Uncategorized March 9, 2023

Common Real Estate Acronyms

Here is a list of some common Real Estate acronyms.

ARC – Accelerated Remittance Cycle – speeds up the loan payment cycle

APR – Annual Percentage Rate – the annual interest rate that borrowers pay on loans

ARM – Adjustable Rate Mortgage – interest rates that fluctuate to reflect credit market activity

AVM – Automated Valuation Model – property valuation done by data, AI & algorithms

BPO – Broker Price Opinion – broker’s opinion on home sales value is often used in foreclosures, short sales, etc.

CAP or “CAP Rate” – net operating income (NOI) divided by Purchase Price

CC&R – Covenants, Conditions & Restrictions – HOA rules; must be signed by buyers

CD – Closing Disclosures – a form that provides final details about the mortgage loan you have selected.

CDO – Collateralized Debt Obligation – asset (mortgage/loan) that services collateral for debt on pooled assets

CFPB – Consumer Financial Protection Bureau – regulations for financial institutions, lenders, etc.; established in 2011

CMA – Comparable Market Analysis – often called comps when comparing/ determining the market value

DSCR – Debt Service Coverage Ratio – a metric that measures the borrower’s ability to service or repay the annual debt service compared to the amount of net operating income (NOI) the property generates

DTI – Debt-to-Income – assesses debt-to-income to assess borrower’s ability to pay

FDIC – Federal Deposit Insurance Corp. – supervises the financial industry

FEMA – Federal Emergency Management Agency – federal responses to natural disasters/emergencies; manages National Flood Insurance Program

FHA – Federal Housing Administration – mortgage loan underwriting & home construction standards for higher risk borrowers; 3.5% down payment and more affordable interest rates on loans

FHFA – Federal Housing Finance Agency – oversees Federal Home Loan Bank System and GSEs (government-sponsored enterprises such as Fannie Mae and Freddie Mac

FIRREA – Federal Institutions Reform, Recovery & Enforcement Act – oversees and regulates banks & savings institutions as a result of the Savings & Loan Crisis

FRM – Fixed Rate Mortgage – constant (1st & last day) mortgage rate

FSBO – For Sale By Owner

GLA – Gross Leasable Area – the amount of square footage available for rent

GSE – Government Sponsored Enterprise – Fannie Mae & Freddie Mac

HELOC – Home Equity Line of Credit – loans based upon the amount of equity in the home; term of loan 5-10 years; full repayment required

HOA – Home Owners’ Association – dictates standards of residential community

HPI – Home Price Index – price changes over time in specific geographic areas

HUD – US Department of Housing and Urban Development – establishes policies/programs and enforces fair housing laws & improvement initiatives

LLPA – Loan Level Price Adjustment – leveraged when loan-to-value rate changes if/when the loan becomes riskier

LTV – Loan To Value – the value of the asset against the amount of the loan – if more than 80%; borrower needs to pay mortgage insurance on the loan

MBS – Mortgage Backed Security – 1 type of asset-backed security or a home mortgage that is packaged & then sold

MERS – Mortgage Electronic Registration System – mortgage regulation system

MIP – Mortgage Insurance Premium – Mortgage insurance for an FHA loan.

MISMO – Mortgage Industry Standards Maintenance Organization – a subsidiary of Mortgage Bankers Association – develops tech standards to reduce costs & increase transparency

MLS – Multiple Listing Services – local repositories of real estate listings & data around the country

MSA – Metropolitan Statistical Area – groups of cities within geographic boundaries

NCUA – National Credit Union Association – regulates credit unions

NFIP – National Flood Insurance Program

NOI – Net Operating Income – NOI =Gross income – Operating Expenses

NOO – Non-Owner Occupied – the owner is renting the property

NPL – Non-Performing Loans – nonpayment of loans; usually 90 days of missed payments

PMIER – Private Mortgage Insurer Eligibility Requirements – requirements to obtain, maintain and get approval for loans @ Freddie Mac & Fannie Mae

PMI – Property Mortgage Insurance – additional payment to the lender, typically for conventional loans with less than 20% downpayment.

PSA – Purchase and Sale Agreement – the real estate contract signed by Buyer and Seller

REO – Real Estate Owned – property owned by a bank

REIT – Real Estate Investment Trust – a company that owns and typically operates income-producing real estate or related assets

RESA – Real Estate Settlement Procedures Act – monitors to ensure no kickbacks between providers & mandates disclosure from lenders

ROI – Return On Investment – (profit – cost) / cost = ROI

RTO – Rent To Own – like a rental agreement but with an option for a renter to purchase property – potential buyer must pay option money, maintain home, etc. before eligible to buy

SFR – Single Family Residence or Rental – just as it sounds

STR – Short-Term Rental – Properties rented for 30 days or less, AIR BNB, VRBO etc.

TILA – Truth in Lending Act – the lender must disclose all credit terms and costs to consumers

TRID – TILA-RESPA  Integrated Disclosure Rule – aka “Know Before You Buy” in easy-to-read language – info like how much interest over the lifetime of the loan – must be given at least 3 days before the loan goes into effect