GLOSSARY OF REAL ESTATE TERMS

MECHANICS’ LIEN
A non-consensual lien against a parcel of real property, created by recording a written instrument (a “statement of lien”) in the county records where the property is situate; which lien runs in favor of someone who has supplied labor or materials for the improvement of the property, and which lien is for the purpose of securing payment. A mechanics’ lien can be foreclosed through the courts. See lien.

METES AND BOUNDS
A method of describing a parcel of real property. Metes are measures of length and bounds are boundaries. A metes and bounds description begins from a known or established “point of beginning” and proceeds along courses and distances, eventually returning to the point of beginning. For example, from point A, North 100 feet, then East 90 degrees 100 feet, then South 90 degrees 100 feet, then Wet 90 degrees 100 feet to the point of beginning.

MINOR
A person under 18 years of age.

MORTGAGE
A written instrument that, when duly recorded in the appropriate county records, creates a lien against a parcel of real property, which lien secures consensual debt. A mortgage is an agreement between two parties (mortgagor and mortgagee); in contract to a deed of trust, which involves three (grantor, beneficiary and trustee). Mortgages are treated as either (1) a conveyance of legal title to the property (title theory), in which case legal title is re-conveyed to the owner when the obligation is fully satisfied; or (2) a lien against the property (lien theory), in which case the lien is released when the obligation is satisfied. The distinction is important in the event of default – in a lien theory jurisdiction the mortgagee is not entitled to possession of the property until it has pursued its remedy in foreclosure. A purchase money mortgage is given to a lender to secure a loan for all or some of the purchase price of a parcel of real property. The lien evidenced by a purchase money mortgage is, by law, superior to that of a judgment against the mortgagor; notwithstanding the fact that a transcript of judgment may have been recorded before the purchase money mortgage. Compare deed of trust. See lien.

MORTGAGE BACKED SECURITIES (MBS)
A debt obligation that represents a claim on the cash flow from mortgage loans – typically residential mortgage loans. Mortgage loans are purchased from banks, mortgage companies and other loan originators. The loans are assembled into pools (securitized) and interests in the pools are sold (e.g., as bonds). The pooling and sale may be done by a government agency (e.g., Ginnie Mae), by a government-sponsored enterprise (e.g., Fannie Mae), or by a private entity. The issuer guarantees timely payment of the principal and interest on the underlying mortgage loans and charges a fee for the guarantee.