Mortgage and Real Estate Terms – E

EARNED AND UNEARNED INCOME – two different sources of income: while earned income comes from wages, salary or business profits, unearned income refers to interest, dividends, rental income, pension benefits, and several other defined sources.

EARNEST MONEY – a deposit made to bind the conditions of sale of real property.

EASEMENT – a right to the limited use or enjoyment of land held by another. Also, an interest in land to enable sewer or other utility lines to be laid or to allow access to a property.

ECONOMIC LIFE – the estimated period of time during which a property can be used by its owners to produce income.

ECONOMIC VALUE – the value of a property based on its earning potential.

EFFECTIVE AGE – for purposes of appraisal, the physical age given to a building based on its present condition, which may differ from its actual age.

EFFECTIVE GROSS INCOME (PERSONAL) – normal annual income including overtime that is regular or guaranteed. This income may be from more than one source. Salary is normally the principal source, but other income may qualify if it is significant and stable, and is expected to continue over a minimum two year period.

EMINENT DOMAIN – the right of governmental bodies, public utilities, and public service corporations to take private property for public use (e.g., schools and roads), upon payment of its fair market value.

ENCROACHMENT – an improvement that illegally violates another’s property or rights to use that property.

ENCUMBRANCE – anything that affects or limits the fee simple title to real property such as mortgages, leases, easements or restrictions.

EQUAL CREDIT OPPORTUNITY ACT (ECOA) – a Federal law that requires lenders and other creditors, to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, sexual preference, marital status, or receipt of income from public assistance programs — it’s also called Regulation B.

EQUITY – the difference between the fair market value and current indebtedness, also referred to as the owner’s interest.

ESCAPE CLA– USE – a clause that allows an applicant to cancel in situations that would not necessarily justify cancellation. ESCROW – a special account set up by the lender in which money is held to pay for taxes and insurance. “Escrow” can also refer to a third party who carries out the instructions of both the buyer and seller to handle the paperwork at the settlement.

ESCROW AGENT – the person or organization, having a fiduciary responsibility to both the buyer and seller (or lender and borrower) to see that the terms of the real property purchase/sale (or loan) are carried out as agreed. Also called escrow company or escrow depository.

ESCROW ANALYSIS – the periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance and other bills when due.

ESCROW COMPANY – an organization established to act as an escrow agent.

ESCROW CONTRACT – a three-party agreement, between the buyer, seller and escrow agent, specifying the rights and duties of each in the real property transfer transaction.

ESCROW OVERAGE OR SHORTAGE – the difference, determined by escrow analysis, between escrow funds on deposit, and escrow funds required to make an “escrow payment” when it becomes due.

ESCROW PAYMENT – that portion of a mortgagor’s monthly payments held by a lender or servicer, to pay taxes, hazard insurance, mortgage insurance, lease payments, or other items as they become due. These are also called impounds or reserves in some states.

ESTATE – the ownership interest an individual has in real property. The sum total of all the real and personal property owned by an individual at the time of death.

EVICTION – the lawful expulsion of an occupant from real property.

EVIDENCE OF TITLE – proof of ownership of real property.

EXAMINATION OF TITLE – the review process of the chain of title, as revealed by an abstract of title or public record.

EXCLUSIVE LISTING – a written contract giving one licensed real estate agent, the exclusive right to sell a parcel of real property for a specific period of time.