Glossary of foreclosure terms: E

easement: Permission a property owner gives to allow another party to use the property in a specific, limited way. An easement is a recorded encumbrance that shows up in a title search, and is considered part of the property. By contrast, permission given by simple contract is known as a license.

effective APR: The annual percentage rate of a loan when all fees and other costs are taken into account.

encumbrance: Anything that limits ownership rights in a property, such as mortgages, judgments, and easements, but excluding such common limitations as laws and taxes. Encumbrances can be either monetary or nonmonetary, and either voluntary or involuntary.

equity: The amount of money a seller would receive from the sale of property, after all monetary encumbrances are paid off, and deducting all costs of sale. Also known as net equity. See also gross equity.

equity partner: Party who invests in a property without right of occupancy, and who expects repayment of principal plus a percentage of appreciation when the property is sold.

equity stripping: Technique of borrowing money against equity in a property. Used by scammers to convert a property owner's past payments (and market appreciation) into current cash.