Escrow Terminology Simplified

Escrow Terminology Simplified

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)

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
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
Escrow Manager

juliana tu

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