REO Glossary of Terms
A
Absolute Auction - An auction with no minimum bid amount. The highest bidder gets the property no matter how low the bid.
Abstract of Title - A summary of the conveyances and other facts relied on as evidence of title.
Accrued Interest - Interest accumulated on the mortgage since the last payment.
Action - The 'notice of' is the published legal beginning of the demand for payment in a foreclosure proceeding.
Appraisal - An opinion of value.
Assessed Value - Value placed on property by the County for the purpose of computing real property taxes. In Florida the assessed value is usually 15-20% below market value but will vary by area.
B
BPO - Broker's Price Opinion also called a Comparative Market Analysis. A method of appraisal in which selling prices of similar properties are used as the basis for arriving at the value estimate. Institutional sellers usually rely on a BPO prepared by a real estate agent and a professional appraisal to determine a listing price.
C
Certificate of Sale - A certificate issued to a buyer at a judicial sale (e.g. foreclosure)
Certificate of Title - In Florida this certificate is issued to a buyer 10 days after the foreclosure sale.
Certified Funds - Same as cash. Buyers monies must be brought to the closing in this form.
Closing - The final accounting of the real estate sale. The closing Statement outlines the costs on both the buyers and the sellers side of the transaction.
Contingent - Dependent upon conditions or events. There are conditions the institutional seller will consider in an offer to purchase such as the ability of the buyer to obtain a mortgage or perform inspections. The sale of another property to raise sufficient funds is an example of a contingent usually not considered.
Contract - A promise. Only when an offer to purchase has been fully executed (signed and initialled) by buyer and seller does it become a contract.
D
Default Judgment - against someone because they failed to show up in court.
Deficiency Judgment - Decision requiring a borrower to pay the lender the difference between the mortgage balance and the amount realized at the foreclosure sale.
E
Earnest Money - An amount of money given with the offer to purchase as a "good faith" gesture of the buyer's serious intent. Although not required by law in Florida, most institutional sellers require a minimum $500-$1000 deposit in a trust account with an offer
Escrow - The deposit of funds with a bonded neutral third party with instructions to carry out the provisions of a contract. Earnest money deposits are usually held in the trust accounts of either a real estate Broker, title company or attorney.
F
Fee Simple - Complete legal ownership of a property.
Federal Housing Administration (FHA) - The federal government agency which administers FHA insured loans.
Federal Tax Lien - An obligation to the federal government as a result of non-payment of taxes.
F.N.M.A. - Abbreviation for the Federal National Mortgage Association affectionately known as "Fannie Mae", an agency which buys blocks of loans from banks. Due to its size, Fannie Mae Foreclosures make up a significant percentage of our Florida inventory.
F.H.L.M.C. - Abbreviation for the Federal Home Loan Mortgage Corporation affectionately known as "Freddie Mac", an agency performing a similar function to Fannie Mae and now much larger. Special financing is offered on Freddie Mac Foreclosures.
Foreclosure - Forced sale of property ordered by a lender due to delinquency in mortgage payments. A foreclosure sale terminates all rights of the mortgagor.
G
G.N.M.A. - Government National Mortgage Association affectionately known as Ginnie Mae is an agency in the secondary mortgage market dealing primarily in recycling VA and FHA mortgages. Grantee. The buyer.
Grantor - The seller.
H
HUD - Abbreviation for the Department of Housing and Urban Development, an agency which oversees FHA. FHA foreclosures are called HUD Homes.
I
Institutional Lender - Financial institutions whose loans are regulated by law such as banks, credit unions and commercial loan agencies.
Involuntary Lien - A lien imposed against property without the owner's consent such as taxes, special assessments, federal income taxes, etc.
J
Junior Lien - A lien that does not have first priority making the property security for payment of a debt.
L
Lien - An encumbrance using the property as security for the payment of a debt or obligation of the property owner.
Lis Pendens - Lawsuit pending. This usually recorded in Florida to give constructive notice of pending litigation.
Loan to Facilitate - Some institutional sellers offer financing to make their properties more attractive in the market.
M
Market Value - The price a property will bring in the open market under normal conditions.
Mechanic's Lien - A lien placed on property by laborers or material suppliers who have contributed to an improvement.
Mortgage - A legal conveyance of property to a creditor for security (from the Latin meaning death pledge).Mortgagee - The lender.
Mortgagor - The borrower.
MLS - Multiple listing service run by local Realtor associations.
N
Notice of Default - A notice filed to show that the borrower under a mortgage is in default (behind on the payments).
O
Option - The right to buy or lease with specified terms for a specified period of time.
OREO - Other Real Estate Owned by institutions. Sometimes used to refer to foreclosure properties but can refer to branch offices, etc. owned by the bank
P
Points - A charge made by the lender for loaning money. One point equals one percent of the loan.
Portfolio Loan - Loan originated and held 'in house' as part of a lender's investments.
PMI - Private mortgage insurance required as part of the monthly payment in loans less than 80% loan to value (less than 20% downpayment).
Pre-foreclosure - Period between when a borrower becomes delinquent and the property is foreclosed upon.
Principal - A person acting for him/herself in a transaction. Also the amount of a loan exclusive of interest.
Q
Qualifying - Process of demonstrating a person is credit worthy and has enough money to buy a property. Institutional sellers may require "proof" in the form of a letter from a lender or some verification of the source of funds if the sale is cash.
Quick Sale Value - Price estimated to sell in less than normal market time and therefore below market value.
Quiet Title - Legal process to eliminate title problems.
Quitclaim - A form of deed in which the grantor is giving the grantee rights to a property but makes no warranties about rights others may have.
R
Realtor - A broker or sales agent who is a member of a local real estate board affiliated with the National Association of Realtors. R.E.O. - An abbreviation for Real Estate Owned most commonly used to describe properties acquired in foreclosure and owned by institutions.
Right of Redemption - Right to buy a property back for a limited period of time(usually 10 days) after a foreclosure sale.
S
Secondary Mortgage Market - Fannie Mae, Freddie Mac, Ginnie Mae were originally chartered by the federal government to stimulate the economy by either buying or recycling packages of loans from financial institutions.
Sheriff's Deed - Deed given by court order to satisfy a judgement.
Short Sale - In some instances in Florida a lender may agree to adjust the amount owed in order to get the property sold.
Special Asset - Term also used to describe properties acquired in foreclosure and owned by an institution.
Special Warranty Deed - See warranty deed. "Special" indicates there are limitations.
T
Title - Evidence that an owner is in lawful possession; instrument evidencing ownership.
Title Insurance - Policy written by a title company to protect a property owner against loss if the title is imperfect.
Title Search - Process to determine validity of the title to real estate.
W
Warranty Deed - Assures the title conveyed is good and possession will be undisturbed.
Workout - A special process in which some lenders and property owners may seek a solution to impending foreclosure by a payment plan or refinance.
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