The Internet Real Estate Glossary

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Sale by advertisement - Also known as non-judicial foreclosure. A procedure whereby a lender may sell a property under foreclosure without having to go through a judicial process. 

Sale Leaseback - sale of property by seller and simultaneous leasing of the same property by seller.

Sales agreement or sales contract - See “agreement of sale.” Secondary financing - A loan that is junior to another mortgage or trust deed.

Salesperson - A natural person licensed to perform on behalf of any licensed real estate broker any act or acts authorized to be performed by the broker.

Sandwich Lease - lease held by a lessee (tenant) who becomes a lessor (landlord) by subletting to another lessee (subtenant), typically the sandwich leaseholder is neither the owner nor the user of the property.

Satisfaction of mortgage - The recordable instrument given by the lender to evidence the payment in full of the debt.

Satisfaction Piece - The receipt for a mortgage that has been paid off

Scarcity - The scarcity of real estate refers to the limited supply of certain types of real estate at particular locations.

Scheduled/Scheduled Remittance - A remittance method wherein the servicer remits the scheduled interest and scheduled principal whether collected from the borrower or not. Method most commonly used in conjunction with an MBS Pool. Remittances are generally made on a monthly basis.

Schedules - The forms listing assets and liabilities that the debtor files with the bankruptcy court.

SCRA - Service members Civil Relief Act (see MODULE 6-Appendix.).

Seasoning - loan which has been in force for a period of time thus establishing the borrower's payment history, loans are typically deemed to be seasoned after either six months or one year.

Seasoned loan - A term used for performing notes or paper. Typically describe loans that have at least four to twelve payments made without being late. Lenders sell performing notes according to certain grades.

Second Deed Of Trust - A Deed of Trust that is in a subordinate position to another Deed of Trust securing the same parcel.

Second Lien - See Junior Lien Holder.

Second Mortgage - A mortgage subordinate to a first mortgage; also referred to as a junior mortgage. (Recorded Second)

Secondary mortgage market - The market in which banks, savings and loans and mortgage bankers can sell mortgages to investors such as Fannie Mae or Freddie Mac. Doing so frees up more money to be lent to new borrowers. Most lenders sell the loans they originate to large-scale, national investors such as "Fannie Mae" and Freddie Mac". The reason they do is to recycle their money to create more loans (on which they collect loan origination fees, points, etc.). In order to sell their loans originating lenders have to adhere to Fannie Mae's underwriting guidelines.

Second home - Also known as a vacation home. This home is different from an investment property because it is not rented regularly and is used only occasionally by the owners.

Second mortgage - A loan that is junior to another mortgage or trust deed. Second mortgages generally carry a higher rate than a first mortgage because they represent a higher risk for an investor.

Secondary mortgage market - The market where lenders and investors buy and sell existing mortgages and MBS securities. Its primary purpose is to make more funds available for the housing market.

Section 8 housing - Privately owned rental units participating in the low-income rental-assistance program. Landlords receive subsidies on behalf of qualified low-income tenants, allowing the tenants to pay a limited portion of their income toward the rent. A federal, rental assistance program under HUD for very-low-income families. The money is funneled to local housing authorities who pay (directly to landlords) the difference between market rent and what eligible families can afford to pay. The housing "voucher" program is a more flexible variant where the recipient families freely rent whatever they want for whatever rental amount they choose to pay.

Section 1031 (1031 Exchange) - The section of the Internal Revenue Service (IRS) that deals with tax-free exchanges of certain property. To qualify for a 1031 exchange, the properties must be exchanged, similar and used for business or as an investment. A real estate investing strategy.

Secured - Promissory notes are either secured or unsecured. Property is used to ‘secure’ a mortgage or deed of trust.

Secured claim - A right to payment for which some type of property or collateral has been made available as an assurance of repayment, such as a claim on a promissory note that is secured by a mortgage on a residence.

Securitization - The process of pooling loans into mortgage-backed securities for sale into the secondary mortgage market.

Security - Real or personal property pledged by a borrower, serving as collateral to protect a lender’s interest.

Security Deposit - cash payment required by landlord to be held during the term of the lease to offset damages incurred due to actions of the tenant.

Security instrument - The instrument that creates a lien on real estate that permits the lender to sell the properly through foreclosure in the event of a default by the borrower. Commonly known as a mortgage or deed of trust.

Security interest - Interest in property obtained pursuant to a security agreement. A form of interest in property which provides that the property may be sold when in default in order to satisfy the obligation for which the security interest is given.

Seisin - The actual possession of land by one who claims rightful ownership of a freehold estate therein.

Seller Financing - also known as Owner Financing.

Senior - A term referring to the lender which has priority over all subsequently recorded liens, (junior) mortgages or deeds of trusts by virtue of the earliest dated lien or mortgage (deed of trust) recorded against a property.

Service members Civil Relief Act (SCRA) - (See MODULE 6-Appendix.)

Servicing (of loans) - The act of billing, collecting payments, filing reports, managing escrow accounts and handling defaults on a mortgage.

Servient Estate - The tract of land burdened by an easement.

Setback Lines - A requirement in zoning ordinances in which all structures are to be a minimum distance from property lines.

Set-back ordinance - Regulates the distance from the lot line to the point where improvements may be constructed.

Settlement statement or closing statement - (See “HUD1.”) A statement showing full details of the loan closing, including costs paid by both the buyer and the seller and a detailed breakdown of the manner in which the loan proceeds were distributed. (See “Real Estate Settlement Procedures Act.”) RESPA requires that this standardized form be used in all loan closings in which the Federal Government is involved, even though the loan itself may not be insured or guaranteed by a government agency.

Settlement - Where property is conveyed to the buyer at a meeting. Settlement Statement - HUD Form 1.

Severalty Ownership - Ownership by one person.

Shared appreciation mortgage - A residential loan with a fixed interest rate that is lower than the market rate, with the lender entitled to a specified share of appreciation of the property over an agreed-upon time interval.

Sheriff’s deed - A deed given at a sheriff’s sale directing an officer of the court to convey title to real estate to the buyer as a result of a foreclosure sale following the foreclosure of a mortgage.

Sheriff’s Notice of Sale - The document by which the sheriff sets the time and place of the sale. (See State Foreclosure Laws.)

Sheriff’s sale (foreclosure sale) - A foreclosure sale of real property that will occur on a specific date, time and place as advertised in the local newspaper where the property is located.

Short Payoff - A workout procedure in which the lender accepts less than the full balance due on the loan as part of a deal in which the borrower cooperates with the lender to obtain a quick sale. The lender skips foreclosure, which would take time, cost money and expose the house to vandalism, further declines in market value, and marketing costs for resale.

Short Rate - The adjusted, pro-rated premium for a canceled insurance policy. The rate is higher than that regularly charged to compensate for a period shorter than originally contemplated.

Short sale - A loss mitigation workout program where the lender accepts less than the full payoff amount due from the borrower.

A short sale is the sale of a property, with the authorization of the creditors, for less than what is owed on it. Short sales are done all the time. Whether it is the forgiveness of debt owed by a nation or an individual, it simply means that someone is willing to settle for less than what they originally anticipated. It's part of business. All lenders know that they will not win all the time. Risk and loss of capital is an anticipated cost in the lending industry. Changing economic conditions, conflicts, and Mother Nature are among some of the many causes of unforeseen situations that turn good lending contracts into bad. In the context of foreclosure on secured assets, a short sale occurs when debtors agree to settle their liens for a known amount of money as opposed to taking a chance at auction. Auction prices are often unpredictable and usually greatly discounted. Many lenders are willing to mitigate further risk of loss by making deals before auction. Bad debt is sold by lenders all the time. For instance, there is a huge market for unsecured credit card debt that is sold for pennies on the dollar to collection agencies. That's self-effectuated short sales. Lenders are more than happy to discuss resolution of aged debt. Their business is to lend capital, not dispose of foreclosed assets.

A short sale is the sale of a property at fair market value, when the investor and or insurer agrees to accept the proceeds of the sale in satisfaction of the defaulted mortgage even though it is less than the amount owed.

Generally a short sale should be considered with homeowners whose financial hardships require that they sell their home, but who face problems selling because the value of the property has declined to less than the amount owed on their mortgage. A short sale may be considered at any time prior to foreclosure if the alternative means a lender will incur greater losses through foreclosure and be forced to acquire the property.  In order to consider a short sale, a homeowner or real estate professional must submit a signed purchase contract and a HUD 1 settlement statement. Once the purchase and sales agreement is submitted and the other documents needed (financial statement, proof of income (paycheck stubs, bank statements and tax returns), authorization to release and hardship letter) are also submitted the qualification process begins. 

Simple Assumption - An assumption arrangement in which the seller conveys title to the property to the buyer and moves out while the buyer moves in and makes payments on the old loan. The lender does not approve the buyer's credit and income, so the deal may be called a no approval loan. However, the seller remains liable on the old loan under such circumstances. Only loans without strong "due on sale" clauses are assumable without approval. This includes DVA loans made before March 1, 1988, FHA loans made before December 15, 1989, and conventional loans made before 1973.

Simple interest - Interest that is computed only on the principal balance.

Simultaneous Priority - Two or more liens recorded one right after the other in the same transaction, against the same property, are of equal parity unless there's a written indication on one of them as to their respective priorities.

Single-family housing (SFR) - A type of residential structure designed to include one dwelling. Sometimes known as detached housing, to differentiate it from town houses and condominiums.

Site - A lot ready for development.

Situs - Refers to the economic location of real estate.

Soldier's and Sailor's Relief Act - Protects certain military personnel from losing their homes to foreclosure while on they're on active duty.

Special Agent - One limited in authority to transact a single business affair or a specific series of business affairs or to perform restricted acts for the principal. (Listing one property for sale)

Special assessment - A special tax imposed on property, individual lots or all property in the neighborhood to pay for improvements such as street lights, sidewalks and parks.

Special forbearance - A form of forbearance where the lender agrees to reduce or suspend the borrower’s payments for a specified period of time, after which the borrower resumes the regular monthly payment plus an additional agreed-upon amount to cure the delinquency. Effective where the borrower’s income is temporarily reduced.

Special Recording - Title companies are allowed exclusive access to the county recorder's office at 7:00 A.M. (an hour before opening time) to record their documents before the doors open to the public at 8:00 A.M. Thus they are assured that the recorder's records, as of the closing the day before, reflect the true state of title when they record their particular transaction early the next morning. Therefore, it is rare that a title company would agree to record documents (on a transaction it is insuring) during the day - exposing itself to the possibility that someone could have already recorded a superior instrument since opening time. Such an exception is called a "special recording".

Special Servicing Option (SSO) - Fannie Mae program where Fannie Mae accepts the risk of loss associated with an MBS pool loan.

Special warranty deed - A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims that arose during the period of time title was held by the grantor. In a Special Warranty Deed, the grantor guarantees to the grantee that he or she has done nothing during the time the grantor held title to the property.

Spec house - A home constructed “on speculation” by a builder in anticipation of finding a buyer. This contrasts with standard builder practice, in which homes are built only after they are purchased.

Specific Lien - One that attaches to a particular property.

Specific performance - An action to compel a party to carry out the terms of a contract.

Specified amount - A sum, equal to the lesser of the net value of the real property or the total indebtedness secured thereby, which the Veterans Administration designates as the minimum amount to be credited to the debt incident to a liquidation sale. Most frequently used to refer to a loan guaranteed by the Veterans Administration.

Standard uniform loan application (Form 1003) - A standardized loan application used widely in the mortgage industry.

Standing Mortgage - A synonym for an "interest only" mortgage; where the periodic payments only cover interest expense-so there's no amortization of the principal balance.

Statute - A law passed by a state legislature.

Statute of Frauds - Every state has some form of laws which require that certain contracts must be in writing in order to be enforceable in a court.

Statutory foreclosure - The term is sometimes applied to foreclosure by execution of a power of sale contained in the security instrument, without use of the courts, and it must conform to the provisions of the statutes regarding these foreclosures and sales.

Statutory lien - An involuntary lien that may include tax liens, judgment liens and mechanic’s liens.

Statutory Period of Redemption - The time within which property may be redeemed after a foreclosure sale.

Statutory right of redemption - The borrower’s statutorily granted right of redemption permitted in many states.

Stay - An order of the court where some action is forbidden until some event occurs or until the court lifts its order.

Steering - The channeling of prospective home purchasers or renters, by real estate brokers or salespersons, into racially homogeneous neighborhoods, and actively discouraging them away from neighborhoods of different racial or ethnic composition.

Stipulation - An agreement made by parties, or their attorneys, concerning some relevant point so as to prevent the need for actual proof or testimony. May also refer to an agreement to accept a defined repayment of delinquent amounts, generally under the auspices of the court.

Stipulations - If the underwriter is not satisfied with what the borrower provides, additional documentation and conditions (stipulations) may be imposed

Straight Note - A promissory note evidencing a loan in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity. A straight note is usually a non-amoritized note made for a short term, such as two to 4 years, and is renewable at the end of the term. A mortgage that secures a straight note is a term mortgage or straight-term mortgage.

Straw Man - A person acting as a front or a dummy buyer for another.

Strict Foreclosure - Although strict foreclosure is similar in one aspect to judicial foreclosure, in that it is a judicial or court process, in a strict foreclosure procedure, after a delinquent borrower has been notified, and the proper papers have been filed, the court designates a specific period during which the balance of the default must be paid in full. If the mortgage is not brought current or a workout is not agreed upon with the mortgage lender, the homeowner’s equitable and statutory redemption rights are waived and the court awards full legal title to the lender. There is no deficiency judgment in a strict foreclosure.

A decree of strict foreclosure of a mortgage finds the amount due under the mortgage, orders its payment within a certain limited time, and provides that, in default of such payment, the debtor’s right and equity of redemption shall be forever barred and foreclosed; its effect is to vest the title of the property absolutely in the mortgagee, on default of payment, without any sale of the property.

Subdivision - A tract of land divided into lots suitable for home building.

Subject To - buyer takes title to mortgaged real property but is not personally liable for the payment of the amount due buyer must make payments in order to keep the property. The purchase of a property with an existing lien against the title without assuming any personal liability for its payment.

Subject To Clause - A clause in a deed that transfers title from a seller to a buyer in an assumption transaction, or in other paperwork for the assumption transaction, in which the borrower refuses to accept legal liability to make payments, although the buyer expects to do so. The lender's remedy for nonpayment is limited to foreclosure, and neither the lender nor the seller can sue the defaulting buyer for missed payments on the loan balance.

Sublease - The transfer when the original lessee retains a reversion. Primary liability remains with the original lessee.

Subordination - A loan in a lower priority; for example, a second mortgage is subordinate to a first.

Subordination agreement - An agreement by which one holding an otherwise senior lien or other real estate interest consents to a reduction in priority to another person holding a lien against, or an interest in, the same real estate.

Subordinate Clause - A clause in a mortgage that gives priority to a mortgage taken out at a later date.

Subordinate mortgage - A mortgage that is second to the first in lien position and regarded as being inferior to the first mortgage.

Subprime Mortgage - A loan with a higher interest rate, charged by lenders to cover the higher risk of lending to borrowers with shakier credit and finances.

Subprime lending, also called B-paper, near-prime, or second chance lending, is the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history. The phrase also refers to paper taken on property that cannot be sold on the primary market, including loans on certain types of investment properties and certain types of self-employed individuals. Subprime lending is risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and adverse financial situations usually associated with subprime applicants. A subprime loan is offered at a rate higher than A-paper loans due to the increased risk.

Subprime lending encompasses a variety of credit instruments, including subprime mortgages, subprime car loans, and subprime credit cards, among others. The term "subprime" refers to the credit status of the borrower (being less than ideal), not the interest rate on the loan itself.

Subprime lending is highly controversial. Opponents have alleged that the subprime lending companies engage in predatory lending practices such as deliberately lending to borrowers who could never meet the terms of their loans, thus leading to default, seizure of collateral, and foreclosure. There have also been charges of mortgage discrimination on the basis of race. Proponents of the subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market.

The controversy surrounding subprime lending has expanded as the result of an ongoing lending and credit crisis both in the subprime industry, and in the greater financial markets which began in the United States. This phenomenon has been described as a financial contagion which has led to a restriction on the availability of credit in world financial markets. Hundreds of thousands of borrowers have been forced to default and several major American subprime lenders have filed for bankruptcy.

Subordination Clause - A clause in which the holder of a mortgage permits a subsequent mortgage to take priority. Subordination is the act of yielding priority.

Subrogation - The substitution of a third person in place of a creditor to whose rights the third person succeeds in relation to the debt. (Title company)

Subrogation For Mortgage Insurers - The right of a mortgage insurance company to file a suit to recover from the borrowers sums it must pay out to a lender as a result of the borrower's default on a loan.

Suit - A court action to enforce a legal claim or right.

Summary judgment - Judgment granted by the court, in response to a party’s motion in a civil lawsuit, where there is no genuine issue of material fact to be decided.

Summons - Instrument used to commence a civil action or special proceeding and is a means of acquiring jurisdiction over a party.

Superior mortgage - First mortgage.

Super lien - A condominium or home owners association lien for unpaid assessments that has priority over the first mortgage. States permitting Super Liens are referred to as Super Lien states.

Survey - A map made by a licensed surveyor who measures land and charts its boundaries, improvements and relationships to property surrounding it.

Sweat equity - Value added to a property because of improvements made personally by the owner.

Syndicate - An arrangement to raise equity capital for real estate purchases or for other types of investments.

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