Laddering

An investment technique designed to save money in unfavorable circumstances.

Land Contract

A contract where buyer lives on the property, making monthly payments, while seller holds ownership until full payment is made. For example Ron is buying a house from Alex. Ron will be making monthly payments for 20 years, until full amount is paid out. Alex will hold ownership of the property until full amount is paid out, but will allow Ron to live on the property.

Land Title

Document which specifies ownership of the property. For example, land title confirms that this house belongs to Ron and he owns it. 

Land Titles System / Torrens title

System used to register land title(ownership of land), where the government makes the ownership indefeasible(cannot challenge it).

Land Transfer Tax / Property Transfer Tax / LTT

Tax collected by provinces for change in property ownership rights. For example, Cathy sold her house to Jessy. Jessy must pay land transfer tax for the sale to go through.

Land Survey

Process which sets boundaries, measures the area and other features for a given piece of land property.

Large Value Transfer System / LVTS

Canadian Electronic payment system designed to process large $50.000 + payments in one day, between banks and private bank accounts.

Late Charge / Late Fees / Late Payment Fee

Penalty for not paying on time. Amount depends on a lender.

Late Payment

Money paid to the lender which are late and past the due date. For example Ron must pay his lender $500 on January 5th. He missed the payment and paid on January 25th, 20 days later.

Latent Defect

Property damage that cannot be noticed easily, such as poor construction, poor foundation, termite damage. Latent defect must be disclosed at times of sale by the seller, otherwise the buyer can charge the seller with misrepresentation.

Lead

Term used by mortgage brokers to describe customers that came as a result of advertising, word of mouth or partnership. For example, I as a mortgage broker, made an agreement with a real estate agent. Whenever that agent gets a customer who needs a mortgage, he will recommend me, creating me a lead. In return, I will recommend that agent whenever my mortgage customers need a real estate agent, generating a lead for him.

Lead Lender

A financial institutions that governs, sets standards or provides credit to other financial institutions.

Lease / Leasehold / Leasehold Estate

Contract which allows use of an asset in exchange for fixed monthly payments. For example - car lease. Instead of buying a car, I and a car dealer can go into a lease, where I will be paying for using one of his cars, for a long period of time(2-5 years). You can take an analogy of long term rent.

Lease Assignment / Assignment of Lease

Transfer of lease rights from one party to another. For example, Ron leased an office building for 3 years and needs a bigger one. His contract expires in 2 years. If he breaks that contract he will face heavy penalties. Instead of breaking a contract, Ron finds another company interested in that office building and passes lease obligations to them, also called Lease Assignment or Assignment of Lease

Leaseback

When a seller sells the property and then rents it from the buyer. For example, Ron sold his house to Alex. After selling it, Ron rented(or leased) that house from Alex(buyer).

Lease Extension

Extension of the lease contract. For example Ron leased an office for 3 years. After 3 years, Ron wants stay in that office. He can extend his lease with the owner, making a lease extension.

Lease Option / Lease with Option to Purchase / Lease to Purchase Option

A lease, where the leased asset can be purchased. For example I leased a car from a car dealer. That car may have a lease option, meaning I can buy it whenever my lease contract expires or during the contract. Also known as Lease with Option to Purchase

Lease: Contract which allows use of an asset in exchange for fixed monthly payments. For example - car lease. Instead of buying a car, I and a car dealer can go into a lease, where I will be paying for using one of his cars, for a long period of time (2-5 years). You can take an analogy of long term rent.

Lease Types / Lease Type

There are numerous leases, each specifically designed to fit particular requirements, both individual and corporate.

Lease: Contract which allows use of an asset in exchange for fixed monthly payments. For example - car lease. Instead of buying a car, I and a car dealer can go into a lease, where I will be paying for using one of his cars, for a long period of time(2-5 years). You can take an analogy of long term rent.

Lease Types: Finance Lease, Gross Lease, Guideline Lease, Net Lease, Leveraged Lease, Net Net Lease(NN), Tax Lease, Full Payout Lease, Hybrid Lease, Sales-type Lease, Open-end Lease, Operating Lease, True Lease, Capital Lease, Triple Net Lease(NNN), Direct Financing Lease (Direct Lease), Synthetic Lease, Trac Lease.

Leasehold Mortgage

A mortgage that comes after a lease. For example Ron leased a property from Alex for 35 years. Ron must pay Alex monthly payments for the lease. Ron decides to build shopping center on a leased land and borrows a mortgage from YYY bank. YYY bank will have a leasehold mortgage, because the project financed by a mortgage is built on leased land, which does not belong to Ron. In that case, since the lease was first, mortgage has a secondary value or it can be called - Leasehold Mortgage.

Lease-purchase Mortgage / Lease Purchase Mortgage Loan

Mortgage designed for moderate and low income families. Non-profit organizations offer homes for lease, with an option to buy. In case a family decides to buy, their monthly payment will go towards:

• Principal
• Interest
• Insurance
• Down payment account

Legal Description

Description of real estate property that satisfies court of law.

Legal Fees

Fees charged for legal services.

Legal Blemish

Legal problem with a property. This may include problem with ownership, land use violation, etc.

Legal Protection

Protection in a court of law. Legal protection can be provided by a lawyer.

Lender / Loan Provider / Lending Institution

Financial institution that provides mortgages and credit such as: banks, unions, private corporations, governments.

Lender Buy Down

Option which allows borrowers to reduce interest rates in the first years of a mortgage by paying an additional sum. For example, if I want to pay less interest, I can pay a sum of money (for example $5000) to the lender and my interest rates will be reduced for a number of upcoming years. That sum will be deposited in a special account and will help to gradually pay for the interest every month. In a long term context, buy downs reduce interest, since you provide lenders with guaranteed stream of income for a limited time.  

Lessee

Person who signs for a lease.

Lease: Contract which allows use of an asset in exchange for fixed monthly payments. For example - car lease. Instead of buying a car, I and a car dealer can go into a lease, where I will be paying for using one of his cars, for a long period of time(2-5 years). You can take an analogy of long term rent.

Lessor

A company, financial institution or an individual who grants the lease.

Lease: Contract which allows use of an asset in exchange for fixed monthly payments. For example - car lease. Instead of buying a car, I and a car dealer can go into a lease, where I will be paying for using one of his cars, for a long period of time(2-5 years). You can take an analogy of long term rent.

Letter of Credit

Confirmation by a bank that guarantees money transfer under certain conditions. A letter of credit is an essential piece of international trade. It protects buyers from fraud by international sellers. Buyers give money to their banks and banks make sure that the funds do not get transferred until goods are received. To protect sellers, banks guarantee money transfer as soon as the goods arrive, in quantities promised.

Letter of Intent

Letter that states buyers intentions to buy the property. It is not legally required.

Letting Agent

Person between the landlord and a person looking to rent property. Letting agent rents property on behalf of the landlord and usually charges commission for the services.

Level Payment / Level Payment Amortization

Payment that remains constant through the mortgage term. It is used to describe fixed rate mortgages. For example, Ron got a mortgage for 25 years. He pays $500 every month and will continue paying $500 a month for 25 years, until his mortgage is paid. Part of the payment goes towards interest, while another goes towards reducing principal.

Leverage

Credit used for company’s operations. For example, YYY Corporation borrowed $50 million from the bank to finance its operations.

Leveraged Property

Property bought with a mortgage loan

Liabilities

Debt owed.

Liability Insurance

Insurance that protects individuals/companies from legal claims such as: negligence, malpractice, injury, property damage. In case anyone sues and wins for any of the claims, liability insurance will cover legal costs and any payouts assigned by court. Liability insurance does not cover voluntary action.

LIBOR / LIBOR Rate / London Interbank Offered Rate

LIBOR or London Interbank Offered Rate is a lending rate at which banks can borrow money from other, bigger banks, in London interbank market. LIBOR determines interest rates for short term loans and largely affects adjustable(variable) rate mortgages. Banks that borrow money from London interbank market assign more points to the final interest rate and lend to end users. For example, if LIBOR rate is 4%, banks will usually add 3-5% more percent, making final rates 7-9% percent.

LIBOR also represents the rate at which the most favorable institutions can borrow money, such as international corporations.

LIBOR rate is set every day at 11 a.m. (London Time), based on various market calculations. Countries that rely on LIBOR rate are: England, United States, Canada, Switzerland.

Libor-Linked Mortgage

Mortgage rate which is connected to LIBOR index (London Interbank Offered Rate). See LIBOR for more information.

Lien

Lien is claim on the property by the lender, which states that the lender may take away borrowers property if the borrower does not meet contract obligations(pay for mortgage). For Example, Ron got a mortgage. In order to get that mortgage, Ron had to enter into a Lien, guaranteeing that he will give his property to the lender if he does not pay for the mortgage.

Lien generally refers to a claim on something. Like a claim on a house, claim on a car and so on.

Lienor

Owner of a property who grants a lien to the lender.

Lien: Lien is claim on the property by the lender, which states that the lender may take away borrowers property if the borrower does not meet contract obligations(pay for mortgage). For Example, Ron got a mortgage. In order to get that mortgage, Ron had to enter into a Lien, guaranteeing that he will give his property to the lender if he does not pay for the mortgage.

Lienee

Refers to the lender, who will take away borrowers property if the borrower does not meet contract obligations.

Lien: Lien is claim on the property by the lender, which states that the lender may take away borrowers property if the borrower does not meet contract obligations(pay for mortgage). For Example, Ron got a mortgage. In order to get that mortgage, Ron had to enter into a Lien, guaranteeing that he will give his property to the lender if he does not pay for the mortgage.

Lien Waiver

Document stating that the party with lien rights no longer wants hold those rights.

Lien: Lien is claim on the property by the lender, which states that the lender may take away borrowers property if the borrower does not meet contract obligations(pay for mortgage). For Example, Ron got a mortgage. In order to get that mortgage, Ron had to enter into a Lien, guaranteeing that he will give his property to the lender if he does not pay for the mortgage.

Life Cap / Life of Loan Cap / Lifetime Rate Cap

Maximum rate limit in an adjustable rate mortgage. Adjustable(variable) rate mortgages have their interest rates adjusted periodically. Life cap ensures that the interest rates do not go over a set percentage over the life of a loan. For example, Ron got a new mortgage. He’s current interest rate is 5%. The interest rates adjust every month. He has a cap for 9%, meaning that no matter the market, his interest rates will not go over 9%. 

Life of Loan / Life of a Mortgage

Mortgage term. For example, you got a mortgage for 25 years, meaning that its life is 25 years.

Life-cycle Cost Analysis

Construction project estimates, calculating its maintenance costs before building the project. Calculations are done by an architect.

Like-kind Exchange

Exchange of property for the same type of property.

Limited Liability Company / LLC

Company in which shareholder’s/owner’s personal assets are protected from the actions of the company. In case company goes bankrupt or faces a suite, the owner’s personal assets will not be threatened.

Limited Partnership / Limited Liability Partnership / LLP

A business partnership, where partners are liable only with the investments they made. For example, if it was regular partnership and company faced legal suites, partner’s personal assets and saving would be under threat. Limited partnership protects personal assets and only puts at risk the funds invested in a company.

Liquid Assets / Liquidity

Assets that can be quickly converted into cash. This includes: stocks, bonds, real estate, oil, gas.

Liquid Damage / Liquidated Damages

An agreement, where one party agrees to sell assets in case it does not follow the contract in order to recover damages for another party. For example, George does not pay for his loan. As per contract, his liquid damage is his house. Since he broke the contract he must recover damages to the lender, which will mean that he will have to sell the house, or simply pass it to the lender.

Liquidation

The process of selling excess stock at low prices. For example, Ron has too many DVD players, which aren’t selling well. He may liquidate them at low prices, recovering some of the money invested. Liquidation may also take place when the company goes bankrupt. In order to recover some investments, inventory and stock will be sold at low, below market prices. There is a number of firms that specialize in liquidation.

Lis Pendens

A court notice that notifies property owners that their ownership may be affected by the lawsuit.

Listing

Real estate property for sale. Usually advertised in special magazines, websites, TV/radio commercials.

Listing Agent / Listing Broker / Real Estate Broker / Real Estate Agent

Person who arranges sale or purchase of real estate property, taking care of legal papers, transfer procedures and other related proceedings. Real Estate agents work for a commission and must have appropriate licenses.

Listing Inventories

Real estate property for sale in a particular market.

Live-in Partnership

An agreement, where two completely unrelated people purchase and share property. Both of the buyers are equally responsible for the payments.

Loan

Another word for a mortgage.

Mortgage: Debt borrowed from a lender to buy real estate property. For the privilege of borrowing, lenders apply an interest rate. For example Ron wants to buy a house for $300.000. He only has $50.000. Ron can borrow $250.000 from a lender and buy that house. Lender will apply an interest rate to the amount of money he borrowed. Ron will be required to pay each month for money borrowed + interest rate charged by lender.

Loan Application

Document filled out by the borrower when applying for a mortgage.

Loan Application Fee

Fee charged by lenders and mortgage brokers for filling out loan applications. It is usually free, however some banks charge the application fees.

Loan Application: Document filled out by the borrower when applying for a mortgage.

Loan Balance

Mortgage amount left to be paid. For example if you paid out $40.000 on a $100.000 loan, your balance is $60.000.

Loan Commitment

Written document from the lender/bank, promising to lend specific amount of money at a specified date.

Loan Consolidation

Loan available to students. It combines all education related loans into one loan, and sets a specific period for repayment(max 30 years). It is then paid over that period with fixed monthly payments at an interest rate.

Loan Closing / Closing

In real estate and mortgage world, closing refers to completion of real estate or mortgage transaction. For example Ron signs a final document on the mortgage, meaning that he is closing the mortgage transaction.

Loan Fraud

It involves illegal and unethical activities which benefit one party, but financially hurt another. Loan fraud can be conducted by all parties involved in a transaction.

• Lenders
• Mortgage Brokers
• Borrowers

For example, lender may include fees which are illegal or should not be paid at all. It may also involve manipulation of the escrow account or overly high interest rates that result in foreclosure, etc.

Mortgage Brokers may manipulate refinance procedures, recording more money for the services, frauding both parties. For example, broker charged $5.000, but wrote down $10.000.

Borrowers may state income other than theirs. 

Loan fraud has many forms. Make sure you are dealing with ethnical mortgage brokers to protect yourself from loan fraud.

Loan Flipping

Encouraging borrowers to refinance periodically, charging high service fees and other charges at borrower’s cost. Loan flipping is a predatory lending technique.
Loan Modification / Mortgage Modification

Modification on the loan by the lender, due to borrowers’ inability to repay the loan. Loan modification may include reduce in interest rates, longer mortgage terms, different kind of a loan.

Loan Origination

The process of getting new loans, from start to finish. This involves:

• Marketing
• Generating Leads
• Qualifying Buyers
• Processing Documents
• Giving the Loan
• Recording and Closing the Transaction.

Loan Origination Fee / Loan Points

Loan percentage charged by brokers and lenders for giving the loan. For example, Ron got a new loan for $100.000 from a broker. Broker’s commission is 2 points, meaning that the broker will add 2% to the mortgage, making it $102.000. Lenders charge points(percentage) as well.

Loan Officer

Another word for mortgage broker.

Broker: Person who represents another person or another company. For example, mortgage brokers represent borrowers or lenders. It is brokers job to find borrowers or lenders and satisfy the party they represent.

Loan Program

Description of a mortgage detailing features, terms, conditions, interest rates, changes and other specifics.

Loan Processing

Steps taken by lenders during loan approval process. When borrower submits the application, lender looks at credit score, liabilities, assets, income, property and other details that will affect the mortgage. Once lenders approve or disapprove the application, loan processing is completed.

Loan Processing Fee

Fee charged for accepting the application after loan processing. For example, Ron got approved for a loan. He will be charged loan processing fee as a result.

Loan Processing: Steps taken by the lender in loan approval process. When borrower submits the application, lender looks at credit score, liabilities, assets, income, property and other details that will affect the mortgage. Once lender approves / disapproves the application, loan processing is completed.

Loan Servicing

Administration of a mortgage loan. After mortgage is issued it must be maintained. This includes: collecting payments, collecting insurance, paying taxes, maintaining records, balance, calculating payments, interest, etc.

Loan Term

The time it takes to pay a mortgage, including interest. For example, you got a mortgage for 25 years, meaning that its term is 25 years.

Loan-to-Value Ratio / Loan to Value / LTV

Ratio between mortgage and the price of property financed with a mortgage. For example, cost of a house is $100.000. Mortgage that was borrowed to buy that house is $70.000, meaning that it is 70% of the value. In that case loan-to-value ratio will be 70.

Local Taxes

Taxes charged by municipal government. For example, people living in Quebec, Montreal may be charged taxes that are not charged in Ontario, Toronto.

Lock / Lock-in / Lock-in Clause / Rate Lock / Interest Rate Lock

A guarantee by the lender or a mortgage broker that the interest rates quoted will not change when the borrower signs up for a mortgage. For example Ron quoted the rates on 10th of July, but wanted to sign up on July 25th. Brokers will lock the quoted rate for Ron to make sure they get his business.

Lock-and-float / Lock and Float

A guarantee by the lender or a mortgage broker that the interest rates quoted will not change when the borrower signs up for a mortgage, with one exception. Rates will change only if they go down below the quoted price.

Lock Failure

Failure or unwillingness to lock promised interest rate.

Rate Lock: A guarantee by the lender or a mortgage broker that the interest rates quoted will not change when the borrower signs up for a mortgage. For example Ron quoted the rates on 10th of July, but wanted to sign up on July 25th. Brokers will lock the quoted rate for Ron to make sure they get his business.

Lock Jumper

Borrower who refinances in order to lock in into the lowest rate, once current locks expire. In reality, borrower does not win anything, since he pays for new closing costs.

Lock Period

The number of days for which the lock is held.

Rate Lock: A guarantee by the lender or a mortgage broker that the interest rates quoted will not change when the borrower signs up for a mortgage. For example Ron quoted the rates on 10th of July, but wanted to sign up on the 25th of July. Brokers will lock the quoted rate for Ron to make sure they get his business.

Lock-out Period / Lock out period

Period where the borrower cannot repay the mortgage in full. For example Ron got a loan for 25 years. He may have a lock-out period of 20 years, meaning that he cannot repay the loan in the first 20 years. This is done to ensure that the lender makes healthy profits from interest rates.

Long-Term Loan / Long Term Loan / Long-term Liability

Money owed for more than a year, for example a mortgage.

Loss Payable Clause

Mortgage coverage, where the collateral is secured in case it is stolen or damaged. For example, Ron got a mortgage, but his collateral for the loan was stolen. Ron defaults on the loan(can not longer pay). Bank would usually move to the foreclosure(taking the property), however loss payable clause would protect Ron in this case.

Lot Size

Total size of a piece of land measured in square feet or square meters.

Lot Purchase

Purchase of a piece of land.

Low-doc Loan / Low Doc Loan / Low-documentation Loan / Low Documentation Loan

Mortgage that does not require extensive background and income verification. It is provided to people who cannot disclose their income, are self-employed or are recent immigrants. Low documentation loans require good credit history, substantial down payment and have higher interest rates than conventional mortgages.

Low-down Mortgages / Low Down Mortgage Loan / Low Down Payment Mortgages

Mortgage that does not require large down payment. Usually below 10% mark.

Lowball Offer

An offer to buy the property at very low price.

Lump Sum Payment

Large sum of money.