Margin Of Security
Definition of "Margin of security"
Buffer amount between the value of the collateral and the principal balance of the obligation. For example, if the mortgage has a principal balance of $200,000 and the appraised value of the property is $250,000, the bank has a margin of security of $50,000 in the event of default. The greater the collateral value, the more protection the bank has. In troubled real estate markets because of adverse economic conditions, the market value of the property may fall substantially below the balance of the mortgage. Many homeowners in such a case have defaulted on the loan because of the decline in market values. For example, if the appraised value of a home has fallen to $60,000 while the mortgage balance is $100,000, it might be more financially prudent for the debtor to default on the mortgage.
Popular Real Estate Terms
Gets rid of unwanted substances and materials from a residence or office building. Waste includes solids and liquids, hazardous and nonhazardous materials. ...
Any permanent development that has been made to a parcel of land. Improved land features include whether the land has fruit bearing trees or crops producer by labor, landscaping, or ...
A mortgage where the payments are overdue and open to a foreclosure action at any time. A mortgage not having a prepayment clause permitting the mortgagor to repay the mortgage at any ...
The term land use succession definition can be looked at from two perspectives. While the general way to define land use succession would be “changes that occur over time in the use ...
In order to determine what is the definition of utility, we only need to look at what the term comes from. The word utility can be used to describe something useful and when looking at what ...
Agreement to transfer funds to a third party. ...
A statistical procedure using a body of measurable independent variables to compute an equation that successfully measures and forecasts the variance in another variable, the dependent ...
(1) The exposed trim and molding surrounding a door or window. (2) Woodwork which encases a pipe or structural member. (3) Method of creating a form for the pouring of concrete. ...
Amount to be paid by a person or business for violating a statute or legal court order. It may also be assessed for violating the provisions of a contract. Examples of penalties are a ...
Have a question or comment?
We're here to help.