as the custodian for the documents and funds involved – and makes disbursements, delivers documents and effects the consequential changes to the title record of the subject property.
First trust Deed	A lien on real property which is superior to any other lien of record.
Grant Deed	A deed used extensively in several States to transfer title. There are a number of implied warranties attributed to it, the main ones being that the grantor has the right to convey the property, and that the grantor hasn’t encumbered the property any more than already disclosed. The grantee may hold the grantor liable if the title proves to be defective.
Hard Money	1) Private funds used for the purchase of real estate by investors 2) Financing given to individuals who are unable to qualify for standard financing and the amount is typically based on the current equity in the home. This funding comes at a higher cost (hence the term “Hard”) and will often have time limits attached to the duration of the loan.
Lien	A claim against real property.
Market Value	The current value of property as determined by exposure to offers from willing buyers in the open market.
Notice of Default	The first phase of the two step foreclosure process in most States. The notice, which is prepared and either recorded, mailed and/or posted by the foreclosing trustee, contains particulars regarding the default in payment, the affected deed of trust, etc. The default period time to allow the debtor time to bring loan current or payoff.
Points	Are an “upfront fee” on a loan that is incurred at the time of the loan. Each point is equal to 1% of the value of the loan. The points are often wrapped into or included in the loan to reduce the borrower’s upfront fees.