Schedule a Confidential Consultation Today: 858.490.3630
INFORMATION CENTER
A&D Loan: Acquisition and Development Loan
ABS: Asset Backed Securities
AITD: AITD = All Inclusive Deed of Trust, sometimes referred to as a "wrap"
ALLL: Allowance for Loan and Lease Loss
CDO: Collateralized Debt Obligation
CMBS: Commercial Mortgage Backed Securities - A mortgage-backed security collateralized by the mortgages on commercial building, offices, factories, apartments, and other buildings other than single-family homes. Unlike most other mortgage-backed securities, the structure of a commercial mortgage backed security is not standardized and, as a result, it is difficult to assess its risk. It is also called a collateralized mortgage backed security.
Credit Rated Tenant: Tenant of a commercial space that is a publicly traded company where that tenant’s financials are reported to the SEC and can be reviewed by the lender to determine stability of the income producing property.
Condo Wrap Insurance: 10-year liability tail in CA for Condo conversions: protection from tenants and HOA’s. Requires peer review from beginning to end to qualify.
Defeasance: A form of prepayment penalty, similar to Lock-Out. However this type of penalty usually requires additional collateral, such as a Treasury Instrument, purchased by the business owner and assigned to the lender. In the event of default, early payoff or any other early termination of the mortgage debt, this additional asset is surrendered to the lender
DSCR: Debt Service Coverage Ratio - Debt Service Coverage Ratio—the ratio of NOI to Current or Proposed Mortgage Payment (P&I Only). [1.25 DSCR means that for every $1.00 of mortgage payment the NOI must be $1.25]. (Divide the NOI by the Mortgage Payment.)
EFG: Effective Gross Income—the adjusted Gross Income after adjusting for V&C
Failure to Fund: CA: Typically a contract claim Other Area: Can be a Tort claim
Forbearance: A reduction of the principal and interest payment for a period of time after which the portion of the P&I that was given “forbearance” is placed at the end of the loan and recapitalized.
Lock-Out: A form of prepayment penalty applied to a commercial mortgage forcing the property owner to pay the full amount of interest (yield) a note would have generated if the loan was retained (not paid off) during the lock-out period. This penalty is paid in addition to a prepayment penalty.
Negligent Misrepresentation:
Permanent Modification: Often a complex transaction that the bank is reluctant to do as it often reduces the value of the asset on the banks books.
Principal Balance Reduction: The lender(s) agree to reduce the principal amount owed wiping out a portion or all of the negative equity a person may have do to the drop in real estate values.
REIT: Real Estate Investment Trust; a type of investment company that invests money (obtained through the sale of its shares to investors) in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the rents received from the properties and receive capital gains as properties are sold at a profit. REITs have been formed by a number of large financial institutions such as banks and insurance companies. The stocks of many of them are traded on security exchanges, thereby providing investors with a marketable interest in a real estate investment portfolio. REITs that distribute all of their income generally pay no entity-level tax. However, in exchange for this special tax treatment, REITs are subject to numerous qualifications and limitations including: (1) Shareholder qualifications. Generally, REITs are not permitted to be closely held and must have a minimum of 100 shareholders. (2) Qualified asset and income tests. REITs are required to have at least 75% of their value represented by qualified real estate assets and to earn at least 75% of their income from real estate investments.
TDR: Troubled Debt Restructuring
Term Extension: This is when the bank agrees to extend the maturity on a loan that can't be refinanced because of high LTV (loan-to-value ratio) but has cash flow sufficient to service the debt. This type of extension can be difficult for a lender to agree to due to its regulatory pressures. We can often with our analysis tools convince the lender that an extension is in their best interest despite LTV's that are outside of their acceptable range.
Tenant Mix: A requirement that a property have a general mix of tenants so if one business class requires to vacate, the entire property is not in danger of losing all tenants and will still be able to produce income. [An office building with all real estate/mortgage and financial services tenants would be considered an unacceptable tenant mix. A building full of medical practices would be considered an acceptable mix].
Tort: Civil wrong such as negligence and fraud
UBPR: Uniform Bank Performance Report: Issued QTRLY and ANNUAL
V&C: Vacancy & Collections—the amount of Expenses to cover for unit vacancy and collections of bad debt.
Yield Curve: A curve that shows the relationship between yields and maturity dates for a set of similar bonds, usually Treasuries, at a given point in time.
Yield Maintenance: A prepayment based upon the projected yield a loan would generate if it preformed over a specific period of time. Similar to a Lock-out and usually based on credit default swap rates.
