Appraisal - An estimation of a home's value based on sales of comparable properties in the neighborhood. Appraisals are conducted by a licensed appraiser and are used in the loan process to ensure that the value of the home is equal or greater than the purchase price. As of May 1st, 2009 some loans my be subject to the Home Valuation Code of Conduct (HVCC) which is designed to restrict the interaction the appraiser has with the loan company through the use of a third party management company. This may add time to the transaction, but is intended to protect the integrity of the appraisal process and make the estimated value of the home more reliable.
Bank Owned Property - See REO Property
BPO (Broker Price Opinion) - A BPO is similar to an appraisal, but is done by a Real Estate Broker instead of a licensed appraiser. This option may be used by lenders and mortgage companies when they feel the expense and delay of an appraisal is not necessary.
FHA (Federal Housing Administration) Loan - An FHA Mortgage is ensured by the Federal Government, meaning that if the home-buyer can't pay the loan, the government will pay the lender for any losses. These types of loans (which also include VA loans, and are often referred to as 'government loans') are gaining popularity as rates have increased and private loans are harder to obtain.
Foreclosure - A multi-step process that can take months to complete. Foreclosure happens when a homeowner can no longer make their mortgage loan payments, so the ownership of the home is transferred from the homeowner to the bank or lender.
Impounds - An Escrow account set-up on the borrowers behalf to pay property taxes and home owners insurance. This is required by lenders whenever there is less than a 20% down payment.
LTV (Loan to Value) Ratio- A ratio (usually expressed as a percentage) derived from the difference between the amount of money borrowed vs the appraised value of the home. This percentage may determine a home buyers down payment, and/or by used by lenders to determine the amount of risk involved in the loan.
Mello Roos - Often found in newer communities, Mello-Roos is a fee (actually principal and interest payments made on public bonds) assessed by the state of California to maintain community infrastructure such as schools, streets and parks.
Notice of Default - An official note from the lender indicating that the homeowner has fallen two months behind on payments. This is the first step in foreclosure and at this point, the homeowner has 2-3 months to catch up on payments before the lender will continue the foreclosure process.
REO (Real Estate Owned) Property- This is a property that has been through the entire foreclosure processes and is now owned by a bank or lender. Also known as a 'Bank Owned Property'.
Short Sale - A home for sale whose owner owes more on the mortgage than the home is worth. In a short-sale, the the home is still owned by the homeowner who hopes to be able to pay debts to the bank or lender and avoid the penalties associated with foreclosure.
Truth in Lending Act - A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
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