Global Capital Advisory |
10 Yr US Treasury – A rate corresponding to the current yield of the US Treasury
note which is also used as an index rate.
30/360 – An interest rate accrual method which uses a 360 day year
Abstract Title – A history of the ownership of a parcel of real estate
Actual 360 – An interest rate accrual method which charges interest for all 365
days while using a 360 day year.
Actual 365 – An interest rate accrual method where annual interest is divided by
365 days. The interest is then calculated using the actual number of days in that
period.
Actual/Actual – An interest rate accrual method where annual interest is divided by
the exact number of days in that year. This figure is then multiplied by the exact
number of days in the period to calculate interest.
Adjustment Interval – The time between rate adjustments on an adjustable rate
mortgage.
Annual Percentage Rate (APR) – An annual interest rate which takes into account
all costs of the loan such as points and other costs, not just interest charged.
Assumption – Taking over an existing loan on an asset you are purchasing.
Assumption Fee – A fee paid in order to approve a new borrower on existing
debt.
Buy Down – This is an upfront payment to the lender which allows the borrower to
pay a lower interest rate.
Capitalization Rate – Rate of return. This is calculated by dividing the net
operating income by the value of the assets. Can also be used to calculate value
based on the net operating income.
Clear to Close – Identifies when the loan is ready to close without any other
conditions needed.
Collection Loss – An underwriting guideline used on income producing project
assets which estimates the amount of uncollectible income and other losses the
property will produce.
Conduit – A financial intermediary between the lender and the end investor. A
conduit purchases loans, pools them, and then sells the loans to investors in the
CMBS market.
Credit Report – This is a report of past credit performance for a particular person
or business.
Debt Coverage Ratio – A ratio showing the projects ability to cover the loan
repayment owed when compared to the net operating income. This is calculated
by dividing the loan repayment into the net operating income.
Escrow – A neutral third party or entity that has the responsibility of carrying out
the instructions of all the party's in a transaction.
Foreclosure – A process which usually takes place after payments are 90 days
past due where the lender takes the property from the borrower.
Full Recourse – The right of the lender to go after personal assets of the
guarantor to recoup any losses incurred.
Functional Obsolescence – When the assets of a project are less functional than
others of the same type.
Interest Only Strip – Excess interest sold as a strip when the loan interest
exceeds the interest rate paid on the security backed by the loan
Junior Debt – This is debt which is subordinate to other liens.
Legal Description – A method of describing a location of a project that is
acceptable in a court of law.
Loan to Value (LTV) – A ratio showing the loan amount in comparison to the value
of the project. Expressed in a percentage format and calculated by dividing the
project value into the loan amount.
Lock-Box Provision – In certain transactions, control of gross revenues may be
given to a trustee. Project owners will have control of the funds for payment of
expenses which may include debt service, taxes, insurance and other operating
expenses.
Master Servicer – A required certification in order to service certain commercial
loans.
Non Recourse – A type of loan in which the lender will not pursue personal
assets in the case of default.
Note – A legal document which outlines the terms of a loan.
Partial Recourse – A loan in which the lender will only pursue a portion of
personal assets in the case of default.
Phase 1 Environmental – A report prepared by an environmental consultant to
reveal any presence of hazardous materials.
Prime Rate – This is an index rate which usually corresponds to the current yield
of the US Treasury, LIBOR, etc.
Quit Claim – A deed which releases any claim to title by the grantor.
Recourse – A loan in which the lender seeks full remedy through personal
assets for losses incurred.
Reserve Funds – This is a part of bond proceeds which are kept in reserve to
recoup any losses in the pool.
SBA Financing – Financing which is provided or guaranteed by the Small
Business Administration, United States
Second Mortgage – A lien that is subordinate to a first lien.
Servicer – An institution working on behalf of the note holder for collection of the
payments.
Tranche – A term which describes the class of a CMBS security.
Trust Deed – An instrument used to show a note as a lien on assets
note which is also used as an index rate.
30/360 – An interest rate accrual method which uses a 360 day year
Abstract Title – A history of the ownership of a parcel of real estate
Actual 360 – An interest rate accrual method which charges interest for all 365
days while using a 360 day year.
Actual 365 – An interest rate accrual method where annual interest is divided by
365 days. The interest is then calculated using the actual number of days in that
period.
Actual/Actual – An interest rate accrual method where annual interest is divided by
the exact number of days in that year. This figure is then multiplied by the exact
number of days in the period to calculate interest.
Adjustment Interval – The time between rate adjustments on an adjustable rate
mortgage.
Annual Percentage Rate (APR) – An annual interest rate which takes into account
all costs of the loan such as points and other costs, not just interest charged.
Assumption – Taking over an existing loan on an asset you are purchasing.
Assumption Fee – A fee paid in order to approve a new borrower on existing
debt.
Buy Down – This is an upfront payment to the lender which allows the borrower to
pay a lower interest rate.
Capitalization Rate – Rate of return. This is calculated by dividing the net
operating income by the value of the assets. Can also be used to calculate value
based on the net operating income.
Clear to Close – Identifies when the loan is ready to close without any other
conditions needed.
Collection Loss – An underwriting guideline used on income producing project
assets which estimates the amount of uncollectible income and other losses the
property will produce.
Conduit – A financial intermediary between the lender and the end investor. A
conduit purchases loans, pools them, and then sells the loans to investors in the
CMBS market.
Credit Report – This is a report of past credit performance for a particular person
or business.
Debt Coverage Ratio – A ratio showing the projects ability to cover the loan
repayment owed when compared to the net operating income. This is calculated
by dividing the loan repayment into the net operating income.
Escrow – A neutral third party or entity that has the responsibility of carrying out
the instructions of all the party's in a transaction.
Foreclosure – A process which usually takes place after payments are 90 days
past due where the lender takes the property from the borrower.
Full Recourse – The right of the lender to go after personal assets of the
guarantor to recoup any losses incurred.
Functional Obsolescence – When the assets of a project are less functional than
others of the same type.
Interest Only Strip – Excess interest sold as a strip when the loan interest
exceeds the interest rate paid on the security backed by the loan
Junior Debt – This is debt which is subordinate to other liens.
Legal Description – A method of describing a location of a project that is
acceptable in a court of law.
Loan to Value (LTV) – A ratio showing the loan amount in comparison to the value
of the project. Expressed in a percentage format and calculated by dividing the
project value into the loan amount.
Lock-Box Provision – In certain transactions, control of gross revenues may be
given to a trustee. Project owners will have control of the funds for payment of
expenses which may include debt service, taxes, insurance and other operating
expenses.
Master Servicer – A required certification in order to service certain commercial
loans.
Non Recourse – A type of loan in which the lender will not pursue personal
assets in the case of default.
Note – A legal document which outlines the terms of a loan.
Partial Recourse – A loan in which the lender will only pursue a portion of
personal assets in the case of default.
Phase 1 Environmental – A report prepared by an environmental consultant to
reveal any presence of hazardous materials.
Prime Rate – This is an index rate which usually corresponds to the current yield
of the US Treasury, LIBOR, etc.
Quit Claim – A deed which releases any claim to title by the grantor.
Recourse – A loan in which the lender seeks full remedy through personal
assets for losses incurred.
Reserve Funds – This is a part of bond proceeds which are kept in reserve to
recoup any losses in the pool.
SBA Financing – Financing which is provided or guaranteed by the Small
Business Administration, United States
Second Mortgage – A lien that is subordinate to a first lien.
Servicer – An institution working on behalf of the note holder for collection of the
payments.
Tranche – A term which describes the class of a CMBS security.
Trust Deed – An instrument used to show a note as a lien on assets
TM
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