Short Sale Glossary

Owensboro, KY real estateShort sale: occurs when the borrower sells the property for less than what they actually owe, thus the term "short sale".

"Possible Short Sale": This is a property that has been put on the market prior to getting the lenders approval for a short sale. Most short sale contracts will include language that says: "subject to lender (lien holder) approval"

Foreclosure: Property is sold at a court ordered sale to settle the debt owed to a bank or individual.

Bank Owned Property: a.k.a. REO (Real Estate Owned) property. Property taken into the banks' inventory after a foreclosure sale.

Loss Mitigation Department: Department at the bank that works with consumers on short sales, forbearance and loan modification agreements. This department may also be called the Collateral or Work Out Department.

Foreclosure Department: Department at the bank that oversees the foreclosure process once the borrower is in default.

Eviction Department: Notifies homeowner of pending foreclosure and advises when they should vacate the property. They may also hire third party companies to secure the property once vacant and maintain the property until sold.

PMI (Private Mortgage Insurance) Company: The insurance company that will pay the lender in the event of your default. Most PMI companies will have a say as to income/debt limits on your loan modification agreement and will have to approve the final agreement.

BPO: This is typically a "drive-by" appraisal done by an area mortgage broker to determine the "market value" of the property that is the subject of the short sale. Many times, these BPO's are inaccurate because they are "drive-by" only. Most brokers doing the BPO will estimate the market value on the low side, due to the fact that they do not have complete information.

Mortgage Debt Relief Act: The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. Click the link for the skinny from IRS.gov - http://www.irs.gov/individuals/article/0,,id=179414,00.html

Still have short sale questions? Call me for information on Owensboro, KY area short sales, Karen Pannell, 270-903-2167

 http://www.karenpannell.com

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Text or Phone:  270-903-2167

Owensboro, Kentucky 42301

Comment balloon 2 commentsKaren Pannell • May 26 2011 04:53PM

Comments

I realized I used the term "forebearance or loan modification agreement" without a definition.  A forebearance or loan mod agreement is one in which the lender agrees to modify the original terms of the loan to something that the borrower can afford.  For example, if the borrower has sufficient income, the lender will agree to lower the interest rate and extend the term, to get the payment down to a payment the borrower now can afford.  These modifications typically occur when a borrower has taken a pay cut.  You must be employed in order to qualify for a modification.  This is a great option for many borrowers.  Call me if you think a loan modification might benefit you.  270-903-2167

kp

Posted by Karen Pannell, Owensboro KY Real Estate -270-903-2167 Homes, Cond (Real Living / Home Realty) over 7 years ago

Not very many people do informational blogs like this. I like it! Have a great memorial day weekend!

Posted by Real Living (Real Living Real Estate Group(DFW)) over 7 years ago

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