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Mortgage / Loan Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

R

Rate Index

An index used to adjust the interest rate of an adjustable mortgage loan. For example: the change in U.S. Treasury securities (T-Bills) with a 1-year maturity. The weekly average yield on said securities, adjusted to a constant maturity of one year, which is the result of weekly sales, may be obtained weekly from the Federal Reserve Statistical Release H.15 (519). This change in interest rates is the "index" for the change in the specific Adjustable Mortgage Loan.

Rate Of Return

The annual percentage of return on investment on income property.

Ratification

Affirming a prior act, which was not legally binding; the affirmation gives the act legal effect. Occurs when an unauthorized agent acts, and the principal later affirms the action, giving authority retroactively.

Real Estate

(1) Land and anything permanently affixed to the land such as buildings, fences, and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items which would be personal property it not attached. The term is generally synonymous with real property, although in some states a fine distinction may be made. (2) May refer to rights in real property as well as the property itself.

Real Estate Settlement Procedures Act (RESPA)

A federal statute requiring disclosure of certain costs in the sale of residential, improved property, which is to be financed by a federally insured lender.

Rebate

A discount or reduction in price of a product or interest, not given in advance, but handed back because of prompt payment or other reason. Many states regulate gifts and educational aids given to real estate brokers by supporting companies such as title companies, calling these in effect, a price discount (rebate).

Recapture Of Depreciation

Taxing as ordinary income, upon the sale of property, the amount of depreciation taken above straight-line depreciation.

Re-conveyance

The conveyance to the landowner of the title, held by a trustee under a deed of trust, when the performance of the debt is satisfied.

Recordation

Involves filing for record in the office of the county recorder for the purpose of giving constructive notice of title, claim or interest in real property.

Record Owner

The owner of property as shown by an examination of the public record.

Redemption

The process of canceling a de-feasible title to land, such as is created by a mortgage foreclosure or tax sale.

Redemption Period

A time period during which a mortgage, land contract, deed of trust, etc., can be redeemed. Usually set by statute, and after judicial foreclosure.

Refinance

(1) The renewing of an existing loan with the same borrower and lender. (2) A loan on the same property by either the same lender or borrower. (3) The selling of loans by the original lender.

Reinstatement

(1) Payment of a note, mortgage, deed of trust, etc., to bring it from default to good standing. (2) Restoring the previously used entitlement of a veteran to enable the veteran to purchase property under a VA program. (Also called Restoration of Eligibility).

Reinsurance

The transferring of a portion of the liability to other insurers. Example: Insurer A insures for $200,000, A insures for $100,000 and reinsures the "second" $100,000 through B insurer, The "first" $100,000 is called "primary liability."

Renegotiable Rate Mortgage

A real property loan calling for an adjustment in the interest rate at a given time. Example: A loan with a 15-year amortization is adjusted to current interest rates after 2 years. The lender agrees to make the adjusted loan at the new rate as long as the old loan is not in default. The Federal Reserve Board allows the original loan to be treated either as a balloon payment loan or a variable rate loan. However, points must be figured into the A.P.R. based on the time or renegotiation (2 years rather than 15).

Reservation

(1) A right created and retained by a grantor. The reservation may be temporary (such as a life estate) or permanent (such as an easement running with the land). (2) Public land reserved for a special purpose, such as an Indian reservation.

Restraint of Alienation

Restrictions placed against the transfer (vesting) or sale of property. Certain restrictions are allowed but must conform to the rule against perpetuities and free right of an owner to sell. For example: Selling on the condition that the grantee could resell only to members of a certain family would be too restrictive and not valid.

Right Of Way

A strip of land, which is used as a roadbed, either for a street or railway. The land is set aside as an easement or in fee, either by agreement or condemnation. May also be used to describe the right itself to pass over the land of another.

S

Safety Clause

A clause in a listing protecting the broker from having buyer and seller wait until the listing expires to make a deal, thereby avoiding the payment of commission. The clause states that if the property is sold during a specified period after the expiration of the listing (or any extension thereof) to a buyer provided during the listing period by the broker, the commission shall be paid.

Savings And Loan Association

Originally an association chartered to hold savings and make real estate loans. Federally insured and regulated. Active in long term financing rather than construction loans. Recent changes in federal controls have enabled these associations to offer checking accounts, consumer loans, and other services traditionally offered by banks.

Secondary Financing

A loan secured by a mortgage or trusts deed, which lien is junior (secondary) to another mortgage or trust deed.

Secondary Mortgage Market

The buying and selling of first mortgages of trust deeds by banks, insurance companies, government agencies, and other mortgagees. This enables lenders to keep an adequate supply of money for new loans. The mortgages may be sold at full value (par) or above, but are usually sold at discount. The secondary mortgage market should not be confused with second mortgage.

Second Mortgage

A mortgage, which ranks after a first mortgage in priority. Properties may have two, three, or more Mortgages, deeds of trust, or land contracts, as liens at the same time. Legal priority would determine whether they are called a first, second, third, etc. lien.

Sequestration, Writ Of

The taking custody of one's property (real or personal) to force compliance with a court order.

Shared Appreciation

The gaining or retaining of equity in a property by someone other than the buyer. For example: the seller retains a 25% interest in the property. This makes the buyer responsible for only 75% of the purchase price and, therefore, lowers the necessary financing by 25%. This obviously makes the property more affordable. By agreement, expenses are shared as well as any increase in value when the property is sold. Statement of Information (SI): A confidential information statement completed by the buyer, seller and borrower in every transaction where a policy or policies of title insurance are requested. Allows the title company to competently search documents affecting the property to be insured, documents which may not refer to said property. Allows title companies to differentiate between parties with similar names when searching matters such as liens and court decrees.

"Subject To" Clause

A clause in a deed, stating that the grantee takes title "subject to" an existing mortgage. The original mortgagor is alone responsible for any deficiency, should there be foreclosure of the mortgage. Differs from an "assumption" clause, whereby the grantee "assumes" and agrees to pay the existing mortgage.

Surface Rights

The rights (easements) to use the surface of land, including the right to drill or mine through the surface when subsurface rights are involved.

Sweat Equity

A program which allows a purchaser to do work on the property in place of all or part of the down payment and other costs of purchase.

Subordination Agreement

An agreement under which a prior or superior lien is made inferior or subject to an otherwise junior lien.

Survey

The measurement of the boundaries of a parcel of land, its area, and sometimes its topography.

Syndicate

An association of individuals, formed for the purpose of carrying on some particular business venture in which the members are mutually interested.

 
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