Continued from…
Real Estate Glossary M [Part 2]
Model home
A house built as part of a land development programme to show the style, construction, and possible furnishings of similar houses that will be built and sold. A model home, also called a demonstration home or spec home, is a great way to sell a house if it is done right. After it has served its purpose, it is often sold with some of the furniture. The first house built in a new neighborhood may be used as a model, and it’s usually the last one to sell.
Model unit
A piece of land used to build mobile homes.
Modification
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The effect that improvements made to nearby parcels have on how the land is used and how much it is worth.
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Changes made to a contract. Any time, as long as both parties agree, a contract can be changed.
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A change to the design of a building that is required by law. For example, the Americans with Disabilities Act says that public buildings need to be more accessible to people with disabilities.
Modification and assumption agreement
When the due-on-sale condition of the mortgage is enforced owing to a change in ownership, a written agreement to adjust the interest rate is required. There is also no longer any personal accountability for the prior mortgagor in terms of the mortgage.
Modified accelerated cost recovery system (MACRS)
A depreciation method that lets assets lose value over a longer period of time than the accelerated cost recovery method (ACR). The Tax Reform Act of 1986 (TRA '86) got rid of ACR and replaced it with MACRS. MACRS keeps the ACR structure but makes it take longer for most depreciable assets to get their money back. For residential rental property put into use after December 31, 1986, the recovery period is 27.5 years, and for nonresidential real property, it is 39 years. In real estate, the accelerated method is no longer an option. The only method that can be used is the straight-line method.
The current rules for depreciation don’t make a difference between new and used property, nor do they take any salvage value into account. Depreciation of parts is not allowed unless new parts are added after the initial purchase. The way that improvements or additions are depreciated is the same as how the property itself is depreciated. A mid month rule now applies to both residential rental property and other types of real property. That is, the property is considered to have been put into use at the middle of the month, no matter when it is put into use.
TRA '86 also made an alternative depreciation system (ADS), which must be used for property that is mostly used outside the United States, for property that is leased to a tax-exempt entity or paid for with tax-exempt bonds, and to figure out the amount of depreciation that is treated as a tax preference for the purposes of the corporate and alternative minimum taxes. ADS real estate is written down over a period of 40 years. Even if a taxpayer doesn’t fit into any of the above groups, they can still choose to use ADS.
Modified internal rate of return (MIRR)
A version of the internal rate of return intended to address the many root problems by discounting all negative cash flows back to the time an investment commitment must be made and compounding all positive cash flows ahead to the end of the last year of the investment holding term. The modified internal rate of return is the discount rate that matches the present value of all negative cash flows with the future value of all positive cash flows.
Modified pass-throughs
A Ginnie Mae security backed by a pool of guaranteed mortgage loans. Holders of pass-through securities receive a pro-rata part of the repayment of interest and principal.
Modified uniform limited partnership act
A modified version of the Uniform Limited Partnership Act that precisely defines the acts that restricted partners can perform without jeopardizing their limited liability.
Modular construction
Construction of six-sided houses (four walls plus ceiling and floor) or building components in a controlled manufacturing environment using highly sophisticated methods; prefabricated home is another name for this type of construction. Because the home can be constructed in the factory while the construction site is being prepped, modular solutions can reduce construction time and hence save money.
Modular buildings does not have any federal codes of standards. There are several uses for modulars outside of residential construction: office buildings, hotels, strip malls, schools and factories, and storage. Unattached modular homes are sold as personal property, and hence no written listing or real estate license is required for a commission to be earned by a real estate agent selling one.
Module
A common measurement that affects where window mullions, ceiling tiles, light fixtures, columns, electrical distribution systems, walls, and other things are placed. The chosen module could make office design a lot more flexible.
Mold
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The cornice is a wood molding that goes over the place where the roof boards meet the outside wall. The picture mold is put on the inside where a wall meets the ceiling.
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A simple life form that can’t make its own food through photosynthesis and doesn’t need sunlight to grow. It gives off spores and alcohols, ketones, and hydrocarbons, which can cause allergies, breathing problems, and sinus problems in some people. Most molds grow well when the humidity is above 55%, and they can spread quickly in homes with little air flow. Mold is just one of the many environmental problems that often affect real estate deals. There are no federal rules about telling people about mold problems, and only a few states have similar rules. Buyers should be reminded that they not only have the right to find out, but also the responsibility to find out.
Monetary policy
Controlling the money supply in order to boost or stifle economic growth.
Money market fund
Mutual funds that invest primarily in short-term debt instruments, such as CDs, commercial paper, Treasury bills and other U.S. government securities, are known as short-term debt mutual funds.
Monitoring
Capturing, analyzing, and reporting on project performance, often in comparison to plan.
Monochromatic
A single wavelength or, most typically, a small range of wavelengths
Monopolistic competition
A market arrangement in which any number of rivals supply sufficiently distinct goods or services that purchasers are not wholly indifferent among them, such that selection is influenced by factors other than price alone.
Monopoly elements
A feature of an item or service that distinguishes it from other goods or services, making the others less attractive as alternatives.
Month-to-month tenancy
A type of rental agreement in which the tenant pays rent for a set amount of time at a time. If there isn’t a written or verbal rental agreement, a tenancy is usually month-to-month or, if there are boarders, week-to-week. Under this type of tenancy, the estate keeps renewing indefinitely until either the lessor or the lessee gives the statutory notice that the tenancy is over. According to the laws of most states, this notice must be given at least one rental period before the end of the lease. In other words, if the rent is due every month, you must give one month’s notice; if it’s due every week, you must give one week’s notice; and so on. In some states, you can give the required notice at any time of the month.
When a tenant stays after the lease term is over, this can lead to a month-to-month tenancy. When there isn’t a new lease agreement, the landlord can either kick out the tenant or let them stay. Most of the time, a landlord’s agreement is clear when they accept rent. Courts usually decide that tenants who want to stay will be able to do so for the same amount of time as the original lease, as long as that time is one year or less. Some courts have said that a holdover tenancy can only last for one year. So, if the original lease was for six months and the tenancy is extended, courts usually think that the extension is also for six months. If the original lease was for five years, however, the holdover tenancy could not be longer than one year (the statute of frauds period). Some written leases say that a tenant who stays past the end of the lease is a month-to-month tenant if there is no renewal agreement. Most of the time, this is a good deal.
A representative unit in a building that is meant to show how the area will look in the future.
Monthly constant
In statistics, the arithmetic mean.
Monthly loan constant
A loan payment factor that is used to calculate payments on a fixed-rate, level-payment loan.
Monument
A natural or man-made object that can be seen and is used by the government or surveyors to mark the lines and boundaries of a survey. Some monuments are made by people, like stakes, iron pins, or posts. Others are made by nature, like trees, streams, and rivers that have been marked. One problem with natural monuments could be that they move from where they were first built. A comer in a government survey system would be an example of an intangible monument. Even though it can’t be seen, it can still be found with accuracy by survey.
For a metes-and-bounds description to be correct, it must start at a monument, which is called the “point of beginning” (such as an iron pin or the intersection of two streets). When there is a disagreement about who owns a piece of land, the monuments win, even if the courses or distances in a metes-and-bounds description in a deed or other legal document say otherwise.
Moraine
The material physically deposited by a glacier; also, the material (load) transported in or on a glacier; moraines, as landforms, often have hilly or rolling terrain.
Moral character
The ability of the licensed person to serve the general public in a fair and honest manner.
Moral turpitude
Conduct that goes against the acknowledged customary rule of right and duty amongst people; conduct that goes against justice, honesty and modesty; or conduct that goes against morality and decency in the private social sphere. Examples include embezzlement, perjury, robbery, and theft; on the other hand, failing to pay income tax, speeding or possessing minor amounts of marijuana may not be considered morally turpitude. As a result, felonies are deeds that are depraved in character.
If a person has been convicted of a crime involving moral turpitude, state licensing authorities may refuse to give a license unless that person has received a full and free pardon or has provided adequate proof of living an upright and moral life for a defined length of time.
Moratorium
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To avoid a default and foreclosure, the lender suspends the monthly payment due under the terms of the financing agreement for the duration of the borrower’s recovery period.
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A temporary halt in the issuance of building permits while the government investigates more stringent zoning controls, as with condominium conversions. This is sometimes referred to as a zoning freeze and occurs most often in relation to shoreline development and no-growth policies.
More or less
When describing real estate, this phrase means that the size or dimension given is about right. A small difference from the real size doesn’t affect the validity of the contract, but a big difference could be a reason to get out of the deal. For their own safety, buyers should hire a surveyor to find out where the exact boundaries are. Some courts have said that the phrase “more or less” means that the property is being sold in its entirety, not by the acre.
Mortgage
A security interest in real estate that is used to guarantee the repayment of a loan.
A document in which real estate is pledged as collateral for a loan.
A lien on real estate used to secure a debt. A specific contract in which the borrower transfers a security interest in the mortgaged property to the lender.
A debtor’s transfer of ownership to a creditor in exchange for security on a debt that continues while the obligation is unpaid.
A contract that pledges a property as security for the repayment of a loan on the property
In some places, a deed of trust is used instead of a deed of trust to make real estate the security for a loan. A mortgage is a two-party contract between a mortgagor (a borrower) and a mortgagee (a lender).
A month-to-month leasing arrangement that can be terminated at any time.
A legal document that guarantees the fulfillment of an obligation. The word “mortgage” comes from the French words mort, which means “dead,” and gauge, which means “pledge.” This is a good name for the loan because the pledge isn’t removed until the debt is paid off. In a typical real estate deal, the buyer borrows money to pay the seller the difference between the down payment and the purchase price. When the lender (mortgagee) gives the money, the buyer/borrower (mortgagor) must sign a promissory note for the amount borrowed and a mortgage to secure the debt.
For a mortgage to be valid, there must be both a debt and a pledge. The mortgage note makes the mortgagor personally responsible for making payments, and the mortgage puts a lien on the property as security for the debt. Even though the note and the mortgage can be on the same paper, they are usually on separate ones. The mortgage is no longer a good form of security once the debt is paid off or becomes unenforceable, like when the statute of limitations runs out. The mortgage document is long and has many clauses, such as provisions for acceleration, subordination, release schedule, defeasance, and waivers. There are also promises to pay taxes, keep the property in good shape, and keep enough insurance. If the mortgagor doesn’t pay taxes or insurance premiums, the mortgagee can pay them and add the amount to the mortgage debt.
Most mortgages have a clause called “assignment of rents.” This lets the lender collect rents if the borrower doesn’t pay on the note but keeps getting rental income from the property.
In practice, the mortgage says that if the borrower doesn’t pay the note, the lender can take possession of the property. Even though this isn’t always the case, the property that is mortgaged is usually the property that the borrower buys with the money from the loan. So, if the borrower (mortgagor) doesn’t pay back the loan, the lender (mortgagee) can start foreclosure proceedings to sell the property and keep the money that’s still owed on the note. If the money from the sale is less than what is owed, the mortgagee can get a deficiency judgment against the person who owes the money.
Contract law applies to mortgages: the mortgage must be in writing, name the parties (who must be able to legally sign a contract), include a legal description of the property being mortgaged, state a consideration, include a mortgage clause, state the debt, and be signed by the borrower (mortgagor). Also, borrowers should say if they are married or not. Spouses should always sign because they have homestead rights to the property, no matter what their gender is. The mortgage is usually acknowledged and then recorded. The date of recording is used to figure out the order of priority of the lien. The mortgage is written down because it gives the borrower rights and interests in the real estate. The mortgage note, on the other hand, doesn’t need to be written down because it’s only a personal obligation. There is no rule that says the number of signatures on the note has to match the number of signatures on the mortgage.
Some states see the mortgagee as the owner of the property that was put up as collateral, but this can be changed if the debt is paid off or the obligation is met. These states are called “title theory states” because they see the mortgage document as a transfer of property. Lien theory states are the ones that see a mortgage as nothing more than a claim on real property.
Under the lien theory, if the borrower doesn’t pay, the mortgagee must foreclose, put the property up for sale, and use the money from the sale to pay down the debt. As a way to protect the mortgagor, some state laws give the mortgagor a set amount of time after the foreclosure sale to redeem the property. Whether a state uses the title theory or the lien theory of mortgages, the mortgagee’s security interest in the land is considered personal property and can only be transferred when the debt that the mortgage secures is also transferred.
When a property is sold, the mortgages on it can be taken over, made subject to (unless a due-on-sale clause says otherwise), or paid off. When the mortgage is paid off in full, the owner of the property should make sure that the note is returned and “canceled,” and that a “satisfaction of mortgage” or “release of mortgage” is recorded to show that the mortgage is no longer a lien on the property.
There are many different kinds of mortgages. Some of these are the adjustable-rate mortgage loan, the graduated-payment mortgage, the wraparound mortgage, the shared appreciation mortgage, the flexible loan insurance payment, and the buy-down mortgage. Under their own headings, we talk about these and other types of mortgages, such as blanket mortgages, budget mortgages, open-end mortgages, package mortgages, participation mortgages, and purchase-money mortgages.
A promise to repay a debt by pledging property as collateral. The vow can also be specified in a legal instrument.
Mortgage assumption
When purchasers assume the payments on the sellers’ mortgages and become personally accountable by issuing a note in their name.
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Mortgage banker
A person, corporation, or firm that isn’t in banking or finance and usually uses its own money to finance mortgages, unlike savings and loan associations or commercial banks, which use the money of their depositors to start mortgage loans. Some mortgage bankers do offer permanent long-term loans, but most of them focus on short-term and interim loans, which they get from their own money or from commercial sources. People say that everything a mortgage banker lends must be sold.
Because of the mortgage correspondent system, mortgage bankers can do a lot more now than they could before. Under this system, a mortgage banker or mortgage banking company tries to make a lot of loans and then sells them at a discount to big investors like insurance companies, commercial banks, and retirement and pension funds. Mortgage bankers are a major source of construction loans and are very active in lending money on commercial real estate like shopping centres and office buildings.
The secondary mortgage market is where most of the money for mortgage banking comes from. If the secondary market wasn’t involved, this is how a typical mortgage banking deal would look:
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A local mortgage banker makes a deal with a savings and loan association (like one in New York) to sell $5 million worth of loans within a certain amount of time.
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Loans are made to individuals.
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The loans are taken care of for the association by a local mortgage banker.
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The loans are sold to the New York investor based on the agreement that was made before.
Also, these loan administrators are experts at getting FHA and VA loans started in areas where mortgage money is hard to come by. Most of the time, they sell these mortgages to banks in other parts of the country where money isn’t as tight for an origination fee. So, most of the time, they are not the final lenders in mortgage deals. The goal of the mortgage banker is to sell the loan on the secondary mortgage market for a profit while taking on the risk themselves. The mortgage broker, on the other hand, does not do anything without the principal’s permission. The mortgage banker usually stays in the picture and takes care of the mortgage for clients who are big investors. These services include collecting monthly payments, distributing the money to pay taxes and property insurance, keeping an eye on the loan, preventing late payments, and taking the right steps to fix things if a payment is late.
A legal document used to ensure that a debt or obligation is paid.
Individuals or businesses who originate real estate loans can keep such loans in their own portfolios or sell them on the secondary market.
Full-service mortgage firms that originate, process, close, fund, and sell loans in the secondary mortgage market, as well as service loans for loan investors.
Service providers similar to those who provide mortgage broker services.
Mortgage broker
Person or company that works as a middleman between the borrower and lender; one who, for fee or advantage; negotiates, sells or arranges loans; also known as a loan broker; When a mortgage broker originates a loan, the loan is typically closed and serviced by the lender. Mortgage bankers, on the other hand, not only close loans in their own names, but also maintain a relationship with them after they are closed. In order to prevent any potential conflicts of interest, many mortgage brokers are also registered as real estate brokers and offer these financial services in addition to their real estate ones.
A mortgage lender who originates, sells, and services loans.
A middleman between individuals who need mortgage money and those who offer them. Brokers charge a fee to arrange mortgage loans, but they do not originate or service the loans.
A mortgage broker who works with a variety of lenders to assist people secure low-interest mortgages
Mortgage commitment
A lender’s obligation to provide cash at some point in the future. Loan terms might be set or those in effect at the time the funds are to be advanced.
A person who specializes in putting together a borrower and a lender for a fee.
Mortgage correspondent
A person who will charge a fee to originate and service a loan.
Individual mortgage bankers or brokers working on behalf of an institutional lender in a specific geographic area.
Mortgage fund
A mortgage-investing mutual fund that is professionally managed.
Mortgage insurance
A type of insurance that protects a lender from any financial loss caused by a mortgagor failing on a loan.
Insurance that pays the mortgage if the insured mortgagor dies or is otherwise unable to perform his or her duties. In essence, mortgage insurance is a type of life insurance with a decreasing term. The premiums are paid along with the mortgage payment each month.
Protector for lenders in the event that homebuyers fail to pay their mortgages.
Mortgage insurance premium (MIP)
FHA-insured loans demand an upfront insurance fee.
Mortgage joint venture
A collaboration between developers and others who provide all or most of the capital in the form of loans to create properties that will be utilized in their businesses or added to their portfolios.
Mortgage lien
Mortgagee’s equity in their home is pledged as collateral for the debt they owe the lender. In contrast to a tax lien, which is enforced by law, a mortgage lien is one that the property owner voluntarily places on their home. The priority of a mortgage lien is established through the recording of the lien, as is the case with other liens on real property. There is no legal obligation to record a mortgage or lease until it has been signed by all parties involved. Unless it is subordinated to later liens, a recorded mortgage, regardless of its title, has priority over any other mortgages or liens that are subsequently recorded. With all liens, the mortgage lien is subordinate to any liens for special assessments or state real estate taxes. It is not until the mortgage lien is recorded with the registrar of titles and reflected on an owner’s certificate of title that a Torrens lien can be applied to the property.
To protect future advances, such as in the case of a construction loan, the mortgagee (the lender) may take out an obligation to make mandatory payments to the mortgagor (the borrower). It is only when the mortgage clearly refers to this particular advance as being secured by a previously recorded lien that such future advances take precedence over other liens that have taken effect since the mortgage was recorded that such future advances take precedence over other liens.
A mortgage encumbrance is a lien on a property that is used to finance a loan.
Mortgage menu
The many sorts of residential loans made available to residential borrowers by originating lenders. The cost of the different mortgage elements, such as the contract interest rate and the amount of upfront discount points and origination costs, is listed on the menu.
Mortgage note
The debt is described, as well as the mortgagor’s vow to pay it back.
At closing, the borrower signs a paper pledging to pay back the borrowed funds.
Mortgage offset
Offset accounts can help you save money on taxes by putting taxable income from deposit accounts against the interest you pay on your mortgage in after-tax money. It’s also not true that all offset accounts pay the same interest rate as your mortgage. Many don’t pay the same rate of interest as your mortgage.
Mortgage participation certificates
Under the conditions of a mortgage, the party to whom real estate is committed. In most cases, the lender in a real estate transaction.
Mortgage pipeline
Loan commitments authorized but unmet by an originating lender, as well as loans funded but unsold.
Mortgage pool
A pool of mortgage loans where people can put their money.
Mortgage protection insurance
Borrowers get insurance to cover their loan payments if they can’t make them because of things like serious sickness and job loss. This kind is called “loan insurance.”
Mortgage REITs
A real estate investment trust that predominantly invests in first mortgage-secured real estate loans.
A real estate investment trust (REIT) is a company that invests in real estate and loans money on it.
Real estate investment trusts that buy mortgage liabilities and, in effect, become lenders.
Mortgage release
On the mortgage note issued by the mortgagee, there is a disclaimer of any further obligation.
Mortgage spreading agreement
A contract that lets a mortgage lien on a property cover other properties that it didn’t cover before. This gives the lender more security and is often used when the person who took out the mortgage wants to get more money.
Mortgage subsidies
A type of financing in which a homebuilder allows a buyer of a new home to occupy the home for a set period of time (e.g., six months) without making monthly payments. The money saved is put toward a down payment, a savings account to serve as a reserve to help make monthly payments after permanent financing is in place, or into a fund to reduce the interest rate on permanent financing. For a limited time, a builder may offer a reduced monthly payment, or subsidy.
Mortgage warehousing
The procedure of inventorying real estate loans. Mortgage bankers or brokers may inventory loans while creating pools of loans for later transfer to bigger institutional real estate lenders.
Mortgage-Backed Securities (MBS)
Securities that are collateralized by mortgages on real estate.
It refers to all securities whose repayment security is a mortgage loan (or a group of mortgage loans) backed by real estate. Interest and principal payments to investors come from payments made on the underlying mortgage loans.
Pools of mortgages are utilized to guarantee the security, which is used to direct funds from the securities market into the housing market. Popular MBS programme run by Ginnie Mae known for minimal risk and big return. As a bond, the Ginnie Mae MBS security consists of a pool of VA and FHA loans. MBS programmes are also offered by Freddie Mac and Fannie Mae.
Mortgage-equity rate analysis
Estimation of an overall capitalization rate by taking a weighted average of the capitalization rates for debt (mortgage constant) and equity (equity dividend rate). The weight is defined by the percentage of the total investment that each component (debt and equity) represents.
Mortgagee
In the case of a mortgage loan, the lender.
Under the conditions of a mortgage, the party to whom real estate is committed. In most cases, the lender in a real estate transaction.
The lender is the person who gets the mortgage claim.
A person or entity who has a mortgage on a property.
On the mortgage, the lender is referred to as
The company that lends the money.
A person who has a lien on a property as collateral for a loan.
The mortgage holder is the individual involved in a mortgage transaction who receives and holds a mortgage as security for a debt. A mortgage holder might be a lender or creditor who holds a mortgage as security for payment of an obligation.
It is the party who lends money in a mortgage deal.
Mortgagee In Possession
When a mortgagee has executed their mortgage rights and taken possession of the property from the mortgagor. In the United States, this is referred to as foreclosure.
After a mortgagor defaults, the mortgagee obtains a court order to seize control of the property.
Mortgagee sale
Sale of a property that entitles the mortgagor to sell the property over which the mortgage has been held in the event that the mortgagee is in default of payments.
Mortgaging out
Acquiring or developing a project to the farthest extent possible.
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Mortgagor
In the case of a mortgage loan, the borrower.
Under the conditions of a mortgage, a party pledges real estate. Borrower who promises property as collateral for a loan.
The mortgage claim’s borrower or grantor.
A person who lends money to buy a house with a mortgage.
The guarantor
The person who gets the money from a lender.
A person who promises property as collateral for a loan.
The person who gives a mortgage as security for a debt; the borrower; usually the landowner, but it could also be the owner of a leasehold estate; the borrower or debtor who hypothecates or puts up property as security for an obligation.
Mortmain
Real estate that is given to a church, school, or charity so that they can own it forever. There are laws about how much of a person’s estate can be left to such institutions.
Mosaic
A phrase used in landscape ecology to indicate the patchy quality of habitat as a result of land use fragmentation; an assemblage of overlapping aerial or space shots or images whose edges have been matched to make a continuous graphical depiction of a piece of the earth’s surface.
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