Glossary – E

A B C D E F G H I J K L M N O P Q R S T U V W XYZ

E

Earnest Money
Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

Economic Life (Useful Life)
The period of time during which an asset will have economic value and be usable.

Effect Of Economic Indicators On Fixed Income Investments
Market participants look to U.S. Government economic releases as an indication of the economy’s strength and general direction. Overall, economic indicators reflect the rate of economic growth and inflation which, in turn, affects interest rates. There is an inverse relationship between interest rates and bond prices. If the economic indicators indicate that the rate of inflation is on the rise, it will most likely result in higher interest rates and lower bond prices. Conversely, if these indicators indicate the rate of inflation is falling this will result in lower interest rates and higher bond prices.

Effective Lease Rate
The effective rate (to the lessee) of cash flows resulting from of lease transaction. To compare this rate with a loan interest rate, a company must include in the cash flows any effect the transactions have on federal tax liabilities.

Entitlement
The VA home loan benefit is called an entitlement (i.e. entitlement for a VA guaranteed home loan). This is also known as eligibility.

Equity
The difference between the fair market value and current indebtedness, also referred to as the owner’s interest. The value an owner has in real estate over and above the obligation against the property.

Equity Capital
Capital raised from owners. In a commercial real estate case, a lender will also provide equity capital for a percentage of ownership.

Equal Credit Opportunity Act (ECOA)
Is 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, marital status or receipt of income from public assistance programs.

Equity Participant
The owner participant, trustor owner, or grantor owner.

Equipment Schedule
A document that describes in detail the equipment being leased. It may also state the lease term, commencement date, repayment schedule and location of the equipment.

Escrow
An account held by the lender into which the buyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing.

Escrow Disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

Escrow Payment
The part of a mortgagor’s monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.

Extraordinary items
Unusual or nonrecurring event that must be explained to shareholders or investors, such as a manufacturer’s sale of a building.