Mortgage Terms - "L"

Land Contract

Installment plan for buying a house. It is used as an alternate to obtaining a loan from a traditional source such as a mortgage banker or savings and loan.

Late Charge

A penalty for failure to pay an installment on time.

Lease with Option to Purchase

A lease under which the lessee has the right to purchase the property. The option may run for the length of the lease or only for a portion of the lease period.

Legal Description

An expanded and unique description of a property that is used on legal documents such as deeds and deeds of trust. Recorded documents generally require a legal description.

Lender

A general term encompassing all mortgages, and beneficiaries under deeds of trust.

Lenders Instructions

A document that lenders prepare for the closing agent that outlines the requirements for loan closing.

Letter of Intent

A formal method of stating that a prospective developer, buyer or lessee, is interested in property.

Liber

A latin word for book.

Lien

An encumbrance against property for money, either voluntary or involuntary.

Life Estate

An estate in real property for the life of a living person. The estate then reverts back to the grantor or on to a third party.

Limited Partnership

A partnership consisting of one or more general partners who conduct the business and are responsible for losses, and one or more special partners, contributing capital and liable only to the amount contributed.

Lis Pendens

A notice that litigation is pending on a property.

Listing Agreement

Agreement between a property owner and a real estate owner, authorizing the broker to find a buyer for the property. If the sale is consummated, the listing broker will be paid a fee.

Loan Discount/Premium Fees

Fees that borrowers pay (sometimes seller will pay for borrower) that adjust to the yield requirement of the investor. Loan discount denotes an investor yield requirement higher than the note rate. Loan premium denotes an investor yield requirement lower than the note rate.

Loan Lock

Guarantee that the borrower will receive the rate in effect at the time of loan application.

Loan Officer

A person that helps borrowers through the loan selection, processing and closing a mortgage loan. Loan officers can be paid a commission or salary for their services and can work for mortgage brokers, mortgage bankers, or depository institutions.

Loan Origination Fees

The cost to obtain a loan that is paid to the originating lender or broker.

Loan Package

The information given to the lender regarding the borrower and the property necessary to decide to give or not to give the loan.

Loan Ratio

The amount of a loan to the value or selling price of real property.

Loan Servicing

The loan serving is the function of collecting loan payments, managing the property tax and insurance escrows, foreclosing on defaulted loans, and remitting payments to the investor/beneficiary.

Loan-to-Value Ratio

The ratio of the mortgage loan amount to the properties appraised value (or the selling price whichever is less).