Fannie Mae
See Federal National Mortgage Association .

Farmers Home Administration (FmHA)
Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

Federal Home Loan Mortgage Corporation (FHLMC)
Also called Freddie Mac, is a quasi-governmental agency that purchases conventional mortgages from insured and uninsured depository institutions, HUD, and VA approved mortgage bankers.

Federal Housing Administration (FHA)
A government agency that promotes homeownership, renovations, and the remodeling of residences by issuing government guaranteed loans to homeowners.  Its main activity is to insure residential mortgage loans made by private lenders and to set underwriting standards. 

Federal National Mortgage Association (FNMA)
Also known as Fannie Mae. Created by Congress, it is a Corporation that purchases and sells conventional residential mortgages bought from banks, trust companies, S & L's, mortgage companies, and insurance companies, as well as those insured by FHA or guaranteed by VA.  FNMA facilitates liquidity in the market by providing funds for one in every seven mortgages. 

Fee Simple
Absolute ownership not encumbered by any other interest or estate and subject only to the four powers of government; [1] taxation, [2] escheat, [3] eminent domain, [4] police power. 

FHA Loan

An insured loan made by the Federal Housing Administration -  open to all qualified home purchasers. FHA limits the size of loans but limits are usually sufficient to handle moderately priced homes most anywhere in the country.

First Mortgage

A mortgage that has priority over all other liens.   
 

Foreclosure

A legal process in which a lender forces the sale of property to recover all or part of the defaulted loan proceeds. 
 

Freddie Mac

See Federal Home Loan Mortgage Corporation.
 

Functional Obsolescence

See Curable functional obsolescence and  Incurable functional obsolescence.  

G

General Warranty Deed

A covenant/warranty in the deed that binds the grantor and heirs to defend the title against the lawful claims of all persons.  It conveys not only all the grantor's interests but also warrants that if the title is defective or has a "cloud" on it (tax liens, title claims, judgments, mortgages, mechanic's liens, etc.) the grantee may hold the grantor liable.
 

Gentrification
A market phenomenon in which middle and upper class buyers purchase neighborhood properties and renovate or rehabilitate them. 
 

Gift Deed

A deed given or conveyed without consideration.
 

Going-Concern Value

A value created by the proven/successful business operation.  It is a separate entity valued with an established business.    
 

Government National Mortgage Association (GNMA - Ginnie Mae)

Also known as Ginnie Mae.  It provides sources of funds for residential mortgages, insured or guaranteed by FHA or VA by subsidizing these mortgages  and issuing mortgage backed federally insured securities. 
 

Graduated Payment Mortgage (GPM)

A flexible-payment mortgage where payments increase for a specified period of time then level off. This type of mortgage can have include negative amortization. 
 

Grantee

The buyer or "recipient" in a deed or instrument. 
 

Grantor

The seller or "giver"  in a deed or instrument.
 

Gross Building Area

Total floor area measured from the exterior walls - the most common standard of measure, especially in computing size of industrial buildings.  (Excludes unenclosed areas).
 

Gross Income

Income produced from the operation/management of real estate.  Usually stated on an annual basis.   See effective gross income and potential gross income. 
 

Gross Income Multiplier

See effective gross income multiplier (EGIM) or potential gross income multiplier (PGIM).
 

Gross Leasable Area

Total floor area designed for the occupancy/exclusive use  of tenants  (includes basements and mezzanines).  It is the standard of measure usually used for shopping centers.
 

Gross Lease

A type of lease whereby the landlord receives rent and is obligated to pay all or most of the fixed and operating expenses from the real estate.
 

Gross Living Area

Total area of finished and "above grade" residential space.  The standard usually used for determining the amount of habitable space in residential properties.
 

Gross Rent Multiplier

A ratio expressing the relationship between sale price or value and gross rental income.
 

Ground Rent

The rent paid for the right to use/occupy land.
 

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H  
 

Highest And Best Use

The most probable use of  land or improved property that is; [1] legally possible, [2] physically possible, [3] financially feasible (and appropriately supportable ) from the market, and [4] which results in maximum profitability.   HBU As Vacant - The use of a property  as vacant or that which can be made vacant thru demolition.  HBU As Improved - The use that should be made of an improved property as it exists. HBU "as vacant" is often different from HBU "as improved".  See Consistent Use.  
 

Holdover Tenant

A tenant who remains in possession of the leased premises after lease expiration. In some states, a lease may be considered automatically renewed if the lessor accepts rent payment after expiration. 
 

Home Equity Line of Credit

A form of open end credit in which the home is used as collateral.
 

Homestead Exemption

[1] The lawful withdrawal of real property occupied by the head of household, from attachment by the occupant's creditors or forced sale for general debts.  [2] The release from property tax/assessment or the application of a lower tax rate on property designated as a family homestead.  
 

Housing Expenses-to-Income Ratio

A ratio that expresses the relationship between a borrower's housing expenses and net effective income (FHA/VA loans) or gross monthly income (Conventional loans).
 

HUD

U.S. Department of Housing and Urban Development. Office of Housing/Federal Housing Administration within HUD that insures home mortgage loans and sets minimum loan standards. 

I
 

Impound

That portion of a borrower's monthly payments held by the lender (fiduciary) to pay for taxes, assessments, hazard insurance, mortgage insurance, lease payments, etc. as they become due  (aka reserves).
 

Income Capitalization Approach

A valuation approach for income producing properties that converts  the anticipated benefits (positive cash flows and reversion/resale) into a value estimate by one of two methods; [1] direct capitalization of a single year's income estimate -or- an average of several year's income estimates, and/or  [2] by discounting all anticipated annual cash flows and the reversion (equity gain after loan payoff) to a present value estimate using a specified "yield" rate. 
 

Income Rate

A measure of investment that reflects the ratio of a single year's income (or average of year's) to value, e.g., equity cap rate (Re), overall cap rate (Ro), mortgage constant (Rm).  (aka cash flow rate).  An income rate (single year measure) is not the same as a yield rate (measure of total return). 
 

Increasing And Decreasing Returns

A valuation concept that successive increments of one or more of the agents of production added to fixed amounts of other agents will enhance income at an increasing rate until a maximum is reached.  Then, income will cease to increase proportionately with expenditures. (commonly applies to over-improvements). 
 

Incurable Functional Obsolescence

A defect caused by a deficiency or a superadequacy in materials, structure, or design (an element of accrued depreciation).
 

Incurable Physical Deterioration

A defect caused by physical deterioration that is impractical or not economically feasible to repair   (an element of accrued depreciation). 
 

Index

[1] A benchmark interest rate   (such as 1, 3, or 5-year U.S. Treasury Security yields, the monthly average interest rate on loans closed by S & Ls, or the monthly average Costs-of-Funds incurred by S & Ls)  used by lenders to determine pricing for adjustable rate mortgages.  The spread between their rate charged and the base rate for other investments depends on market conditions.  Rates may be adjusted up or down.  [2] A lease that provides for periodic adjustments in the rent based on a specified index such as the cost-of-living index.
 

Indirect Costs

Expenditures for items other than labor and materials (aka soft costs - financing costs, loan interest, taxes, builders risk/other insurance, marketing, sales, lease-up, administrative costs, professional fees, etc). 
 

Infrastructure

[1] In construction -  utility lines, streets, curbing, i.e., the core development or source of utilities and support services.  [2] In planning, term used to describe facilities and services  that are integral to urban community life.
 

Ingress

Entry into a site.
 

Inheritance Tax

A tax on the right to receive property by inheritance as opposed to estate tax.
 

Installment Contract

A purchase contract whereby payments are made to the seller.  Title is generally not transferred/recorded  until the contract is paid in full and installment payments are usually forfeited if the buyer defaults.  (aka installment land contract).  
 

Interim Use

A temporary use of  a site/property in transition to it's highest and best use. 
 

Internal Rate Of Return - IRR

A rate of return on capital invested over the holding period.  A measure of  investment performance often used to measure profitability after income taxes, i.e., the after-tax equity yield rate - the rate of discount that equates the present value of the benefits (equity cash flows and net resale proceeds after loan payoff) to the present value of the initial investment by the buyer/owner.
 

Investment Value

Value/price to a particular investor based on his/her individual investment requirements; as distinguished from market value which is impersonal and detached.

(See also value in use). 
 

Inwood Annuity Capitalization

A valuation technique that estimates value by discounting a stream of level income into a present value - uses a present value factor (PW of $1 per period).

J
 

Joint Tenancy

Ownership by two or more persons with right of survivorship.
 

Judgment

A statutory lien on real/personal property of a judgment debtor; created by the judgment itself.
 

Judgment Creditor

A person/entity who has received a decree (judgment) from the court against the debtor for money due.
 

Judgment Debtor

A person/entity against whom a judgment has been issued by the court for money owed. 
 

Jumbo Loan

A loan greater (more than $203,150) than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans are not funded by these two agencies, they usually carry a higher interest rate.
 

Junior Lien

A secondary lien placed after a previous lien has been made/recorded.
 

Just Compensation

The amount a property owner is compensated when property is taken - generally held to be market value.  

K
 

K Factor 

An income adjustment factor used to convert an income stream (that changes at a constant ratio) into its stable or level equivalent. 
 

L
 

Land Capitalization Rate

[1] A ratio of  land income to land value.  [2] A rate used to convert income from land into a value estimate for the land itself.  Used in appraisal residual techniques -or- in a band of investment,  to value property.
 

Landlocked

A land parcel that has no legal access to a road or highway.
 

Leased Fee Estate

The ownership interest held by a landlord with use/occupancy rights conveyed to others. 
 

Lease Rollover

The subsequent re-leasing of space after expiration of the initial lease.
 

Leasee

 A person who signs a lease to get temporary use of property.
 

Leasehold Estate

The tenants right to use/occupy real estate subject to the terms of the lease.
 

Leasehold Improvements

Improvements/upfits/additions to leased property made by the leasee (tenant).
 

Leasing Commissions

Fees paid to a real estate agent for successfully leasing property. 
 

Legally Nonconforming Use

A use that was lawfully established but no longer conforms to the use regulations established  by present zoning.
 

Lessor

A company that provides temporary use of property usually in return for periodic payment.
 

Lien

A claim upon a piece of property for the payment or satisfaction of a debt or obligation.
 

Life Estate

Use/occupancy/control  rights granted to a designated person until their death. 
 

Loan Servicing

The administration and collection of  periodic mortgage payments from homeowners usually performed by a bank acting for itself or the mortgagee.  
 

Loan-To-Value Ratio

The relationship (%)  that expresses the difference between the amount of the mortgage loan and the appraised value of the property. 

M
 

Margin

The amount a lender adds to the index on an adjustable rate mortgage. 
 

Market Value

The most probable price a property will sell [1] after reasonable market exposure in a competitive market, [2] under all conditions requisite to a fair sale, [3] buyer and seller acting knowledgeably/prudent and for their self-interest, [4] neither buyer or seller is under undue duress, [5] with cash, cash equivalent terms, or with typical market financing.  Market value may is not always the price a property actually sells for nor is it the highest price paid.   It is defined in the concept of a typical buyer and willing seller. 
 

Marketable Title

A title that is free and clear of any objectionable liens, clouds, or  title defects.  
 

Mechanic's Lien

A statutory lien granted against a property for those who perform labor or services or furnish materials to improve a property.
 

Metes And Bounds

A legal description that references a parcel's boundaries - has a point of beginning, intermediate points or bounds, and courses or angular direction of each point, i.e. metes.   
 

Mortgage

A lien or claim against real property pledged by the buyer to a  lender as security for money borrowed. Under government-insured or loan-guarantee provisions, payments may include an escrow for taxes, hazard insurance, and special assessments. 
 

Mortgage Commitment

A written notice provided by the bank stating it will advance mortgage funds to enable a buyer to purchase a home. 
 

Mortgage Insurance

Fees paid to insure a  mortgage when the down payment is less than 20 percent. See Private Mortgage Insurance (PMI) or FHA Mortgage Insurance .
 

Mortgage Insurance Premium

The insurance payment charged each year by the lender - usually for transmittal of the loan to HUD to help defray the cost of the FHA mortgage insurance program.  It provides  a reserve fund to protect lenders against loss in insured mortgage transactions. For FHA insured mortgages,  this usually  represents an annual rate of 1/2 % paid by the mortgagor on a monthly basis.
 

Mortgage Note

A written contract/agreement  to repay a loan. It is secured by a mortgage, serves as proof of indebtedness, and states the [1] repayment terms and conditions, [2]  amount borrowed, [3] interest rate, and other terms/conditions. 
 

Mortgage (Open-End)

A mortgage that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges.  Open-end provisions usually limit borrowing to no more than the original loan figure. 
 

Mortgagee

The lender.
 

Mortgagor

The borrower or homeowner.

N
 

Negative Amortization

Occurs when loan payments are not sufficient to pay all the interest due on the loan. If interest continues to accrue faster that payments can retire the principal, then it is possible to owe more than the original amount of the loan. 
 

Net Income Multiplier

A factor that expresses the relationship between price or value and net operating income; it is the reciprocal of the overall rate.
 

Net Income Ratio

The ratio of net operating income (NOI) to effective gross income (EGI); it is the complement of the operating expense ratio (OER).
 

Net Lease

A lease whereby the tenant pays all property charges in addition to the contract rent.  See gross lease and triple net lease.
 

Net Operating Income (NOI)     

The net income left remaining after deduction of all operating expenses from effective gross income but before payment of debt service and deduction of book depreciation. 
 

Non-Assumption Clause
A statement in a mortgage contract that prohibits the assumption of the mortgage without prior approval from the lender.

Nonconforming Use
A structure that was lawfully erected or altered but no longer conforms to present zoning because of subsequent changes in the ordinance.
 

Nonconventional Mortgage
Mortgages that are either guaranteed or insured by the federal government (Veterans Administration, Federal Housing Administration, etc.) or privately insured.
 

Nonrecourse Loan
A clause in a debt agreement secured by real estate that states that the lender has no claim against the debtor if he/she defaults and may only recover the property.