Mortgage Note Encyclopedia

An absentee landlord or owner does not live at the property. For note investors, this signals higher collateral risk, lower borrower engagement, and.

An accessory building is a secondary structure like a garage, shed, or barn that affects property valuation, insurance, and collateral assessments for.

Adverse possession allows someone to claim property ownership through open, continuous, unauthorized occupation — a collateral risk on vacant note.

Appreciation is the increase in a property's market value over time. It strengthens the collateral protecting a note but cannot be captured unless the.

After Repaired Value (ARV) is a property's estimated market value once repairs are completed. Note investors use ARV to price loans and project recovery.

Assessed value is the dollar amount a local tax assessor assigns to a property for calculating property taxes, often differing from fair market value.

Cap rate is the ratio of net operating income to property value, used to evaluate real estate investment returns and compare note collateral.

Comparable sales are recent transactions of similar properties used to estimate a subject property's current market value.

Contiguous means sharing a common boundary. In note investing, contiguous parcels may be secured by the same mortgage or create disposition opportunities.

A county is the local jurisdiction that records deeds, mortgages, and liens. Its recorder, assessor, and tax offices are primary sources for note.

County records are publicly recorded documents that establish property ownership, liens, and encumbrances — the primary source of truth for note investor.

Days on market (DOM) measures how long a property has been listed for sale, helping note investors assess local demand and REO disposition timelines.

Depreciation is the decline in a property's value over time. For note investors, it erodes the collateral securing a loan, reducing the equity cushion.

An easement is a legal right allowing someone other than the property owner to use a portion of the property for a specific purpose.

Eminent domain is the government's power to take private property for public use with just compensation, which can eliminate a note investor's collateral.

Equity is the difference between a property's market value and total debt secured against it, directly driving note pricing and resolution probability.

An estate is the type and extent of ownership interest in real property. Whether fee simple, life estate, or leasehold, it affects collateral value and.

Fee simple is the highest form of property ownership, granting full unrestricted rights — the ideal collateral type for note investors with the fewest.

Hazard insurance covers physical damage to property from fire, wind, and other perils. Active coverage on collateral is a critical requirement for note.

An HOA lien is a claim on property for unpaid association dues that can achieve super-priority status over first mortgages in some states.

A homeowners association (HOA) manages a residential community, collects dues, enforces rules, and can place liens for unpaid assessments.

Improved land is property enhanced with structures or utilities. Whether collateral is improved or unimproved significantly affects note valuation and.

An institutional note is a mortgage originated by a bank, credit union, or mortgage company — the primary source of non-performing loan inventory on the.

An investment property is real estate held for rental income or resale profit. Its occupancy status directly affects note pricing, borrower motivation,.

Mineral rights are ownership rights to subsurface resources beneath a parcel of land, which can be severed from surface ownership.

Occupancy status — owner-occupied, tenant-occupied, or vacant — drives resolution strategy, timeline, and preservation costs for note investors.

Property taxes are annual government levies on real property. Unpaid taxes create super-priority liens that can destroy a note investor's mortgage position.

Property value is the estimated worth of collateral securing a mortgage note, driving LTV ratios and pricing decisions for secondary market note investors.

A special assessment is a charge levied against properties that benefit from a specific public improvement such as road paving or sewer installation.

A survey is a professional measurement and mapping of a property's boundaries, dimensions, and physical features used to confirm the legal description.

An upside-down or underwater loan is a mortgage where the debt exceeds the property's current value, resulting in negative equity for the borrower.

A vacant property has no occupant, increasing note investor risk through deterioration, vandalism, code violations, and eroding collateral value.

Zoning refers to local government regulations that dictate how a property can be used, directly affecting its value and permissible improvements.