Back-To-Back Escrow
An escrow set up to facilitate the simultaneous purchase of one property and the sale of another property by the same party.

Backup Offer
A secondary offer to buy property although the first offer has been accepted, useful in case the first offer fails.

Balance Sheet
A report of the financial position of a business at a specific point in time, showing its assets, liabilities, and owner’s equity.

Balloon Mortgage
A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date, usually at the end of the term.

Balloon Payment
A scheduled payment on a mortgage that is larger than other, periodic payments, usually the unamortized final payment.

Bank Holding Company
A corporation that owns a controlling interest in one or more banks.

Bankrupt
An individual, firm or corporation who, through a court proceeding, is relieved from the payment of all debts. Bankruptcy may be declared under one of several chapters of the federal bankruptcy code: Chapter 7, which covers liquidation of individual or business assets; Chapter 11, which covers reorganization of bankrupt businesses; Chapter 12, which covers certain farm bankruptcies; and Chapter 13, which covers workouts of debts by individuals.

Base Rent
The minimum fixed guaranteed rent in a commercial property lease.

Basic Rent
The rent charged in a subsidized housing project and computed on the basis of a maximum subsidy.

Basis
The cost of a property, including improvements, refinancing costs, closing costs, and similar costs, less depreciation. Basis is used for tax purposes to calculate any profit or loss realized on the sale of a property.

Basis Point
One one-hundredth of one percent. Used primarily to describe changes in yield or price on debt instruments, including mortgages and mortgage-backed securities.

Bear Market
A market characterized by falling prices. A bear market in the mortgage industry may be triggered by rising interest rates.

Bedroom Community
A suburban residential area where most residents commute to neighboring metropolitan areas to work.

Before-Tax Income
Gross income minus all expenses, except income taxes.

Below Market Interest Rate (BMIR)
Describes mortgage insurance programs where the interest rates on the mortgages are below that ordinarily charged for similar conventional financing; used to assist low- and moderate-income families to rent or buy dwelling units.

Beneficiary
A person who benefits from a life insurance policy, will, contract, or deed of trust. In the latter case, the lender is the beneficiary.

Beneficiary Statement
The lender’s statement under a deed of trust, detailing the remaining principal balance, monthly payment, and interest rate on the loan. Also called a bene statement, offset statement, or estoppel certificate.

Betterment
An improvement, replacement or maintenance which results in a higher asset valuation

Bid
The price at which a seller will sell particular securities. In the securities and commodities trade, the highest price offered for a security or commodity at a given time. Also called a quotation or quote.

Bid-Ask Spread
The difference between the highest price offered for securities and the lowest price that will prompt a seller to sell.

Bill of Sale
A document signed by a seller that certifies a transfer of ownership of personal property.

Binder
Temporary hazard or title insurance granted prior to the issuance of a permanent policy. In real estate, a preliminary agreement between a buyer and seller which includes the price and terms of the contract.

Bi-weekly Mortgage
A mortgage with payments due every two weeks, totaling 26 payments a year.

Blanket
The coverage of more than one piece of property under one instrument, such as blanket insurance policy, blanket deed of trust, blanket assignment, or blanket survey.

Blanket Mortgage
A mortgage that covers more than one parcel of real estate owned by the mortgagor.

Block
A square or rectangular portion of a city or town enclosed by streets. Often used as part of a subdivision legal description.

Blue-Sky Laws
State laws covering the registration and sale of new securities.

Bona Fide
A Latin term meaning "in good faith," without fraud.

Bond
An obligation written under seal. For example, the obligation may be to make good if a third party defaults (performance bond), or betrays a trust (fidelity bond), or an obligation to pay interest and principal as specified. The latter type of bond is a debt instrument which may be secured by a mortgage or a pool of mortgages.

Bond Loan
A state-sponsored method of assisting low income borrowers and first time homeowners in the purchase of a home at a reduced interest rate.

Book Cost
The actual cost of assets purchased or acquired.

Book Value
The capitalized cost of an asset, less depreciation taken for accounting purposes, based on the method used for the computing of depreciation over the useful life of the asset. The actual value of an asset after deducting depreciation and all liabilities is the net book value.

Borrower
One who receives funds in the form of a loan with the obligation of repaying the loan in full with interest.

Bow-Tie Loan
A variable-rate loan that attempts to smooth the impact of rate increases on borrowers by deferring a portion of high interest rates until maturity. Usually, all interest above a certain rate is deferred to maturity.

Breach
Failure to perform under a contract or violation of a legal obligation.

Break-Even Point
The figure at which occupancy income is equal to all required expenses and debt service. Used to determine the amount of cash flow necessary to operate a residential or commercial property.

Bridge Financing
A loan spanning the gap between the termination of one loan (generally short-term) and the start of another (generally permanent long-term) loan. Also called gap financing.

Broker
An individual employed on a fee or commission basis as agent to bring buyers and sellers together and assist in negotiating contracts between them.

Builder-Seller Sponsor
A project sponsor specifically organized to build or rehabilitate and sell a project immediately upon completion to a private, nonprofit organization, at the certified cost of the project. The nonprofit sponsor buys a total package.

Builder’s and Sponsor’s Profit and Risk Allowance (BSPRA)
A credit against the required equity contribution in HUD/FHA insurance programs granted the developer for its services in sponsoring and building the project.

Builder’s Risk Insurance
Fire and extended coverage insurance for a building under construction. Coverage increases automatically as the building progresses and terminates at completion.

Building Code
Regulations based on safety and health standards that govern design, construction, and materials used in construction.

Building Efficiency
A ration of net rentable area to gross building area.

Building Permit
Written authorization from a local government for the construction of a new building, or for extensive repairs or improvements on an existing structure.

Building Residual
A method of real estate appraisal used to determine the value of a building when the land value is known.

Built-ins
Permanent, immovable appliances or similar features.

Bullet Loan
Interim financing for leased-up properties often used to repay the construction loan; typically an interest-only loan for two to ten years that cannot be prepaid.

Bull Market
A market characterized by rising prices. In the mortgage industry, a bull market may be promoted by falling interest rates.

Business Interruption Insurance
Compensation to a business owner or operator for income lost when the business is closed due to fire or any other insured hazard.

Buy-Down Mortgage
A mortgage with a below-market interest rate made by a lender in return for an interest rate subsidy in the form of additional discount points paid by the builder, seller or buyer.

Buy-Sell Agreement
An agreement between an interim and permanent lender for the sale and assignment of a mortgage to the permanent lender upon the completion of a building. Often the mortgagor is a party to this agreement on the theory that the mortgagor should have a contractual right to insist that the permanent lender buy the mortgage.

Buy-Up
Freddie Mac’s up-front payment to a loan seller in exchange for a higher guarantee fee.

Buyer’s Market
Economic conditions in which the supply of housing exceeds demand. Sellers may be forced to make substantial price concessions.