Definition of Terms

In our continuing effort to educate you about the terms you will soon be hearing about, we have included a small “glossary” of terms regarding REO and foreclosure. Understanding may mean the difference in losing your property or obtaining your equity.

  1. B.P.O. (Broker Price Opinion). Estimate of value by real estate professional working in the subject property area having no personal interest in the property. You may be paid for this
  2. Foreclosure. A proceeding in or out of court, to extinguish all rights, title, and interest of the owner(s) of property in order to sell the property to satisfy a lien against it.
  3. Foreclosure Sale. A sale of property used as security for a debt, to satisfy said debt.
  4. Loan Workout Group. Term used by some lenders to describe the department-handling borrowers who are late in payments (pre-foreclosure).
  5. R.E.O. (Real Estate Owned). The real estate owned by a lending institution. Handled by its R.E.O. Department.
  6. Over-Encumbered. The total of all the loans secured by the property exceed the value of the property.
  7. Discounted Note. Face value of the note is reduced to a new, lower amount a lender will accept as payment in full.
  8. N.O.D. (Notice of Default). A notice filed to show that the borrower under a mortgage of deed of trust is in default (behind on the payments).
  9. H.U.D. (Department of Housing and Urban Development). The federal department responsible for the major housing programs in the U.S., such as F.H.A.
  10. F.H.A. (Federal Housing Administration). A federal agency, which insures first mortgages, enabling lenders to lend a very high percentage of the sales price.
  11. F.H.L.M.C. (FREDDIE MAC) Federal Home Loan Mortgage Corporation. A federal agency purchasing first mortgages, both conventional and federally insured, from members of the Federal Reserve System and the Federal Home Loan Bank System.
  12. F.N.M.A. (FANNIE MAE). A private corporation dealing in the purchase of first mortgages at discounts.
  13. G.N.M.A (GINNIE MAE) Government National Mortgage Association. A federal association, working with F.H.A., which offers special assistance in obtaining mortgages, and purchases mortgages in a secondary capacity.