On my annual visit to the doctor, I am reminded that if you want to leave your customers in the dark, start using acronyms! Here is a list of common real estate acronyms and terms - don't want to leave anyone in the dark!
BPO - Broker Price Opinion: Usually ordered when a borrower is behind on payments or facing foreclosure. These are drive-by opinions if the property is occupied.
HOA - Home Owner's Association: This is the neighborhood association responsible for enforcing all neighborhood rules and regulation, and responsible for collecting all HOA Fees. As a homeowner in your neighborhood, you elect these people.
CMA - Competitive Market Analysis: This is a price opinion prepared by your REALTOR to determine a competitive asking price for marketing the property. Your Realtor will use a minimum of three recent sales (within the past three - six months) of similar properties to help you determine the asking price. If properties are not selling in your area, your REALTOR will use properties that have been on the market but not sold. This tells you what price properties have already been rejected by buyers in the current market.
PVA - Property Valuation Assessor or Administrator: The entity who works for local government determining the amount of property tax to be paid on real property. This value is for tax purposes only.
LTV - Loan To Value: Usually expressed as a percent, i.e. 80% LTV represents a down payment that is equal to 20% of the purchase price (value).
PMI - Private Mortgage Insurance: Required by lenders on Fannie Mae and Freddie Mac loans with less than a 20% down payment. This insures the lender for up to 20% of the value in the event the borrower defaults. This can be collected up front and/or monthly. Typically, the lower your credit score, the higher the monthly PMI portion of your payment will be. (except on FHA loans and some other government loans)
MIP - Mortgage Insurance Premium: This is the up-front portion of PMI that is collected when a borrower has less than 20% downpayment.
FNMA - "Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, is a stockholder-owned corporation chartered by Congress in 1968 as a government-sponsored enterprise (GSE), but founded in 1938 during the Great Depression. The corporation's purpose is to purchase and securitize mortgages in order to ensure that funds are consistently available to the institutions that lend money to home buyers*.
FHLMC - "The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac (NYSE: FRE), is a government sponsored enterprise (GSE) of the United States federal government. Freddie Mac has its headquarters in the Tyson's Corner CDP in unincorporated Fairfax County, Virginia. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases.*
Short Sale: A short Sale occurs when a home is sold for less than what is owed on the property. The need for this type of sale usually occurs when the borrower has suffered a significant pay cut and can no longer afford the payment. Job loss and pay cuts often facilitate an out of town or state move as well, which will also create a need for a short sale. Click here for more details on short sales.
Earnest Money - Money given by a purchaser at the time they make an offer on a property. This money shows that the buyer is "earnest" and sincere in making their offer - not wasting the seller's time. This money is typically held in an escrow or trust account until the sale closes. Click here for more info on earnest money.
Foreclosure - Foreclosure occurs when a borrower defaults on their loan - i.e. stops paying or is no longer able to make their payments. Most Promissory Notes stipulate that foreclosure proceedings will commence when a borrower is 30 days late, however, most lenders do not initiate foreclosure until the borrower is 90+ days late. Click here for foreclosure prevention help.
Promissory Note - A written agreement between the borrower and lender where buyer is promising to pay the loan back. This promissory note is secured by a mortgage.
Mortgage - A written agreement between borrower (buyer) and lender allowing the lender to take the property that is the subject of the mortgage in the event the borrower defaults (stops making payments). This agreement is recorded at the county court house and creates a lien on the property the buyer is purchasing. So when people say "they have to pay the mortgage", they are actually paying the note, not the mortgage!
More "Reality in Realty" terms tomorrow!
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