Appraisal – is an evaluation to determine the current market price of a property.
Assessment – is a tax levied on a property, or a value placed on the worth of a property, by a taxing authority.
AS-IS – is a term used to mean the transferring property in its existing condition, with all defects apparent or not apparent.
Broker Price Opinion (BPO) – is the opinion of a licensed real estate broker concerning the value of the property. BPOs are not appraisals, although they may both reach similar conclusions.
Chain of Title – is the successive conveyance of title to improved or unimproved real property.
Clear Title – is a term that indicates the property is marketable; the property is clear of any objectionable liens or encumbrances.
Closing – is a meeting to sign documents that transfer a property from a seller to a buyer (settlement).
Closing Costs – are the charges paid at settlement for obtaining a mortgage loan and transferring a real estate title.
Closing Disclosure – is a final statement with figures calculated for closing day.
Cloud on Title – is an expression referring to any matter appearing on the public record that negatively affects the marketability of title to real property.
Comparative Market Analysis (CMA) – is an analysis done by a licensed real estate broker by comparing and analyzing the prices of recent sales and comparable properties.
Contingency – is a provision in a contract that ties it’s performance, completion, or enforceability to an event such as inspections, appraisals, financing, or condition of title.
Deed – is the document, which Is usually recorded in the public records, that is used to convey title to real property.
Deed-in-lieu of Foreclosure – is a deed given by a borrower to the lender transferring title in the secured property back to the lender. There can be unintended legal and tax consequences.
Default – is the failure to honor the terms of the contract. Most contracts, such as note and mortgage or trust deed, require that written notice of default be given before the lender may institute foreclosure actions.
Deficiency – is a shortfall in the repayment of a debt or other financial obligation.
Depreciation – is the loss in property value due to market conditions, age, excess wear and tear, or other causes.
Distressed Housing – is housing that has lost value when compared to its value when originally purchased. Sometimes characterized by a mortgage and/or other liens that together exceed the price the home can be sold for today.
Distressed Transaction – is when the seller is compelled to sell or transfer the property back to the bank or third party due to adverse factors such as inability to refinance, declining real estate market, or lack of renters or buyers. This mostly occurs when properties have lost significant value or the homeowner has indebtedness that s/he can no longer meet.
Due-on-sale – is a clause in a mortgage contract requiring the borrower to pay the entire loan balance upon sale or transfer of property.
Escrow – is the handling of funds or documents by a third party on behalf of the buyer and/or seller.
Equity – is the difference between the value of a home and what is owed on it.
Fair Market Value – is the value of a property that would be paid by a hypothetical ready, willing, and able buyer in a voluntary arm’s length transaction. The price paid for a property in a distressed sale is not necessarily fair market value.
Federal Housing Administration (FHA) – is a federal agency that insurers mortgages with lower down payment requirements.
Forbearance – is the act of giving up entitlement to exercise a legal right or remedy.
Foreclosure – is a process in which a lender exercises their rights under a mortgage, trust deed, or land sale contract to cut off (or foreclose) all legal rights of the borrower to the secured property. If there is a shortfall in the proceeds obtained at the time of sale, that amount is a deficiency and becomes a personal repayment of obligation to the lender.
Home Equity Line of Credit (HELOC) – is a line of credit loan available up to a certain limit and secured by the equity in the property.
HUD 1 Statement – is a settlement statement required to be completed and given to buyers and sellers at the time of closing. It itemizes all costs related to the closing of the transaction and also discloses the funds received and disbursed.
Insolvency – is a financial condition in which a person’s liability exceeds their assets.
Judicial Foreclosure – is the process whereby a lender uses the courts to foreclose out a borrower’s interest in the secured property. This entails the filing of a complaint for foreclosure in a court and the defendant filing an answer.
Lien – is a charge against real estate property, the nonpayment of which can result in a sale of that property. Some liens are voluntary such as mortgages and trust deeds. Tax liens and judgment liens are not voluntary.
Lis Pendens – is short for Litigation Pending, which permits the one who has filed a claim in the interest of the real estate property of another to also file in the deed records a document informing the public that the claim has been filed.
Loan Servicer – is the company to which a borrower makes their monthly payments. The servicer is responsible for handling the accounting and disbursement of payment. The server also monitors non-performing loans and forecloses and demands payment.
Loss Mitigation – refers to an attempt to mitigate damage or to try to reduce its negative impact; it is also known as the workout department.
Mediation – is a confidential dispute resolution process where a third party tries to reach a consensus or settlement.
Modification – is a term used to refer to an agreement between a lender and borrower to change one or more repayment terms of a loan.
Mortgage – is an instrument used by lenders to secure the promissory note given by the borrower for the repayment of a loan.
Mortgage Broker – is a broker who represents numerous lenders and helps consumers find affordable mortgages; the broker charges a fee only if the consumer finds a loan.
Mortgagee – is a term in a mortgage document that identifies the lender.
Mortgagor – is a term in a mortgage document that identifies the borrower.
Mortgage Insurance – is an insurance policy the borrower buys to protect the lender from non-payment of the loan.
Negative Equity – refers to the difference between the current balance of the unpaid mortgage on a property and its current fair market value.
Promissory Note – is the legal instrument that sets the amount of a debt due on a loan, including the repayment terms such as interest rate, monthly payments, and due dates.
Real Estate Owned (REO) – is a term referring to bank-owned real estate that has been recovered from a borrower in default of note and mortgage.
Short Sale – is the sale of a property where the sale proceeds are insufficient to pay off all liens, encumbrances, commissions, and other charges that must be paid at the time of sale. Creditors must release their liens for a price that is less than the face amount due. Short sales can result in potential tax (debt forgiveness) and deficiency (promissory note) liability.
Strategic Default – is a term used to describe a situation where a homeowner who defaults on their loan but could afford to pay the loan.
Title – is one’s right of ownership to a real estate property; a deed is the physical document showing evidence of title to a property.
Title Insurance – is an insurance policy which insures against errors in the title search, essentially guaranteeing the buyers and lenders financial interest in the property.
Trust Deed – is the name of the instrument used by lenders to secure the promissory note; the same thing as a mortgage.
Walk-through – is a final inspection of a home before settlement to search for problems that need to be corrected before closing.
Warranty Deed – is a deed that contains the maximum title protection to a buyer.