What did you say?
Breaking Down Escrow Terminology
The English language is filled with acronyms, an invention of the modern technological world, put into place when email and texting became the normal way to communicate. Why type “Consumer Financial Protection Bureau” when a simple “CFPB” will suffice? We are all in a hurry (or lazy) so the less the fingers need to do the walking the better it is.
You know you are in an “acronymed” world when you string several acronyms together to form a new one! Case in point: TRID
Truth In Lending Disclosure Act (TILA)
Real Estate Settlement Procedures Act (RESPA)
Integrated
Disclosures
This TRID regulation put forth by the CFPB is actually called the “Know Before You Owe” regulation. So which would you prefer to say, “TRID” or “Know Before You Owe”? By the way, on an amusing side note, due to the complexities of handling a TRID transaction the escrow industry has spoofed this TRID acronym and it stands for “The Reason I Drink”.
This list below are some commonly used terminology and acronyms used in the escrow, mortgage, and real estate world. New terms will come up as the industry evolves and we will add to it from time to time. Let us know if there are any that were missed or deserves to be mentioned!
| 1003 | Loan application form |
| 1099 | IRS form issued by Escrow to Seller to report the sale of the transaction for income tax purposes |
| 9-A | City of Angeles 9-A Residential Property Report |
| ADJUSTABLE | A type of loan where interest rate is not fixed |
| AIR form | American Industrial Real Estate commercial real estate purchase contract form |
| AITD | All Inclusive Trust Deed – a type of loan given by Seller to Buyer |
| ALTA | American Land Title Association – National trade organization for title insurance companies |
| ALTA policy | American Land Title Association policy of title insurance. Usually means the policy insuring the new Lender of a property |
| APN | Assessor’s Parcel Number – identification number assigned to each property by County Tax Assessor |
| APR | Annual Percentage Rate – loan term used to describe the annual interest rate |
| ARMs | Adjustable Rate Mortgage. See “Adjustable” |
| BEC | Business Email Compromise – email scam/spoofing/phishing |
| BCFP of CFPB | The Bureau of Consumer Financial Protection, previously known as the Consumer Financial Protection Bureau |
| BENE | Beneficiary – the person or entity who lent the money on the property; the Lender |
| BK | Bankruptcy |
| BONAFIDE | Real, legitimate, in good faith and without fraud |
| BPO | Broker Price Opinion letter – Document provided by Real Estate Broker showing the value of the property, for a Short Sale Lender |
| CAMB | California Association of Mortgage Brokers |
| CAR | California Association of Realtors |
| CAR contract | California Association of Realtors purchase contract form |
| CC&Rs | Covenants Conditions and Restrictions setting out limitations and conditions of the property |
| CD | Closing Disclosure – new loan disclosure form required under TRID |
| CDA | Commission Disbursement Authorization – authorization from Real Estate Broker on how to disburse commission at closing |
| CDTFA | California Department of Tax and Fee Administration – previously known as the State Board of Equalization |
| CEA | California Escrow Association – Trade organization for all California escrow professionals |
| CFPB or BCFP | The Consumer Financial Protection Bureau – the name changed to the Bureau of Consumer Financial Protection |
| CLOSED | The status of a file when all documents have been recorded and ownership and new loan is transferred |
| CLTA | California Land Title Association |
| COE | Close of escrow – the date of closing of transaction |
| CONDO | Condominium – A property that is part of a unified development complex that has an association to manage the complex. Can be a home or commercial property. |
| CONFIRMED/ CONFIRMATION | Acknowledgement that all documents are recorded and ownership and new loan is transferred |
| CPL | Closing Protection Letter – letter from Title Company to Lender to acknowledge responsibility for loss incurred for failure to follow lenders instructions at closing |
| DBO | Department of Business Oversight – California’s regulator of financial services industries |
| DEED | The Grant Deed – the document that transfers the ownership of a property (see our FAQ) |
| DEMAND | The document issued by a lienholder that states how much needs to be paid |
| DOI | Department of Insurance |
| DRE | Department of Real Estate |
| DTT | Documentary Transfer Tax – One time tax paid to County Recorder’s office upon recordation of a transfer of ownership form |
| EASEMENT | A right or interest placed on the property to benefit someone else |
| EDD | Employment Development Department – California government agency which handles employee/employer taxes |
| EI | Escrow Instructions |
| EIC | Escrow Institute of California – Trade organization for California independent escrow companies |
| ENCUMBRANCE | A debt or a claim against a property |
| ENDORSEMENT | A document attached to the title or other insurance policy which adds to or subtracts from the standard insurance coverage |
| EOI | Evidence of Insurance – proof required by Lender that there is or will be insurance on the property |
| ESCROW ACCOUNT | Term used by Lender, same as Impound Account. See “Impounds” below |
| EXCEPTIONS | An item now existing on the property which the Title Company WILL NOT insure on |
| FANNIE MAE (FNMA) | Federal National Mortgage Association aka FNMA – government sponsored entity to provide money for loans to financial institutions |
| FEE (title) | Type of ownership to property (as compared to “leasehold”) |
| FHA | Federal Housing Administration – government agency under HUD used to insure loans made by financial institutions |
| FIRST | Means the first loan on the property (adjective) |
| FIRPTA | Foreign Investment in Real Property Tax Act |
| FIXED | A type of loan where interest does not change through the life of the loan |
| FREDDIE MAC (FHLMC) | Federal Home Loan Mortgage Corporation aka FHLMC – government sponsored enterprise to buy loans from financial institutions and sell them as mortgage backed securities |
| FSBO | For Sale by Owner |
| FTB | Franchise Tax Board – California’s government entity that collects personal and corporate income taxes |
| FUNDING | The status of a loan in which the Lender is ready to release the money they are lending |
| GD | Grant Deed – the document that transfers ownership (see our FAQ) |
| GFE | Good Faith Estimate – required document provided by Loan Officer to disclose fees |
| GI | General Index – Listing at the County Recorders for filings under personal names |
| GRANTEE | The person who is receiving the property |
| GRANTOR | The person who is selling or giving the property |
| HCD | Housing Community Development – government organization responsible for manufactured homes licensing |
| HECM (pronounced as “hekem”) | Home Equity Conversion Mortgage – Reverse Mortgage program administered by FHA |
| HELOC | Home Equity Line of Credit – A line of credit mortgage against property which borrower can draw upon and/or payback any time during the term |
| HOA | Homeowners Association – the group of owners who manage the condominium project |
| HPP | Home Protection Policy aka home warranty plan. Insurance protection for building and fixtures |
| HUD | The Department of Housing and Urban Development. Government agency which is responsible for programs for the housing market, like FHA |
| HUD-1 | Nationwide standardized closing statement established by HUD to transmit fees and closing costs to Buyers and Sellers |
| HW | Husband and Wife |
| HWJT | Husband and Wife as Joint Tenants |
| HWCPROS | Husband and Wife as Community Property With Rights of Survivorship |
| IBA | Interest bearing account |
| IMPOUNDS | Loan term used to describe amounts collected by Lender for taxes and/or insurance along with the month payments |
| IRS | Internal Revenue Service |
| JT | Joint Tenancy – type of vesting to hold title in real property |
| JUDGEMENT | A Court approved lien that is filed against a person who owes money |
| JUNIOR (to) | A loan that is behind one or more loans that were recorded before it |
| JURAT | The form used by Notaries when notarizing a party who has to swear under Oath |
| L&V | Legal and Vesting – a document that shows the present legal description and ownership of property |
| LE | Loan Estimate – disclosure form used under TRID |
| LEGAL | Legal description – the location of the property on the County maps |
| LIENS | A debt against a person or a property |
| LIS PENDENS | “Notice of Pending Action” or “Pending Litigation.” When this notice is recorded, it gives a warning to everyone that there is an ongoing dispute involving the property |
| LLC | Limited Liability Company |
| LP | Limited Partnership |
| LRT | Lender, Rate and Term (amendment) |
| LTV | Loan To Value |
| MBA | Mortgage Bankers Association (national) |
| MERS | Mortgage Electronic Registration System – system to register Mortgage (loan) Documents nationwide |
| MLS | Multiple Listing Service – centralized location of listing homes for sale |
| MIP | Mortgage Insurance Premium – insurance required for FHA loans to offset any losses by lender if loan cannot be repaid |
| MISMO | Mortgage Industry Standards Maintenance Organization – organization proponent of standardization of mortgage |
| MORTGAGE | The loan on the property |
| NAR | National Association of Realtors |
| NHD | Natural Hazards Disclosure report |
| NNA | National Notary Association |
| NOD | Notice of Default – first step in notification of non payment of mortgage loan |
| OA | Owners Association – same as Homeowners Association, but for commercial properties |
| OWNERS (policy) | Policy of title insurance that insures the new Buyer’s ownership of property |
| PAYEE | The person who is getting paid |
| PAYOR | The person who has to pay |
| PCOR | Preliminary Change of Ownership form – to be attached to any transfer of ownership deed that is being recorded |
| PD | Professional Designation given to Escrow people who have passed the tests given by the California Escrow Association |
| PIQ | Property in Question |
| PITI | Principal, Interest, Taxes, Insurance – the main payments of a property owner |
| PMI | Private Mortgage Insurance – insurance paid by Borrower on non-FHA conventional loans to offset any losses by lender if loan cannot be repaid |
| PO | Payoff demand |
| POA | Power of Attorney |
| POC | Paid Outside of Closing |
| POINTS | A fee charged by lender for the loan. 1 point equals 1%. Separate from any other fees |
| PRE or PRELIM or PR | Preliminary report issued by the Title Company to show who owns the property, the liens, and what are the exceptions that won’t be insured |
| PREFIGS | Preliminary figures for costs and payoffs provided by Title Company before the actual closing |
| PRIA | Property Records Industry Association |
| PRIOR TO DOCS | Lender required conditions that have to be met before loan documents can be issued |
| PRIOR TO FUNDING | Lender required conditions that have to be met before the loan can be funded |
| PROBATE | Process of submitting to the Court for approval of the sale of property where owner has passed away |
| PRORATE / PRORATION | Dividing charges between Buyer and Seller so that each pays their share based on the time of ownership of property |
| PSA | Purchase and Sale Agreement |
| PUD | Planned Unit Development – Single family home that is part of a unified development which may have an association that manages the complex |
| PULLED | When a recording did not go through because of a last minute problem at the Title Company or at the County Recorder’s |
| QUITCLAIM or QC | The document used to transfer certain interests in the property (see our FAQ). OR, as a verb – the act of giving up interest |
| RECON | Reconveyance – release document used to show a loan is paid in full |
| RECORD | The action of recording a document at the County Recorder’s offices to make it of public record (verb) |
| REO | Real Estate Owned – properties foreclosed and now owned by financial institutions |
| RELEASE(S) | Noun – The document used to show a lien is paid and no longer affects the property |
| RESPA | Real Estate Settlement Procedures Act – passed by government to monitor lending and settlement practices against consumers |
| RIDER | An attachment to a document, normally, an attachment to the Deed of Trust |
| SBEor BOE | State Board of Equalization – California government entity which collects sales and other use and products taxes |
| SECOND | Means the second loan on the property (adjective) |
| SERVICER | Servicing Agent. The institution that is collecting the payments for a loan on behalf of the actual Lender. |
| SFR | Single Family Residence |
| SI | Statement of Information – a form to be completed by parties in escrow stating certain personal information |
| SINGLE | Never been married (different from “unmarried”) |
| SUBJECT TO | (1) Conditions that have to be met first (ie: “subject to” the following); (2) Loans that will remain (ie:”subject to” first trust deed loan) |
| TC | Tenants in Common – type of vesting to hold title in real property |
| TD | Trust Deed or Deed of Trust – the document which secures a loan on the property |
| TIL or TILA | Truth In Lending disclosure – required document provided by Loan Officer to disclose the terms and conditions of a loan |
| TERM | Time period, usually used to state the length of a loan |
| TERMS | The conditions of an agreement, contract, loan |
| TITLE | Name of the person or entity who owns or has interest in the property |
| TRID | TILA Respa Integrated Disclosure (also known as the Know Before You Owe) rule |
| TRUST DEED | See “TD” |
| TRUSTEE | The third party in a Trust Deed (see above) who will issue the Recon (see above) |
| TRUSTOR | The person or entity who owes the money on the property; the Borrower |
| TRUST CERT | Trust Certification – document to be completed by Trustee that reflects the status of the Trust Agreement |
| UCC | Uniform Commercial Code |
| UETA | Uniform Electronic Transaction Act |
| UNDERLYING DOCS | The actual recorded documents that describe the items summarized on a preliminary report |
| UNDERWRITER | The person at the Lender institution who reviews the loan file to see that all the requirements to approve the loan are submitted before loan is formally approved (different from loan officer) |
| UNINSURED DEED | A grant deed or quitclaim deed that was recorded without benefit of title insurance to back it up |
| UNMARRIED | Married before but presently not married (different from “single”) |
| VESTING | The manner in which ownership is held by person or entity has on property, for instance, “joint tenants” or “community property” or “tenants in common” |
| VOD | Verification of Deposit |
| VOE | Verification of Employment |
| VOM | Verification of Mortgage |
| X | Escrow |
| ZERO DEMAND | A payoff statement from Lender to show the amount to be paid is $0.00 or that the loan was paid in full |
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
Escrow Manager
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