The following is provided to assist our investors and borrowers with the underwriting and due diligence of our hard money loans. Many of the terms have additional meanings, but the definitions given are those most relevant to private money lending. If you have further questions about any of the terms, please feel free to contact us.

Acquisition Cost – The price paid by the borrower for the property, excluding financing and closing costs.

Amortizated Loan – A mortgage loan in which the principal, in addition to the interest payment is paid via periodic installments during the loan's term.

Appraisal – A report made by a qualified person setting forth an opinion or estimate of value.

Assessed Value - A value placed upon property by the tax assessor, which is typically substantially lower than the actual value.

Beneficiary - The lender under a note who is secured by a deed of trust that encumbers the real property pledged for the loan.

Blanket Encumbrance - A single mortgage or trust deed which covers more than one piece of real estate.

Bridge Loan – A loan intended to be used for a short period time between the initial requirement for funds and a permanent, usually less costly, financial solution. Bridge loans are typically funded by collateralized real estate and are often referred to as hard money loans. There are typically very few limitations on the uses of funds for a bridge loan, although lenders will review the use to insure that payback can be met.

Capitalization Rate - The rate of interest which is considered a reasonable return on an investment. The capitalization rate is used to determine the value based upon net income.

Collection Account Charges - Lenders may do the collection and accounting of their own loans, or outsource the collection and accounting to a third party. The borrower is expected to pay the collection account charges.

Combined Loan-To-Value Ratio (CLTV) - The total amount of all debt secured by the security as a percentage of the total estimated value of the security. So, for example, if the loan is a first position loan for $60,000, and the seller is carrying back a second position note for $20,000, behind the private-money lender, and the property is deemed to be valued at $100,000, then the LTV is 60% and the CLTV is 80%.

Community Property - Property owned jointly by a husband and wife which is not separate property.

Conventional Loan - A loan neither insured nor guaranteed by Federal Housing Administration (FHA) or by Veterans' Administration (VA).

Conveyance - The transfer of title or an interest in land.

Covenants - Agreements written into deeds and other instruments promising performance or non-performance of certain acts or stipulating certain uses or non-uses of a property. Covenants are sometimes referred to as encumbrances.

Deed - A written instrument which conveys title to real property. Deeds are typically general warranty, special warranty or quit-claim.

Deed in Lieu of Foreclosure - A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.

Default - Failure to make a payment or to perform an obligation.

Deficiency Judgment - A judgment given when the security pledged for a loan does not satisfy the debt following foreclosure.

Depreciation - Loss of value in real property brought about by age, physical deterioration or functional or economic obsolescence.

Discount Fee - Sometimes referred to as "points", a fee charged by the lender in order to obtain a higher earning than the stated interest rate. With hard money loans, lenders typically charge 3 to 5 "points".

Easement - The right to the limited use of or enjoyment of land held by another. (Examples: utility or right of way easement.)

Encumbrance - Anything which affects or limits the fee simple title to property, such as liens, mortgages, trust deeds, easements or restrictions of any kind.

Equity - The value which an owner has in real estate over and above the liens against it.

Escrow – A transaction in which a third party, acting as the agent for the buyer and seller, carries out instructions of both and assumes the responsibilities of handling the paperwork and disbursement of funds in a transfer of title or mortgage loan transaction.

Estate - The degree, quantity, nature and extent of an interest in real property.

Fee Simple -The terms "fee" and "fee simple" are synonymous and establishes title of real property in the owner, without limitation or end, although it may be subject to encumbrances.

FHA Loan - A loan that is insured against financial loss by the Federal Housing Administration.

Fiduciary - A person in a position of trust and confidence that owes certain duties to the person they represent under the rules of agency.

Fixtures - Appurtenances affixed to buildings or land, usually in such a way that they cannot be moved without damage to themselves or the property. Fixtures typically include cabinets, plumbing, electrical fixtures, fences, HVAC and similar items. Fixtures are real property and liens upon them are governed by the Uniform Commercial Code.

FNMA (Fannie Mae) - A congressionally chartered private corporation that purchase FHA and VA loans.

Foreclosure - Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms. In most western states, foreclosure is accomplished through a judicial action and differs from a trustee sale under a deed of trust.

Gross Income - Total income before any expenses are deducted.

Guarantor - One who guarantees the performance of another. Hard money loans always require personal guarantees.

Hard Money - Real estate is the primary collateralized asset for a hard money loan. Hard money refers specifically to the asset used to guarantee repayment. In the event of a default; hard money is repaid by the borrower with the collateralized property.

Hard Money Lender - A lender who offers loan funding based on real estate as the primary collateral asset.

Hypothecate - To give property as security for an obligation without giving up possession. A mortgage is a hypothecation of real property.

Income Property - Property which produces income from rentals and profits.

Injunction - A writ or order issued under the seal of a court to restrain one or more parties to a suit or proceeding from doing an act which is deemed to be inequitable or unjust in regard to the rights of some other party or parties to the suit.

Installment Note - A note which provides for periodic payments on the dates specified in the instrument.

Involuntary Lien - A lien imposed against property without consent of the owner. Examples include real property tax liens, federal income tax liens and judgments.

Joint Tenancy - Joint ownership by two or more persons with right of survivorship.

Judgment - Final decision, determination, decree or sentence of a court of law.

Late Charge - The additional amount due to a lender when a payment is not paid by the borrower within the agreed upon grace period. Typically the late charge amount will be a percentage of the late payment amount and will become due after a certain grace period has passed.

Legal Description - A written description by which property can be located by reference to government surveys or approved recorded maps.

Letter of Intent - A non-binding agreement between parties involved in a contract to move forward with negotiations or complete a project.

Lien - A charge or encumbrance upon property for the payment or discharge of a debt.

Lis Pendens - A notice recorded for the purpose of warning all persons that the title or right of possession of certain real property is in litigation.

Loan Costs - The actual expense for services rendered in obtaining a loan, including appraisal fees, attorney fees, documentation fees, processing fees and loan commissions.

Loan-To-Value Ratio (LTV) - With regard to a first position loan, this is the total amount of the loan as a percentage of the total estimated value of the security. With regard to a subordinate position loan (a second or third, for example), this is the total amount of the loan added to the total amount of all superior liens as a percentage of the total estimated value of the security.

M.A.I. - Designates a person who is a member of the American Institute of Real Estate Appraisers. This is the highest designation an appraiser can obtain.

Marketable Title - Title free and clear of objectionable liens or encumbrances.

Market Value - The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and the property being exposed for sale for a reasonable time period.

Mechanic's Lien - A lien created by statute for the purpose of securing priority of payment for work performed or materials furnished in construction or repair of improvements to land.

Mortgage - An instrument by which property is hypothecated to secure the payment of a debt.

Net Worth – The value of all assets, including cash, less total liabilities, for a company or an individual.

Nonconforming Use - A use that was lawfully established and maintained, but no longer conforms to applicable zoning laws.

Notary - A public officer who is authorized by the state government through a certification process to witness and verify certain documents (i.e., contracts, deeds, mortgages). Official affidavits may be sworn before a notary public.

Obsolescence - Loss in value due to reduced usefulness resulting from outmoded physical features.

Open-End Mortgage - One which provides that the outstanding balance can be increased in order to advance additional loan funds to the borrower, up to the original sum of the note.

Option - A right given to purchase or lease a property upon specified terms within a specified time.

Plat - A map or plan of a certain parcel of land.

Plat Book - A book showing the lots and legal subdivisions of an area.

Position - The position defines the order in which claims against the security will be satisfied in the event of a foreclosure. Most lenders prefer to lend only in the first position, but some lenders will go in a "subordinate" position (second, third, etc.) in exchange for a higher rate of return.

Power of Attorney - An instrument authorizing a person to act as the agent of the person granting it.

Preliminary Title Report - A report showing the condition of title to real property that is given prior to a sale or loan transaction. The preliminary title report shows the condition of title but does not insure the condition of title.

Pre-Payment Penalty - The penalty (if any) that a borrower must pay to a lender if a loan is repaid "early." With hard money, most loans have a three- to six-month minimum interest clause. This means that a loan must return at least three or six months in interest to the lender. For example, if a loan is repaid in six months or more, no penalty is assessed. However, if a loan is repaid in less than six months, the penalty is equal to six months interest less the interest already paid.

Promissory Note - The document signed by the borrower promising repayment of the loan. Typically a promissory note shows the amount of monthly payments, interest rate, first payment date, last payment date, and the late charge and prepayment provisions.

Proration of Taxes - To divide or prorate the taxes proportionately to time of ownership of the property.

Purchase Money Mortgage - A trust deed or mortgage given by the buyer to the seller as part or all of the purchase price of the property.

Quiet Title Action - A court action brought to establish title or to remove a cloud on title.

Rescission of Contract - The annulling, revocation or repealing of a contract by mutual consent of the parties to the contract or for cause by either party to the contract.

Restriction – A covenant that restricts or prohibits an owner of real property from doing certain things relating to the property or from using the property for certain purposes.

Right of Survivorship - Right to acquire the interest of a deceased joint owner.

Right-of-Way - An easement upon land whereby the owner gives to another the right to pass over his land.

Separate Property - Property owned by a husband or wife which is not community property.

Specific Performance - An action at law to compel the performance of a contract according to its terms.

Statute of Frauds - State law which provides that certain contracts must be in writing in order to be enforceable at law.

Subordination Clause – Used to subordinate a lien to a subsequent lien. Hard money loans from Coppercrest are always in first lien position.

Tax Sale - A sale of property, usually at auction, for non-payment of taxes assessed against it.

Time Is Of The Essence - A clause in a contract contemplating performance by the date specified therein.

Title - The rights of ownership.

Title Insurance - Insurance written by a title company to protect the property owner against loss if title is imperfect.

Trust Deed – Synonymous with Deed of Trust - An instrument which transfers legal title of a property to a trustee to be held pending fulfillment of an obligation, usually the repayment of a loan to a beneficiary.

Trustee - One who holds title to a property in trust for another to secure the performance of an obligation.

Trustee's Sale - A sale at auction by a trustee under a deed of trust, pursuant to applicable trustee sale statutes.

Trustor - The borrower of money secured by a trust deed.

Usury - On a loan, claiming a rate of interest greater than that permitted by law.

Wrap-Around Mortgage - The wrap-around mortgage is a purchase money mortgage which is subordinate to, but yet includes within its payment structure the encumbrance or encumbrances to which it is subordinated.

Zoning Ordinance - A law by local or regional authority (typically city or county government) that sets parameters for the uses of a property