Mortgage Terminology

Earnest Money Deposit

A "good-faith" deposit submitted with a purchase offer to show that the potential home buyer is serious about buying the house.

Easement

A right of way giving persons other than the owner access to or over a property.

Effective Age

An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.

Effective Gross Income

Normal annual income including overtime pay that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.

Eminent Domain

The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.

Employer-Assisted Housing

A program in which companies assist their employees in purchasing homes by providing assistance with the down payment, closing costs, or monthly payments.

Encroachment

An improvement that intrudes illegally on another's property.

Encumbrance

Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

Endorsement

A signature on a negotiable instrument by which title to property mentioned therein is assigned and transferred. Also, a notation added to an instrument after execution to change or clarify its contents. In insurance, coverage may be restricted or enlarged by endorsing a policy. In FHA loans, a notation placed on the note by the FHA indicating that the loan is insured under the National Housing Act.

Endorser

A person who signs ownership interest over to another party.

Equal Credit Opportunity Act (ECOA)

A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equity

A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.

Escape Clause

A provision allowing one party or more to cancel all or part of the contract if certain events fail to happen, such as the ability of the buyer to obtain financing within a specified period.

Escheat

Property taken into state ownership in the absence of the original owner, or upon the owners death in that state, without heirs.

Escrow

An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Escrow Account

The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses. A borrower typically provides funds that will pay taxes, mortgage insurance, lease payments, hazard insurance premiums, and other payments when they are due.

Escrow Analysis

The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

Escrow Collections

Funds collected by the servicer and set aside in an escrow account to pay the borrower's property taxes, mortgage insurance, and hazard insurance.

Escrow Disbursements

The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

Escrow Payment

The portion of a monthly mortgage payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.

Estate

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

Estoppel Certificate

A written statement setting forth certain facts which cannot later be repudiated (frequently given by a lender or a tenant relative to a loan or lease, respectively).

Et Uxor

Legal term meaning "and wife;" sometimes abbreviated "et ux."

Eviction

The lawful expulsion of an occupant from real property.

Evidence of Title

Proof of ownership of property.

Examination of Title

The report on the title of a property from the public records or an abstract of the title.

Exclusive Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

Exclusive Right to Sell

A written contract giving one real estate agent the right to sell a piece of real property and entitling that agent to a commission upon sale, regardless of who finds a buyer.

Exculpatory Clause

A clause in a contract holding a specified party harmless in the event of default. For example, the provision in a note that the debtor will not be held personally liable in the event of default.

Execute

Recordation of the appropriate signatures on a document such as a mortgage note, to render it "in effect."

Execution

A judicial order directing an appropriate officer of the court to enforce a judgment against the property or person of the judgment debtor, in an attempt to satisfy the judgment.

Executor

A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form.

Exempt Property

Real estate not subject to property taxes. Religious, educational, and charitable organizations generally hold exempt property.

Extended Locks

Mortgage rate commitments which are for longer than the typical 60 day lock-in term.