earned income -- income derived from an individual's personal
efforts, from work, from services rendered or from goods produced and sold. It
also includes pension and annuity income, which is based on income that was
previously earned. See unearned income.
earnest money -- a sum of money given to bind an agreement, such as
the sale of real estate, the advance of a loan or some other transaction
requiring a deposit. Earnest money is forfeited by the donor if he or she fails
to carry out the terms of the contract or agreement.
earning assets -- total assets less repossessed assets, office
premises and equipment, and nonaccrual loans.
earnings -- (1) net income.
(2) anything that is earned as compensation for labor (salary, wages, tips,
bonuses) or as compensation for the use of something of value (rent, interest,
dividends and other returns on investments). (3) the profits of a business.
earnings-based accounts -- certificates of deposit that pay a rate of
interest based at least in part on the earnings or profitability of assets held
by the institution.
earnings per share -- the total after-tax earnings of a corporation
divided by the total number of its outstanding shares.
easement -- a right held by
one person to make specific, limited use of land owned by another person. An
easement is granted by the owner of the property for the convenience, or ease,
of the person using the property. Common easements include the right to pass
across the property, the right to construct and maintain a roadway across the
property, the right to construct a pipeline under the land, or a power line
over the land. Easements for party walls that share a common foundation, are
common in town house and condominium developments.
econometric model -- a set of mathematical equations that depict real
economic conditions both in the present and in the future. Econometric models
are used to determine the economic effects of changes in government policy and
regulation, changes in interest rates, tax law, wage levels, population trends
and many other factors. All the factors influence each other, so changing one
factor will have a chain reaction effect on the other factors. Data showing the
effects and relationships of each factor to the other factors are entered into
a computer, programmed with the model's equations. Using the computerized
model, analysts can determine the probable economic consequences of various
regulatory or business options.
EDS/SACS/ROE -- a computer network with which data on the
examination and supervision of savings institutions is transmitted
electronically between federal thrift regulators. The acronym stands for:
Examination Data System/ Supervisory Action Control System/Report Of
Examination. EDS includes data on when an examination began and ended, the
number of examiner man-hours used to complete the examination, the rating(s)
assigned to the examined savings institution and any violations uncovered
during the examination. SACS includes information on supervisory actions taken
to correct problems at the savings institution. ROE is the summary of the
examiners' findings on the condition of the savings institution.
economic depreciation -- the loss of value of real estate due to changes
occurring outside of the affected property, such as a decline in the neighborhood
or changes in zoning.
economic life -- the length of time during which a piece of
property may be put to profitable use. Usually less than its physical life.
economic rent -- the amount of rent a property likely would command
in the open market if it were vacant and available for rent. Economic rent may
be more or less than the actual rent currently in force.
economics -- the branch of the social sciences that deals with the financial
considerations of the production, distribution, and consumption of goods and
services.
Edge Act corporation -- an organization chartered by the Federal Reserve
to engage in international banking operations. The Federal Reserve Board acts
upon applications by U.S. New Jersey
education loan -- an advance of funds to a student for the purpose
of financing a college or vocational education.
effective rate -- the actual yield of interest as opposed to the
stated rate. For deposits, the effective rate of interest is based on the
accounting method used to compute interest and the frequency of compounding.
For loans, the effective rate is the stated interest rate plus fees and charges
prorated over the estimated life of the mortgage, usually ten years.
efficiency apartment -- a small, one-room apartment that serves as the
occupant's total living, sleeping and eating space, usually containing a
separate bathroom.
egress -- to go out, exit,
leave. It is used with the word "ingress" (to go in, enter) to
describe the right of access to real property.
ekistics -- the science of human settlements, including regional, city and
community planning and dwelling design.
electronic funds transfer systems (EFTS) -- any system that moves funds from one institution
to another, by means of electronic signals transmitted by wire, rather than the
physical exchange of some other medium such as paper checks.
elevation drawing -- a drawing of the geometrical exterior of a building
or other structure as seen from a horizontal view without dimensional
perspective.
eminent domain -- the right of a government to take over ownership
of private property for public use with just compensation to the owner.
employee stock option plan (ESOP) -- an employee benefit in which employees, as part of
their compensation, are given equity shares (stock) in their company. The
purchase of such stock is normally funded by a loan. The stock is transferred
initially to a trust and the loan is paid off from dividends on the stock and
contributions from the employing company.
encroachment --
the act of intruding gradually and without permission upon the rights, land or
other possessions of another. Encroachment is often used to describe the spread
of one type of neighborhood into an adjoining but different type of
neighborhood. A change made to one property may encroach upon the rights or
value of a second property.
encumber -- to burden a parcel of land with a lien or a charge such as a
mortgage.
encumbrance -- a
claim attached to real property, such as a lien, mortgage or unpaid taxes.
end loan -- the final mortgage loan to the ultimate purchaser of a property, as
opposed to a construction loan or other form of interim financing.
endorse -- (1) the act of signing a person's name to a check or other
financial instrument, usually on the back, to indicate the legal transfer of
ownership of the instrument, especially in return for money or credit indicated
on the face of the instrument. (2) to sign a note as a third party guaranteeing
payment in the even of default by the principal borrower. (3) to sign a
contract indicating approval of its contents or terms. (4) to acknowledge with
a signature the receipt of payment. (5) to give support or sanction to
something.
endorsee -- the person or
entity to whom a negotiable instrument is transferred by the act of
endorsement.
endorsement -- a signature either stamped or written by hand on
the back of a negotiable instrument by which the signer transfers ownership of
the instrument to another party.
endorser -- the person or entity who, by signing a negotiable instrument,
transfers his or her ownership of the instrument to another.
equitable mortgage -- an instrument that because of a technical error in
its terms is not actually a mortgage, but that encumbers property as security
for the repayment of a debt. If the intent of the parties was to create a
mortgage, the instrument is enforceable under the law.
equitable right of redemption -- a right under state law of a defaulted borrower to
redeem his or her property up to the date of the mortgage foreclosure sale by
paying in full the outstanding mortgage debt.
equity -- in real estate,
equity is the difference between the fair market value of a property and the
amount of any mortgage debt, or liens against the property, still outstanding.
In business, the excess of a firm's assets over its liabilities. The term is
also used to refer to the ownership interest of stockholders in a company, and
to the value of the investments raised by the stock offerings.
equity capital -- money invested in a business by owners,
stockholders or others who share in profits; distinguished from debt capital.
equity investment -- investment in the ownership of property, in which
the investor shares in gains or losses on the property. Also see debt
investment.
equity loan -- a loan that uses the borrower's equity in real
property as collateral. The loan may be for a variety of purposes. Also known
as a second or junior mortgage loan.
equity multiplier -- total assets divided by total tangible equity.
errors and omissions insurance -- an insurance policy against liability due to
errors or omissions in the performance of professional services.
escalator clause -- a provision of an agreement that provides for
automatic adjustments in payments based on an economic index that neither party
to the agreement controls. Typical escalator clauses provide for increases in
wages based on increases in the cost of living index, or higher rent or other
charges based on high fuel or maintenance costs.
escheat -- the reversion of ownership of property to the state when a person
dies without leaving a will and has no heirs, or when the property is abandoned
for a period of time.
escrow -- a written
agreement under which documents, funds or other property being transferred from
one party to another are placed with a third person or entity, usually a trust
company, acting as custodian. The custodian completes the transfer to the
second party only upon the fulfillment of certain specified conditions.
escrow account -- an account established at a thrift institution
into which a borrower makes monthly payments, usually a part of the monthly
mortgage payment. The savings association draws funds from the escrow account
to pay property taxes, insurance and any special assessments on the mortgaged
property as they become due. Also called a reserve, impound, or trust account.
escrow agent -- the person or organization having a fiduciary
responsibility to both the buyer and seller (or lender and borrower) and who
performs the duties to complete the transaction and ensure that the terms of
the purchase/sale (or loan) are carried out.
escrow closing -- a type of loan closing in which an escrow agent
accepts the loan funds and mortgage from the lender, the down payment from the
buyer and the deed from the seller, and completes the actions required by the
transaction.
escrow company -- an organization that performs the functions of an
escrow agent.
estate -- (1) all ownership rights, title or other interest held in real or
personal property. (2) all assets owned by an individual.
estate tax -- a federal or state tax imposed on the fair market
value of all assets, less liabilities, held by a person at the time of death.
See inheritance tax.
estoppel -- a legal term
referring to a condition or justification that bars a person from alleging
something he has previously denied, or from denying something he has previously
alleged.
estoppel certificate -- a written statement setting forth facts about a
piece of real estate such as the unpaid principal balance of a mortgage and the
interest rate. Its purpose is to stop a future claim that the amount owed is
different from the actual unpaid balance, or that the interest rate is other
than the contracted rate.
ET tuxor -- a legal term meaning "and wife." Sometimes abbreviated as
"et ux ."
Eurobond -- a bond issued for
release by a U.S. or other
non-European company or government for sale in Western
Europe . In that market, corporations and governments normally
issue medium-term securities with maturities of 10 to 15 years.
Eurodollars --
deposits denominated in U.S. dollars at banks and other financial institutions
outside the United States Western Europe , similar
deposits in other parts of the world are also called Eurodollars.
eviction -- the lawful expulsion of an occupant from real property, if
necessary, by force.
Exam Council -- see Federal Financial Institutions Examination
Council.
examination -- a
detailed review of the policies, management, operations and books of a thrift
institution, bank or credit union made by the institution's federal or state
regulatory agency.
examination data system (EDS) -- a computer system maintained by the Office of
Thrift Supervision to record data from examinations of thrift institutions and
make the information accessible to authorized OTS staff. The EDS data includes
the report of examination (ROE).
examiner -- an individual employed by a federal or state regulatory agency to
conduct detailed reviews of the operation of savings institutions or banks in
order to determine if the institutions are meeting the requirements of federal
law and regulation.
exception -- an item that may
not be covered by title insurance because it limits in some way the owner's
right to his or her property. Exceptions may include easements, liens, and deed
restrictions.
excess loan servicing -- an asset established when loans are sold to yield
a rate to the buyer that is higher or lower than the original contractual rate
and the loan seller retains the servicing of the loans. The present value of
the difference between the amount to be collected from the borrower and the
amount to be paid to the purchaser of the loans (the point spread
differential), less normal servicing costs, is the excess servicing amount
recorded as the seller's asset at the time of sale. The excess servicing amount
increases the gain or decreases the loss on the sale of the loan.
exchange -- a central facility
where various financial instruments are traded. The exchange is an organized,
well capitalized body owned by the holders of seats. The exchange establishes
the rules under which the financial instruments are traded and terms are established
by the bidding process of buyers and sellers on the floor of the exchange.
exclusive listing -- a written contract giving one agent the exclusive
right to find buyers or renters for a property during a stated period of time.
Ordinarily, such an agreement by itself does not preclude the owner from
selling or renting the property himself, thus avoiding payment of a commission
to the agent.
exclusive right to sell -- same as exclusive listing, except that the owner
agrees in writing to pay the full commission to the agent even if the owner
himself sells or rents the property.
exculpatory clause -- that part of a written agreement that relieves one
party to the agreement of liability as a result of actions (or lack of actions)
performed in the course of executing the terms of the contract. In a trust
agreement, an exculpatory clause relieves the trustee of liability resulting
from any act performed in good faith under the trust agreement. In a lease, the
exculpatory clause relieves the landlord of liability for personal injury to
tenants or damage to tenants' property.
executor -- a person or
institution named in a will and approved by a probate court to administer the
disposition of an estate according to the instructions of the will.
executrix -- a female executor.
exercise price -- see striking price.
expenses -- (1) the cost of
resources used to create revenue. (2) the cost of goods or services acquired in
the performance of a job. (3) anything paid out to attain a goal or accomplish
an act. All expenses are costs, but not all costs are expenses.
expire -- to come an to end, to terminate, to cease be in force, as in the
passing of the time limit for an agreement, a contract or other instrument to
be enforceable.
ex-post facto law -- Latin for "after the fact." Article 1 of
the U.S. Constitution prohibits convicting a person for committing an act that
was not illegal at the time the act was performed, but which was made illegal
by subsequent legislation.
expropriation --
the act of confiscating private property for a public use by a legally
constituted governing body. For example, property taken under eminent domain is
expropriated.
extended coverage endorsement -- a provision attached to fire insurance policies
that expands coverage to include the perils of windstorm, hail, explosion,
riot, civil disorder, damage by aircraft or vehicles, or smoke, or lightening.
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