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.


Feedback Decoding

The reasons we request feedback from the agent who showed your home are as follows:

  1. To jog the agent’s memory about your home so that we may be able to generate a second showing because we are able to overcome any objections
  2. To answer any questions or concerns the buyer expressed so the house will be reconsidered
  3. To get the impression of the buyers or agents to help us to better market your house by making small changes

Don’t expect other agents to give a full or honest critique of the house. They don’t want to hurt your feelings, and if they showed fifteen houses, they honestly may not remember your home in detail. Also, if an agent doesn’t call us back, it means the buyers are not simply interested.

So, to interpret feedback, please apply the following code breakers:

What the agent says — What the agent means:

  • The buyer thought the house was too small — The buyer found larger homes for the same price
  • They liked the house but bought another one — They found other houses that were better values
  • They liked the house but bought a new home — A buyer will pay 10 to 15% or more for a new house
  • They didn’t like the carpet! — The seller should replace the carpet because of age or color
  • Buyer liked the home but is still deciding — Your home did not meet all of their needs and they are still looking
  • They didn’t like the floor plan — They didn’t like the floor plan. Some deficiencies can only be cured by lowering the price
  • Did not like the neighborhood — Felt the home was overpriced for the area
  • Undecided about the area — Looking in other areas. Price is a great equalizer!

Price objections are always clothed in different terms. The seller’s goal is to continuously maintain the home in the best condition in your price range.