Margin Of Security
Buffer amount between the value of the collateral and the principal balance of the obligation. For example, if the mortgage has a principal balance of $200,000 and the appraised value of the property is $250,000, the bank has a margin of security of $50,000 in the event of default. The greater the collateral value, the more protection the bank has. In troubled real estate markets because of adverse economic conditions, the market value of the property may fall substantially below the balance of the mortgage. Many homeowners in such a case have defaulted on the loan because of the decline in market values. For example, if the appraised value of a home has fallen to $60,000 while the mortgage balance is $100,000, it might be more financially prudent for the debtor to default on the mortgage.
Popular Real Estate Terms
Misuse, alteration, destruction, or neglect of land by an individual right-fully in possession that breeds a significant and permanent reduction of its value to the legal interest owned by ...
Real estate not subject to property tax such as that owned by nonprofit entities including charitable, governmental, religious institutions. ...
The imposition or collection, usually by legal or governmental authority, of an assessment of a specified amount. An example is a tax assessment on real estate. ...
The abstract of judgment definition is best explained as a written summary of the judgment passed by a court. This abstract of judgment includes the amount of money the losing party of a ...
Court action to order a compulsory sale of real estate owned jointly between two or more owners. A partition action divides the proceeds of a real estate sale among the joint owners rather ...
House made using standardized components that are preassembled on an assembly line in a factory rather than being built from "scratch" on a site. Normally, the prefabricate house is trucked ...
Economic principle determining the market prices of goods, services, and property. The principle states there is a pricing relationship between supply and demand for real property. Economic ...
Unlimited interest in property. A freehold estate may be a fee simple or file estate. Freehold estate includes freehold in deed, a fee simple estate; freehold in law, an inheritable estate; ...
Surveyor's use of hypothetical lines to portray a properties position. North to South in the meridian line while East to West is the base line. ...
Have a question or comment?
We're here to help.