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| Appraisal |
A report of value by a licensed third party appraiser retained by the Lender to determine the value of the property.
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| ARV |
The "After Repaired Value" of the Property. What the Property would be worth after repairs are completed. |
| As-Is Value |
The current value of the Property as it sits there today in its present condition. |
| BPO |
The “Broker Price Opinion” is an opinion of value reported by a real estate agent retained by the Lender to determine the value of the property. For Short Sale purposes it is often used interchangeably with “Appraisal”. |
| Buying Folder |
The collection of paperwork needed to meet a Seller and obtain the signatures necessary to begin work on your Deal. |
| Deal |
The real estate transaction once the Short Sale Approval Letter is received. Prior to receipt of the Approval Letter, we refer to a “Candidate”. Once we get the Approval, we call it a Deal. |
| Deed |
The instrument of conveying title from one entity to another. |
| Deficiency |
The difference between what the debt on the property and the funds received by Lender at foreclosure sale or received in exchange for a release of lien. |
| Discount |
The difference between the original obligation on the loan and Short Sale reduced payoff amount. |
| Exit Strategy |
An Investor’s plan to payoff the Short Sale, purchase the property, and profit from its sale. We identify 3 Exit Strategies: Exit Strategy 1: Purchase the Property Yourself and Payoff Short Sale with Cash or Loan, Exit Strategy 2: Reinstate the 1st and payoff 2nd with Cash; or Exit Strategy 3: Simultaneous Closings. |
| Extension |
A Short Selling Lender granting more time than originally set forth in an Approval Letter within which Buyer must close and pay off the Short Sale. |
| Forbearance |
A written repayment agreement between the Lender and a Borrower, which contains a plan to reinstate a loan that is in default. |
| Foreclosure |
The cutting off or termination of a borrower’s right to a property secured by a lien. For our purposes, Foreclosure is the moment in time that usually takes place on the courthouse steps whereby the Lender or sheriff sells the property at public auction. |
| Go / No Go Number |
Our Key Holder’s resistance price point below which you will move forward with a Deal and above which you will pass on the Prospect. |
| Hardship |
An event beyond the control of a Borrower that leads to a default on mortgage payments. Common Hardships include death, illness, divorce, forced job relocation, or national or weather disasters. |
| Impasse |
The point in a negotiation where the Lender refuses to accept an amount that is greater than the Key Holder’s Go/No-Go Number. |
| Junior |
A subordinate loan or lien. |
| Key Holder |
The Short Sale Service’s customer who pays a Commitment Fee for access to the Service. Key Holder may include the customer’s Land Trust or entity in which the customer titles the property so long as the customer maintains the primary relationship with the Seller and is equitably responsible for the transaction. Key Holder status does not extend to a “business associate” or “business partner” of the Key Holder. |
| Lender |
The entity holding the security interest in the property such as a Bank or Mortgage Company, sometimes called the Mortgagee. |
| Loss Mitigation Negotiator |
Your Short Sale Service representative who will negotiate the Short Sale with the Lender on your behalf. |
| MAO |
Maximum Allowable Offer. ARV x .7 – Repairs = MAO. |
| Modification |
A written agreement between a Lender and a Borrower whereby the terms of the Note are changed to permit the Borrower to cure a default (commonly referred to as “moving the missed payments to the back of the loan and picking up with the payment”). |
| Mortgagee |
One who holds a Mortgage; usually the Lender. |
| Mortgagor |
One who mortgages the Property; usually the Borrower. |
| Puffing |
In the context of a negotiation, an asserted statement that may or may not be an exaggeration or stretching of a position that does not rise to the level of a material misrepresentation or lie. For example, saying “this is our final offer, take it or leave it” is puffing and not an unethical lie if a Negotiator later comes up on an offer. |
| Reinstatement |
Acceptance by a Lender of back payments, fees, and interest in order to cure a defaulted loan. |
| Release |
A Lender’s removal of its security interest in a property. |
| REO |
“Real Estate Owned” by a Lender. Describes properties owned by a Lender taken back at foreclosure. |
| REO Expectation |
The amount the Lender expects to net after taking the property back at foreclosure and selling it. |
| Repairs |
Work required to be completed on a property in order to sell at its After Repaired Value, often expressed as a dollar amount (“the house needs $10,000 in Repairs”). |
| Satisfaction |
The receipt of funds by a Lender as payment in full of an obligation. |
| Settlement Statement |
A spreadsheet-like accounting of all the receipts and payments that take place at a real estate closing which is signed by both Seller and Buyer to reflect the exchange of money; often referred to as a HUD-1, the form issued by the U.S. Department of Housing and Urban Development. |
| Short Sale Approval |
The written authorization of a Lender to accept our Short Sale offer which contains the exact dollar amount the Lender will accept and the terms of that acceptance, including the approved closing costs and the date within which the closing must occur. |
| Short Sale Candidate Worth Pursuing |
A Short Sale candidate worthy of spending time on. There is no guarantee that any Short Sale will work out successfully; however, a Candidate Worth Pursuing is good enough to invest our time in trying. |
| Simultaneous Closings |
The coordinated and simultaneous acquisition and sale of a property in two different transactions concerning the same piece of property usually in the same title company or closing attorney’s office.
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Glossary of Terms
