MAI (Member, Appraisal Institute) Appraisal - A demonstrative narrative report of a specific market's economic condition and an assessment of property value performed by a member of the American Institute of Real Estate Appraisers. The property's value is derived using three (3) separate methods of valuation including replacement cost approach, sales comparison approach and income approach.
Management Fee - The amount charged by an independent company for the day-to-day management of a property. Typically based upon a percentage of the property's income.
Market Approach - A method of appraising property by analyzing sales prices of similar properties (comparables) recently sold.
Market and Feasibility Study - A detailed analysis of activities in a market in regard to such influences as location, demand and competition which may or may not affect the value of property. Includes an analysis of a real estate project to determine the most profitable use and the likelihood of the proposed use being a financial success. The study is often used by the promoter or developer to inure would-be investors to participate in the venture and to assist lenders in making their decision whether or not to loan the necessary funds.
Market Rent - The rental income that a property is likely to command in the under current market conditions. Market rent, also referred to as economic rent, may be either higher or lower than what the property is actually renting for under the terms of a lease.
Mechanics Lien - A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.
Metes and Bounds - The boundary lines of land described by listing the compass directions and distances of the boundaries. Originally, metes referred to distance and bounds referred to direction.
Mezzanine Financing - Mezzanine financing is somewhere between equity and debt. It is that piece of the capital structure that has senior debt above it and equity below it. There is both equity and debt mezzanine financing, and it can be done at the asset or company level, or it could be unrated tranches of CMBS. Returns are generally in the mid- to high-teens.
Mixed-Use Commercial Project - A real estate development that contains two or more different uses all intended to be harmonious and complementary. An example would include a high-rise building with retail shops on the first two floors, office space on floors three through ten, apartments on the next ten floors, and a restaurant on the top floor.
Month-To-Month - A lease for a specific period of time, usually one month, which automatically renews itself for the same period of time, unless landlord or tenant provide notice to terminate.
Mortgage - (1) To hypothecate as security, real property for the payment of a debt. The borrower (mortgagor) retains possession and use of the property. (2) The instrument by which real estate is hypothecated as security for the repayment of a loan.
Mortgage-Backed Securities - Securities purchased by investors that are secured by mortgages. Such securities are also known as pass-through securities since the debt service paid by the borrower is passed through to the purchaser of the security.
Mortgage Banker - Originates and services mortgage loans, funding them with their own money.
Mortgage Bankers Association of America (MBA) - The Mortgage Bankers Association of America is the primary trade organization of the mortgage bankers and brokers in the United States. The association provides numerous seminars and publications for its membership and sponsors the designation CMB (Certified Mortgage Banker). The headquarters is 1125 15th Street, N.W., Washington, D.C. 20005; (202) 861-6500.
Mortgage Broker - A person who brings together borrower and a lender and in return is paid a finder's fee. This finder's fee is usually equal to one percent or so of the amount borrowed is normally paid by the borrower. Certain sources of funds, particularly insurance companies, do not always deal directly with the person looking for capital; rather, they work through a mortgage broker. Normally, the mortgage broker is not involved in servicing the loan once it is made and the transaction is closed.
Mortgage Constant - The ratio of an amortizing mortgage payment to the outstanding mortgage balance.
Mortgage Correspondent - A person authorized to represent a financial institution in a particular geographic area for the purpose of placing loans.
Mortgage Note - Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage.
Mortgage Securities Pool - A method by which securities backed by the value of specific real estate mortgages are issued in the financial market for investment purposes. Such securities, because they are mortgage-backed, are more marketable and generally are issued with a lower rate of interest than if no such backing existed.
Mortgagor - The borrower in a mortgage loan transaction.