The Internet Real Estate Glossary

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Needs-Based Pricing - A seller\'s asking price that is based on factors such as the required funds to pay off the mortgage, the cost of remodeling or the purchase of another house. 

Negative amortization - This occurs when the monthly payments do not cover the entire principal and interest cost due. The interest cost that is not covered by the payment is added to the unpaid principal balance. The deferred interest added to the loan balance creates negative amortization. Negative amortization can occur when an ARM has a payment cap that results in monthly payments insufficient to cover the full payment due.

Negative Equity - A position in which a borrower owes more on property than the property is worth.

Negotiation - The process of bargaining that precedes an agreement.

Net Cash Flow - Investment property that generates income after expenses such as principal, interest, taxes and insurance are subtracted

Net Operating Income (NOI) - From income producing property, the gross income minus the total of all expenses except for debt service. Cash flow is defined as NOI minus the total of all debt service payments.

Net effective income (net income) - The borrower’s gross income, minus federal income tax.

Net Listing - The broker agrees to sell the property in order to achieve a net price to the owner, and anything which is received above the net price is the broker's commission. A net listing is prohibited by the licensing law in many states.

No asset case - Chapter 7 case in which the bankruptcy estate does not have sufficient funds to make a distribution to unsecured creditors.

No Cash-Out Refinance - The amount of the new mortgage covers the remaining balance of the first loan, closing costs, any liens and cash no more than 1 percent of the principal on the new loan.

No Income Verification Loan (NIV) - A type of loan generally limited to the self-employed that is underwritten based on the borrower's written representation of their annual income as stated on the loan application. No tax returns, operating statements or other verification of the income is required. Debt ratios are computed based on the stated income. The primary intent of these programs is to allow owners of small businesses to use their actual cash flows rather than the net incomes normally reported in tax filings. Higher interest rates on these products compensate lenders for their higher risks. (See definition of "debt ratio" above.)

Non-Assumption Clause - A loan provision that prohibits the transfer of a mortgage to another borrower without lender approval.

Nonconforming loan - Loans that do not comply with Fannie Mae or Freddie Mac guidelines.

Nonconforming Use - A pre-existing use of land which does not conform to the zoning ordinance but which may legally remain.

Non-judicial foreclosure - A foreclosure conducted without court supervision or control, resulting in a sheriff (trustee) conducting a public auction of the property and using the sale proceeds to repay the debt to the lender. on a mortgage without filing a lawsuit or obtaining a court order. Generally such sales occur because the borrower has signed a document, such as a deed of trust, giving a trustee pre-authorization to sell the real estate to pay off the debt.

Non-performing loan (non-performing paper/note) - Defaulted mortgages are non-performing loans. All loans are notes, and are traditionally referred to as ‘paper.’ Non-performing refers to payment streams that have stopped, such as in a mortgage default. Delinquent mortgages are referred to as sub-performing, in the hope that payments will be restored.

Non-performing note strategies - Refers to real estate investing strategy where an investor purchases non-performing mortgage notes for less than the unpaid balance or appraised value of a property.

Non-Qualifying - buyer is not required to qualify through traditional bank financing requirements

Non-recourse - A clause in a promissory note stating that the borrower is not personally liable to the lender if the borrower defaults on the loan.

Non-Recurring Closing Costs - Costs that are one-time only fees for such items as an appraisal, loan points, credit report, title insurance and a home inspection

Notary public - One authorized to certify acknowledgement of documents such as deeds, contracts and mortgages.

Note - A contract or written promise that acknowledges debt and establishes the terms of repayment and the interest rate between a borrower and a lender.

Notice of acceleration - A notice indicating that a mortgagor is to pay the balance of a mortgage sooner than the date specified upon the occurrence or event described in a mortgage or deed of trust.

Notice of Default (NOD) - I. A notice recorded after the occurrence of a default under the deed of trust or mortgage or note. 2. A notice required by the investor or agency to be given to report a default in the terms of the agreement. The first phase of the two step foreclosure process. The notice, which is prepared and recorded by the foreclosing trustee, contains particulars regarding the default in payment, the affected deed of trust, etc. The default period runs a minimum of three months.

Notice of Intention to Foreclose (NOI) - The notice to the Veterans Administration declaring the lender’s intention to commence a liquidation action. The notice must be given to the Veterans Administration at least 30 days prior to the commencement of any action using VA Form 26-6851 or a VA Form 26-6850a (combination form).

Notice of Responsibility - A statutorily provided notice wherein the owner of real property avers that she will not be responsible for any liability arising out of any work being done on her property at the behest of any tenant, any buyer or any other party. Said notice is usually prominently displayed on the property within 10 days of learning of such work effort.

Notice to Cure - Notification to the Veterans Administration of the cure of a previously reported default.

Notice of Lis Pendens - A notice of a pending lawsuit delivered to the county recorder’s office at the time a lawsuit to foreclose is filed (see Lis Pendens).

Notice Of Rescission - A document that is used to cancel a notice of default and declare that the default has been corrected.

Notice of trustee’s sale - The trustee, when requested by the beneficiary (lender), will prepare a Notice of Trustee’s Sale which will contain the date, time, and place of sale, legal description of the property, and a provision for obtaining directions to the property. The notice will provide information on the Deed of Trust, the amount in default, and name, address, and phone number of the Trustee.

Notice to quit - A notice given by a property owner to the occupant stating its desire to obtain possession of the property.

Novation - The substitution of a new contract or obligation between the same parties or different parties. The substitution, by mutual agreement, of one debtor for another or one creditor for another. The result is that the old contract is extinguished, and a new contract (with generally the same content but with at least one different party) is created.

This real estate glossary is courtesy of the Internet Real Estate Center - Join the Online Real Estate Revolution.