Photo Courtesy of Chaomancer
REO (Speed)Jargon
R.E.O, Bank Owned, Foreclosure, Loss Mitt, “Short Sale,” and a plethora of other terms have found their way in to MLS comments and our daily conversation over the last couple of years. Jargon developed over years and years ago by the default mortgage banking industry used by mortgage company insiders. Terms used to describe property bought back by bank at foreclosure sale, or efforts to keep a “mortgagor” in their home.
With the state of today’s economy and rise in foreclosures, I thought it may be beneficial to define a few of these terms for you.
All definitions come from “The national Mortgage Servicers’ Reference Directory” 18th Edition as published by the United States Foreclosure Network (USFN).
Acceleration Clause: A clause provision of a mortgage or deed of trust providing that the entire principal and interest collected from the borrower.
Assignment of Bid: The assignment of the successful bid at the foreclosure sale to another party.
Broker Price Opinion (BPO): A written estimate of the most probable sales price of a property provided by a licensed real estate broker with experience in the specific locality of the subject property. Value of the subject Property is estimated by comparing like properties that recently sold and adjusting for differences. Often provided as a means to establish a listing price for a property.
Charge-off: The process of writing off sums that have been deemed to be uncollectible.
Confirmation Hearing (Foreclosure): A hearing held subsequent to the Sheriff’s Sale to confirm the sale and transfer title to the successful bidder.
Deed-in-lieu: The voluntary conveyance of the property from the borrower to the lender in lieu of foreclosure. The advantage for the lender is the cost of the acquisition in less than a foreclosure and title is gained faster. The advantage for the borrower is he avoids a foreclosure and potential deficiency judgment.
Fair Debt Collection Practices Act: A Federal act that regulates communications between a consumer debtor and a collector.
Foreclosure: A legal procedure by which a mortgaged property is sold upon default in order to satisfy the debt. Foreclosures are generally governed by state law and vary from state to state. The two most common type of foreclosure are “Judicial” and “Power of Sale.”
Investor: The holder of a note secured by a mortgage or deed of trust.
Loss Mitigation: Activities designed to reduce the likelihood of foreclosure or the amount of the loss associated with a foreclosure. Typical forms of loss mitigation include interest rate reduction loan modifications, forbearance plans, and loan term extensions.
Partial Claim: A form of loss mitigation associated with servicing HUD insured loans where HUD will pay a claim to the lender for up to 12 months of PITI. The borrower must be at least four month’s delinquent to qualify.
R.E.O.: Real estate Owned. Also know as ORE (Owned Real Estate). Editors Note: Can also be called “Bank Owned Properties.” These are properties purchased by the bank at foreclosure sale to protect the investor and/or insurer’s interest.
Short Sale (aka pre-foreclosure sale): A workout program where the lender accepts less than the full payment amount due from the borrower.
Special Forbearance: A form of forbearance where the lender agrees to reduce or suspend the borrower’s payments for specified period of time, after which the borrower resumes the regular monthly payment plus an additional agreed-upon amount to cure the delinquency. Effective where the borrowers income is temporarily reduced.
It is unfortunate that some people have no option but to give up their homes due to various situations. With a little knowledge and understanding, we could best help our clients by encouraging them to speak with their bank if they find themselves in foreclosure situation.
Writer for national real estate opinion column AgentGenius.com, focusing on the improvement of the real estate industry by educating peers about technology, real estate legislation, ethics, practices and brokerage with the end result being that consumers have a better experience.

Paula Henry
October 5, 2008 at 8:22 am
Rocky – Unfortunately, these terms are ones we should all be familiar with. Thanks for the resource!