Glossary of Debt Related Terms

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.

Sales Concession

Incentive to purchase a property, such as vacations, furniture, automobiles, and securities, and/or excess finance concessions. Also, other giveaways granted by any interested party, including financing inducements that may be over limitations set forth in the definition of financing concessions (to-be sales).

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.

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.

Secondary Financing

A loan secured by a mortgage or trust 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.

Secured Debt

Money borrowed that is guaranteed (or secured) by the borrower's funds and held by the lender in an interest-bearing account. Typically required when a borrower is without credit or has poor credit. The lender usually returns the secured money plus a nominal rate of earned interest to the borrower with a certain period of time if a good credit history is established. Distinguished from unsecured debt.

Security

Property pledged to the creditor in case of a default on a loan; also referred to as collateral.

Security Interest

The creditor's right to take property or a portion of property offered as security.

Sequestration, Writ Of

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

Service Charge

A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Servicing

All the steps and operations a lender perform to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.

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.

Simple Interest

Interest that is paid on the principal amount borrowed. Considered the best interest term for a borrower because it is not compounded.

Subordination Agreement

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

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.

Survey

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

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.

Syndicate

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