A Absolute Net A term that is typically used in a lease that requires a tenant to pay, in addition to base rent, all costs associated with the operation, repair and maintenance of the building, as well as all real estate taxes and utilities, including repair and maintenance of the building's structure and roof. Acquisition Loan A loan that is used to acquire property, including property ranging from improved land to completed and operating properties. Acquisition and Development Loan A loan with interest-only payments that is used to acquire, develop and improve property. Amortization The process by which loan principal decreases over the term of the loan. Amortization Term The amount of time required to pay down the principal on a mortgage loan. Appraisal A written analysis of the estimated value of a property prepared by a qualified appraiser. Asset-based Lending (ABL) A loan that is secured by the value of an asset, such as a home, condo, office building of other form of real estate. Benworth provides asset-based loans. back to top B Balance Sheet A financial statement that shows assets, liabilities, and net worth as of a specific date. Bankruptcy A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee. Base Rent A specific amount used as a minimum rent in a lease. Binder A preliminary agreement, secured by the payment of a deposit, under which a buyer offers to purchase real estate. Bridge Loan A loan made for a short period of time until cash is obtained to acquire an asset, such as a home, or permanent financing is arranged. Many times homebuyers will secure a bridge loan to purchase a new home while they wait for their current home to sell. Benworth provides bridge loans. Brokerage Company A business whose main responsibility is to be an intermediary that puts buyers and sellers together in order to facilitate a transaction. Build-To-Suit A building specifically constructed to meet the design and physical specifications of a tenant. back to top C Certificate of Occupancy (COO) A statement issued by a local government verifying that a newly constructed building is in compliance with all codes and may be occupied. Certificate of Title A statement provided by a qualified company, such as a title company, or an attorney stating that the title to real estate is legally held by the current owner. Class A term used to refer to the quality of office property. Class A+: The best of Class A buildings. Very high quality with a prime location within a business district. Class A: High quality and with a desirable location within a business district. Class B: Renovated and in a good location. Class C: Older space that has not been renovated. Closing A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Collateral An asset (such as a car or a home) that could potentially be used to repay a loan. Construction Loan A collateralized loan that is used to construct a building or make other property improvements. Collateral includes the building, land and improvements. Reserves are maintained to provide funding during construction as needed. Covenant A clause in a loan agreement that outlines requirements that are specific to the financial arrangement between a borrower and a lender. Credit Enhancements For borrowers who lack good credit, credit enhancements may be used to obtain premium financing from traditional lenders, who guarantee the loan for a fee and receive an equity position in the property being financed. Credit History A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner. Credit Report A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. back to top D Default Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage. Delinquency Failure to make mortgage payments when mortgage payments are due. Direct Lender A lending source that funds loans directly to borrowers and does not go through an intermediary, like a broker. Commercial banks are considered to be direct lenders. Benworth is considered to be a direct lender. Direct Loan A loan that is funded directly by the borrowing source such as a commercial bank and does not go through an intermediary, like a broker. Benworth provides direct loans. Double Net Lease A type of lease in which multiple tenants, such as tenants of a strip plaza, pay all or part of property taxes and insurance. Tenants pay these fees in addition to monthly rent. Due-On-Sale Provision A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage. back to top E Earnest Money Deposit A deposit made by the potential homebuyer to show that he or she is serious about buying the house or property. Equity Capital An investment of cash into an asset, such as a building. In return, the investor(s) receive ownership or partial ownership of the asset. Equity Financing A process by which cash is received for an ownership stake in an asset, such as a building or real estate project. 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 A bank account used by a third party to hold funds for a specific purpose. back to top F Federal Housing Administration (FHA) An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing. Condominiums financed through Benworth must be FHA-approved. Form 1003 Uniform Residential Lending Application. All lenders use this form to record relevant financial information about an applicant who applies for a conventional one- to four-family residential property mortgage. back to top H Hard Money Lender A lending source that funds loans that are backed by the value of real estate. Typically these loans are for a period of time up to about 2 years. In many cases the underwriting standards at hard money lenders are more flexible than traditional sources, such as commercial banks. Benworth is considered to be a hard money lender. Hard Money Loan A loan that is backed by the value of real estate and made for a term of about 2 years.  In many cases the underwriting standards at hard money lenders are more flexible than traditional sources, such as commercial banks. Benworth provides hard money loans. back to top L LEED (Leadership in Energy and Environmental Design) An internationally-recognized green building certification system. Letter of Intent A legal document that details a financing agreement between a homebuyer and their lending source. The document will outline the amount of the loan and give the seller assurance that the buyer has a reliable source of funds to make the purchase. Benworth will issue a letter of intent upon completion of a preliminary loan approval process. Lien A legal claim to a piece of property. In order for a buyer to acquire property, the asset must be absent of any liens at the time ownership is transferred. As part of its Private Lending services, Benworth will ensure that a property is free of any liens before the transaction closes. Loan to Value (LTV) A ratio lenders use to assess the risk of a loan. Here’s how to calculate the LTV ratio = Loan Amount ÷ Current Appraised Value of the Property Loans must have a LTV ratio of no more than 65% to qualify for a Benworth Private Loan. Lender of OPM (Other People’s Money) A lending source that funds loans using other people’s money. Lenders of OPM align the needs of a borrower with the funds that investors are willing to invest. Borrowers receive the funds they need and investors receive a portion of the interest amount that borrowers repay.  Benworth is considered to be a Lender of OPM. back to top M Mezzanine A mezzanine loan is paid back at the time of sale or refinancing of a property, with an equity position in the property given back to the lender. Essentially, mezzanine loans provide financing when a first mortgage has reached its maximum loan amount. Mixed-Use The use of a building, set of buildings, or neighborhood for more than one purpose. Often located in existing urban areas or as part of a new town center, mixed-use development provides a range of commercial and residential unit sizes and options. back to top N Non-Resident Alien (NRA) An individual who is not a U.S. citizen or permanent resident of the U.S. and who has been admitted to the U.S. on a temporary basis, usually with a visa. back to top O Origination Fee A fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan. back to top P Planned Unit Development (PUD) A zoning classification term that relates to land regulation that promotes a mixture of uses and housing types, accompanied by public and common open space. Power of Attorney A written, legal document that authorizes an individual to represent another person or act on another’s behalf. The power or authorization may be for a defined time period or indefinitely. Sometimes a homebuyer will give their lawyer power of attorney to handle the closing or another legal process. Prepayment Penalty A charge imposed by a lender on a borrower who wants to pay off part or all of a loan in advance of schedule. Principal The total amount of money originally deposited into a savings or CD account. When taking out a loan, however, it refers to the amount of debt, not including interest. Private Lending A type of financial arrangement where the cash from private investors funds loans to borrowers. Private Money Lender A lending source that uses cash provided by private investors to fund loans to borrowers. Benworth is considered to be a Private Money Lender. Private Money Loans A loan that is funded from cash provided by private investors. Benworth provides private money loans. Project Equity When there is a strong opportunity for significant growth in value or increased cash flow related to a property, a qualified developer may receive project equity from an investor that can be used to finance a purchase or improvements. Property Management A company or individual responsible for budgeting expenses, securing renters, collecting rent, complying with laws and regulations, and maintaining real estate assets. back to top R Raw Land Loan A loan that is used for the purchase of unimproved property, from single lots to many acres. back to top S Standby Commitment A commitment provided by a lender to a borrower that is in effect until traditional financing can be obtained, or until a purchase buyout proof of performance is presented. Stated Income A process that declares the amount of income without providing supporting documentation, such as tax returns. back to top T Title A legal document that verifies ownership and entitlement to the legal possession of a property.  Title Search A process to verify that a seller of a property actually has the legal capacity to sell the asset for the intended purpose and to determine if any liens, such as taxes or mortgage payments, are owed on the property. Triple Net A lease requiring the tenant to pay, in addition to a fixed rental, the expenses of the property leaser, such as taxes, insurance, maintenance, utilities, cleaning, etc. The terms "net net", "net net net", "triple net", and other such repetitions are used. back to top U Underwriting The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan. back to top Z Zoning A process of planning for how land will be utilized. For example, land may be zoned for commercial use or residential use. back to top         Benworth Capital Partners, LLC is a licensed mortgage lender. Benworth is not, and never has been, a sub-prime mortgage lender. Benworth does not participate in land loans, second mortgages, mezzanine financing, re-financing of primary residences or condo loans that are not FHA- or Fannie Mae-approved.     DISCLOSURES I © 2012 Benworth Capital Partners, LLC. All rights reserved.