NEGATIVE AMORTIZATION:
When the periodic payments on a loan are not sufficient to pay the interest which has accumulated during the previous period resulting in an increase rather than a decrease in the amount owing on the mortgage.

NEGATIVE AMORTIZATION CAP:
A limit, expressed as a percentage of the principal, of the negative amortization allowed under a variable or adjustable rate mortgage.

NO BID:
Where the VA chooses not to acquire a property in foreclosure upon default but instead to pay out on the amount it has guaranteed of the mortgage (generally 60% of the principal).

NO CASH-OUT REFINANCE:
The replacement of a matured loan with a new loan where no additional principal is borrowed and added to the loan.

NO CHANGE SCENARIO:
A method of calculating the future payments required under a variable or adjustable rate mortgage on the assumption that the index (and therefore the interest chargeable on the mortgage) will not change.

NOMINAL LOAN RATE:
The interest rate stated on the loan agreement.

NON-ASSUMPTION CLAUSE:
A term of a mortgage contract that forbids the transfer of the mortgage to a new owner without prior consent of the lender.

NON-CONFORMING LOAN/MORTGAGE:
A mortgage or loan that is not eligible for Fannie Mae (FNMA) or Freddie Mac (FHLMC) programs.

NONDISTURBANCE CLAUSE:
A term of a mortgage which guarantees that leases regarding the subject property will be allowed to continue uninterrupted in the event of mortgage default.

NOTE:
A written instrument of indebtedness, promising to pay a certain person a particular sum of money upon stated terms.

NOTE RATE:
The interest rate as set out in the mortgage/loan contract.

NOTICE OF DEFAULT:
The written notice sent by a lender to a borrower stating that the borrower has not met his obligations under the loan contract and the lender may take legal action to enforce the agreement.

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This glossary is a compilation of terms commonly used in the real estate, mortgage and construction industries. This publication has been created to provide general overview information with regard to these industries, and while generic, this information may not be applicable to all juristictions. It is provided with the understanding that the publisher is not engaged in the rendering of legal, mortgage or any other professional advice or services. If legal advice or other expert assistance is required or needed, the services of the appropriate professional should be sought and you should not rely on the information found herein.