Text Box: MoniCore International A d v a n c e F u n d i n g R e s o u r c e s Glossary     

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Text Box: Glossary Cash flow specialist: A cash flow professional who brokers cash flow transactions or buys cash flow instruments. Cash flow transaction: Occurs whenever a funding source pays cash to an individual or business in exchange for an income stream. Chattel mortgage: A mortgage on personal property, given to secure a debt. Typically used in the sale of a business. Also called a security agreement. Collateral: Something of value (land, a home, a car, etc.) that is pledged as security to ensure the payment of a debt. Collateral is promised to a lender until a loan is repaid. If the borrower defaults, the lender has the right, by law, to seize the collateral. Collateral-based income streams: Cash flow instruments that are secured by collateral. Collectibility: Refers to the funding source's ability to collect future income stream payments once they are purchased. Commission: Fee paid to a broker for executing or referring a cash flow transaction. Consumer-based income streams: Cash flows in which the party that owes payments is a consumer, a private individual. Contingency-based income streams: Cash flows in which the recipient is not necessarily legally entitled to receive payments, or in which the amount of the payment is uncertain or contingent upon outside factors. Conversion: The process of converting a qualified prospect into an active client. Corporation: A legal entity, chartered by a U.S. state or the federal government, and separate and distinct from the persons who own it. It is regarded by the courts as an artificial person; it may own property, incur debts, sue or be sued. Creditor: One who is owed payments on a debt by a debtor.. Escrow: The system by which money documents, personal property, or real property is held in trust for another party by a disinterested third party until the terms and conditions of the escrow instructions are completed or terminated. Face value: The current principal balance on an income stream. Factor: A funding source that specializes in funding accounts receivable Factoring: The purchase of a business' accounts receivable at a discount. Fictitious name: A legal statement filed when a person uses a name other than his or her own to operate a business. Foreclosure: A legal proceeding in court to seize property given as security for a debt that is in default. Funding source: An individual investor or an investment company that buys income streams. Government-based income streams: Cash flows paid by a government entity, either directly or through an insurance company. Hypothecation: Borrowing funds from a lender, investing those funds in a debt instrument, and giving the lender a security interest in the debt instrument as the collateral for the loan. Income stream: A future payment or series of payments, or a debt that one party owes to another party. Also known as a debt instrument or cash flow instrument. Institutional lenders: Savings and loan associations, local and regional banks, mortgage companies, finance companies, and commercial lenders. Debt instrument: Future payment or series of payments, or a debt that one party owes to another party. Also known as income streams or cash flow instruments. Debtor: One who owes something and makes payments to a creditor. Default: The omission or failure to perform or fulfill a legal duty, obligation, or promise (i.e. to pay a debt). Due diligence: Exhaustive research on a transaction, income stream, client, and/or payor. Due diligence may involve credit checks, appraisals, UCC searches, lien searches, or on-site visits with clients. Equity: The value or interest an owner has in property over and above any indebtedness owed on the property Payee: Person or business that has the right to receive a payment or series of payments and is interested in selling that income stream for cash. (Also called the seller or client.) Payor: The person, company, or government responsible for making payments on an income stream. Partial: Any part of a payment stream that is less than the full amount due. Personal guaranty: A contractual agreement between a funding source and a seller, whereby the seller assumes personal responsibility and liability for the obligations of the income stream. Portfolio: A group or package of income streams of the same type Privately held: Owed to a private individual or business rather than to a bank or other financial institution. Profit and loss statement: A financial statement that shows a historical record of a business' income and expenses. Promissory note: A written promise to pay a specified amount to a specified party over a certain period of time. Real property: Real estate. Replevin: A legal proceeding in court to seize property (other than real estate) given as security for a debt that is in default. Next>> Reserve: An amount a funding source holds in its account to cover potential payment defaults. After a certain time period has passed, the funding source rebates the reserve to the client less any fees or charges for delinquency. Also called a bad debt reserve. Satisfaction: The discharge of an obligation by paying a party what is due (i.e., the satisfaction of an IRS lien or the satisfaction of a mortgage). Seasoning: The length of time payments have been made on a note or other debt instrument. Secondary market: The marketplace where individuals and businesses can sell privately held income streams to funding sources for cash. Securitization: The bundling and resale of debt instruments to investors; permitted only for parties licensed and regulated by the SEC. Security interest: An interest in property, other than real estate, which is given as security for a debt or other obligation. A security interest is created by execution of a security agreement and one or more financing statements under the Uniform Commercial Code. Seller: The person or company that is holding a debt instrument and wants to sell it. Servicing: The collection of payments of interest and principal, and trust fund items such as fire insurance, taxes, etc., on a note by the borrower in accordance with the terms of the note. Servicing by the lender also consists of operational procedures covering accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquent loan follow-up and loan analysis. Sole proprietorship: A business owned and operated by an individual. Subordination: The act of a creditor acknowledging in writing that a debt due him or her by a debtor shall be inferior to the debt due another creditor by the same debtor. Tail: The payment stream and/or balloon payment of an income stream subsequent to another party's right and interest in the income stream. Usually the back half of the payment stream when another party has purchased the front half. Tangible personal property: Personal property other than real estate, such as cars, boats, or other assets. Time value of money: Concept that addresses the way the value of money changes over a period of time. Title commitment: A commitment on the part of the insurer, once a title search has been conducted, to provide the proposed insured with a title insurance policy upon closing. Title insurance: Title insurance can benefit either the payor or the payee. Should the beneficiary suffer any damages due to clouded or false title to real estate, title insurance recompenses the damaged party to the extent of the damages. Title policy: An insurance policy that insures a party against loss due to a defective title. Trial balance printout: A spreadsheet that lists all loans in a portfolio and their payment schedule. Usually required for a portfolio transaction. Uniform Commercial Code (UCC): Standardized set of guidelines protected by law that set down how business transactions must be conducted. Unseasoned: A lease or note that has had few, if any, payments made. Click to Apply Text Box:      

 

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