Mortgages Glossary E
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E-cheque / E-check
E-check stands for electronic cheque. It is an electronic transfer of funds from one account to another. E-cheque performs the same task as a traditional cheque, but it is cleared much faster. You can send e-cheque from your online banking account to a receiver of your choice.
E-commerce / Electronic Commerce
E-commerce is a business model, which is partially or exclusively operated over the internet. For example, eBay, Amazon and Google are all e-commerce corporations, running their businesses exclusively via internet.
Early Closing Cost Reimbursement
Number of credit line lenders forgive fees associated with opening a credit line. If a credit line is closed earlier then the set date, lenders ask those fees together with the total amount borrowed, plus interest.
Early Occupancy
When a seller allows a buyer to move in before the sale is closed and before buyer pays for the property.
Early Withdrawal Penalty
Early withdrawal penalty is an investment penalty. When holders of fixed-term investments retract their money before expiration date, they get charged an early withdrawal penalty.
Early Repayment Charge
When a fixed rate mortgage is repaid early, borrowers must pay an early repayment charge, since lenders make less money with interest.
Earned and Unearned Income
Earned income comes from: job salary, wages, business revenues, cash work, tips, compensation, labor, etc.
Unearned income comes from: interest, rental income, child care benefits, alimony, etc.
Earnest Money / Earnest money deposit
Earnest money can be also referred to as deposit. When buyer gives seller a certain amount upfront to show that he is serious about buying the property – called earnest money. For example Ron is buying a house from Alex for $100.000. To prove that Ron is serious about buying that house, he must give Alex $2000 in earnest money.
Early Redemption Charge
Charge made by a lender, when a borrower pulls out of a mortgage and refinances with another one.
Easement / Right Of Way
Right to use property which does not belong to the party using it.
Economic Growth
The growth of country’s economy. Economic growth is usually supported by stronger currency, no shortage of credit, high employment rates, etc.
Economic Indicators
Statistic used to determine condition of an economy. Economic indicators are: housing, unemployment rate, consumer price index, bankruptcies, retail sales, credit supply, etc.
Effective Age
Estimated age of a building. The actual age of the building may differ from an effective age, depending on the condition of the building.
Effective Interest Rate / Effective Percentage Rate / EPR
Effective interest rate is the actual interest rate you will be paying including: closing costs, consumer loan fees, cap fees, taxes, commission and other fees applied to the mortgage.
Engineering Report
A report written by a professional engineer detailing a building. Engineering report includes physical condition of the property, its parking lot, roof, building systems, etc.
EFT / POS / Electronic Funds Transfer / Point of Sale
EFT stands for – Electronic Funds Transfer. POS stands for – Point of Sale. EFT / POS occurs when you purchase goods with your debit or credit card, with your money being transferred directly from you account into merchants account.
Electronic Cash / Digital Money
Cash which is only traded electronically, over the internet. A good example is Paypal https://www.paypal.com/, WebMoney http://www.wmtransfer.com/ , E-Gold http://www.e-gold.com/ . Electronic cash makes process of online purchasing easy and hassle free, as you can use money directly from your credit card or your bank account.
Electronic check presentment / ECP / Electronic Cheque Presentment
Electronic check presentment is a captured picture of a real check, which details account number, amount and other details on the check. Electronic check presentment allows banks to clear checks faster, reducing costs.
Electronic Data Interchange / EDI
Electronic Data Interchange is a system of exchanging information within the company or between two or more companies via internet.
Electronic Filing
Filing for taxes using electronic software which prepares tax details. Electronic file is then sent to Canada Revenue Agency for processing.
Employment Equity Act
Canadian Federal act, passed in 1995, encourages employers not to discriminate against four groups:
- Women
- People with disabilities
- Aboriginal people
- Minority Groups
Employers with more then 100 employees require some people from those minority groups to be present in the company.
Emergency reserves / Cash Reserves
Funds that are held available to be spent in cases of urgency or emergency. Many corporations have emergency reserves, ready to be spent at moments notice: to save market share, make moves against competition, etc. Emergency reserves are also referred to as cash reserves.
Empty Nesters
Parents who’s children have grown up and moved out. Empty nesters are usually looking for smaller property.
Eminent Domain
Government’s right to seize private property for public use, compensating its owner. For example, when government is building a highway, railroad or a public facility, private property may be on the way. Government then seizes that property under eminent domain. Owners are usually compensated for their property worth market value of that property; however it is not always the case.
Employment Letter
Letter from an employer which confirms employment of individual in question. For example, Ron’s lender requires Ron to confirm that he has work and is currently employed. Ron must request employment letter from his workplace to confirm that.
Employment Verification / Employment Background Check
Employment background check or verification is carried out by new employers to verify information provided in a resume.
Employer Assisted Housing
When employer helps an employee to buy real estate, either with down payment or with monthly payments on top of the salary.
Encroachment
Structure that illegally extends onto another property. For example, George built a fence, however it extends onto Ron’s property and Ron has not approved it.
Encryption
Changing data into code that appears unreadable. In order to decode that data back into readable format, receiver on the other end must have en encryption key. Encryption used in credit card transactions, online payments and other transactions that involve private information being sent over the internet.
Encumbrance
Right to a property by someone else which affects value of that property. For example, Ron’s mortgage is not paid out in full meaning his lender has right to his property or encumbrance.
End Loan / End Mortgage
Final mortgage on a property. For example, YYY construction firm had a loan from X bank to finance construction of the property. Alex bought that property from YYY company with another mortgage from another bank. Alex lived on that property for 5 years and sold it to Ron, who had his own mortgage. Ron continues to live on the property and he has fully repaid his mortgage, meaning that Ron’s mortgage was the end mortgage.
Endorse
To sign the back of a cheque in order to receive and amount specified on the front of the cheque.
Endorser
Person who endorses a cheque, by signing the back of that cheque. Endorse: To sign the back of the cheque in order to receive and amount specified on the front of the cheque.
Entrepreneur
Person who runs a business or is able to run a business.
Energy Efficient Mortgage / EEM
Energy efficient mortgage provides a person with special benefits when he a buys an energy efficient home. It may provide cuts on interest rate or forgive some mortgage related fees. Energy efficient mortgage can only be borrowed with energy efficient homes.
Environmental Impact Statement / Environmental Impact Assessment
Environmental Impact Statement is analysis of possible environmental impacts after construction is given a go ahead. Environmental impact assessment is required prior to any construction in Canada.
Entitlement
Rights to some specific benefits, confirmed by law. For example, Ron has entitlement to half of his family house(50% equity).
Equifax
Credit agency which produces credit reports. Credit reports are essential in mortgage lending and in most cases lenders will refuse a loan if applicant is not willing to provide his credit report. Visit Equifax website.
Equity
Value of a property minus all debt. For example, Ron has a house which costs $600.000. He got a mortgage to purchase that house and has already paid out $240.000 over the years, meaning that his equity is $240.000, with rest belonging to his lender.
Equities
Another name for shares(investment terms)
Equity Grabbing
Equity grabbing is a predatory lending technique used to gain peoples homes. With cash-out refinance, people with a lot of equity in their homes(own most of their homes, since they paid out most of the mortgage) can get a bigger loan then they had before, meaning they will get cash against the equity in their home. They can spend this cash the way they want it, however they will have to pay it back over time at an interest rate. Interest rates do not differ from those on the market, but this where the catch is.
Predatory lenders talk borrowers into cash out refinance without specifying overly high interest rates. Once people sign up for the loan, they do not suspect anything, only when it comes to paying back money they borrowed at 14-20% interest rates. As many people simply cannot afford it, they default on the mortgage(cannot pay it back) which leads to foreclosure(lender taking borrowers home as per contract). In the end people are left without their homes. This is called equity grabbing.
Watch out for any offers, either by contractors who go door to door and offer to fix your roof(do any other fixes) by offering a loan, or phone via calls.
Errors and Omissions Insurance
Insurance that protects brokers from mistakes in documentation due to negligence, wrong documentation or other causes. For example, broker made a mistake in a document. Borrowers found out and demanded a payout. Broker’s expenses will be covered if the can prove it was a mistake.
Escrow
Money, property, deed(contract), documents held under the custody of third party company until both parties settle the contract. For example, Ron is selling his house to Alex. To make sure that both of them play fair and do not fraud each other, they agree on an escrow.
- Ron gives his keys and documents from his house to an escrow company.
- Alex gives his money to an escrow company
- Escrow company puts everything into a safe and issues 3 keys. It gives one key to Alex, one to Ron and keeps one key to itself.
- Safe cannot be opened without 3 unique keys.
Once Ron and Alex settle everything - transfer takes place. Escrow company is witness to the transfer and will not allow it if one party is not satisfied (since it has 3rd key). If everything is settled, everyone signs the documents and transfer takes place. Ron gets his money, Alex gets his house and escrow company collects a fee from both of them.
Escrow Closing
Transfer of property ownership via escrow, when all the terms are met both by the seller and the buyer (see “Escrow”).
Escrow Company / Escrow Agent
Company/Agent that carries out escrow services for two or more parties. Escrow - holding money and documents for both parties until an agreement is settled and terms are met(see escrow).
Escrow Account
A bank account where money for insurance and taxes is held until paid in full. When you make mortgage payment, part of that payment goes towards taxes and insurance. In order to make it more convenient, this money is deposited to an escrow account. Money is held there until it is time to pay the amount due for insurance and taxes.
Escrow Collections / Escrow Payment
Money that the third party collects to pay for insurance, taxes and other expenses from an escrow account(see escrow account).
Escrow Disbursements
Escrow account expenses that are due(see escrow account).
Escrow Analysis
Analysis at the end of the year which details escrow account(see escrow account).
Escrow Abuse
Manufactured abuse of escrow accounts by predatory lenders which results in foreclosure (lender taking away property as agreed) or overly high fees that hit borrowers wallet.
Estimated Closing Fees
Estimated fees required to finalize a new mortgage.
Escalator Clause
A mortgage provision which allows to increase monthly payments with an increase in salary. For example Ron was making $5000 a month and paying $2000 a month for his mortgage. He got a raise and now makes $6000 a month. Escalator clause allows lender to increase monthly payments with the raise, so lender decides to make it $2200 a month.
Estate
Property which is fully owned by an individual, with no debts or mortgages on it.
Estate Tax
Tax paid on the value of property when the owner of the property dies.
et ux
“et uxor” is latin for “and wife” which is used in wills. For example he et ux, meaning he and his wife.
et al
"et alii," is latin for "and others." For example, Ron, Alex, David me, et al. Meaning Ron, Alex, David me and others
Estoppel
(legal) Law that stops a person from denying facts which that person once recognized as truth, together with other people in Good Faith. For example, George said he was at the office at 5 o’clock, while others agreed with this and confirmed it. Later he said that he wasn’t there at 5, but was there at 2 o’clock. George is prevented from asserting new claim under estoppel.
Eviction
The act of removing someone from property for non payment. For example, Jenny did not pay for her rent for 2 months, she was evicted from it for non payment.
Examination of Title
Research on a real estate title(ownership). Examination of title looks at all previous owners of the property from the day that property was built.
Exchange
To trade goods of equal value. Trading property of similar value is a common practice.
Exclusive Listing
Agreement between a seller and a real estate agent, where seller gives exclusive rights to an agent to sell his property, usually 3 months. If agent sells the property he is entitled to commission. If seller sells his property himself he is not bound to pay commission.
Excavation
Act of digging the ground. Excavation is required to build a house and is the first task in the process.
Exotic Mortgage
Exotic mortgage refers to a number of mortgages which help buyers purchase expensive homes. Exotic mortgages are very risky for the borrowers. Some exotic mortgages:
- The 40-Year Mortgage
- The Piggy Back Mortgage
- 103s and 107s
- The Portable Mortgage
- The Interest-Only Mortgage
- The Negative Amortization Mortgage
- Home Equity Line of Credit
- The Flex-ARM Mortgage
- Loan Modification Mortgage
- Short-Term Hybrids
Expensing
Government allows business owners to write down taxes for purchases that are considered business expenses.
Experian
Credit agency which produces credit reports. Credit reports are essential in mortgage lending and in most cases lenders will refuse a loan if the applicant is not willing to provide his credit report. Visit Experian website. http://www.experiangroup.com/
Express Account
Bank account which is limited to ATM and online purchase usage.
Expropriation
Government taking away private business from its owners.
Existing Liabilities
Liabilities on a property which must be paid. For example, a mortgage.
Executor
Person named in a Will that must carry out that Will. For example, Alice’s father died, leaving all the property to Alice, while naming Kate the Executor. Kate must proceed with the execution of the wishes specified in a will. She is held responsible if the Will is not carried out or if Alice disagrees and takes matters to the court.