Real Estate Acronym Quiz

Front 1

Adjustable Rate Mortgage (ARM)

Back 1

A variable interest rate note, often starting out with the introductory teaser rate only to reset it at a much higher rate in a few months or years based on a particular index.

Hint 1

i.r. teaser

Front 2

Affiliated Business Arrangement (ABA)

Back 2

Referral of a client to a financially controlled business whose earnings are shared with the broker.

Front 3

Annual Property Operating Data sheet (APOD)

Back 3

A worksheet used when Gathering income and expenses on the operation of an income-producing property to analyze its suitability for investment.

Front 4

"As-is" clause

Back 4

An unenforceable provision stating the buyer accepts the property without a full disclosure of known conditions. Properties are sold "as-disclosed" never "as is".

Front 5

Bona Fide Purchaser (BFP)

Back 5

A buyer who acquires ownership of real estate without actual knowledge or recorded notice (constructive knowledge) of a pre-existing enforceable purchase agreement held by another buyer regarding the same property.

Front 6

Covenants, Conditions & Restrictions (CC&Rs)

Back 6

Written rules, limitations and restrictions on use agreed to by all property owners in a subdivision or common interest development.

Front 7

All - Inclusive Trust Deed (AITD)

Back 7

A note entered into by the buyer in favor of the seller to evidence the amount remaining due on the purchase price after deducting the down payment, an amount inclusive of any specified mortgage debts remaining of record with the seller retaining responsibility for their payment. Also referred to as a wraparound mortgage or overriding mortgage. [See RPI Form 421]

Front 8

Applicable Federal Rate (AFR)

Back 8

Rates set by the Internal Revenue Service for carryback sellers to impute and report income at the minimum interest when the note rate on the carryback debt is a lesser rate.

Front 9

CA Home Energy Rating System (HERS)

Back 9

California state system used to create a standard rating for energy efficiency and certify professional raters.

Front 10

common interest development (CID)

Back 10

Condominium projects, cooperatives or single family residences in a planned unit development.

Front 11

debt-to-income (DTI) ratio

Back 11

Percentage of monthly gross income that goes towards paying debt.

Front 12

Department of Real Estate (DRE)

Back 12

A government entity which oversees, regulates, administers and enforces California real estate law as practiced by licensees.

Hint 12

o.r.a.e.

Front 13

designated officer (DO)

Back 13

The individual who is the licensed officer qualifying a corporation for a corporate broker license.

Front 14

Energy Efficient Mortgage (EEM)

Back 14

An FHA-insured purchase-assist or refinance mortgage which includes the additional amount to cover the costs of constructing energy improvements on the mortgaged property.

Front 15

equity purchase (EP) agreement

Back 15

The document used to negotiate the sale of an owner-occupied residence-in-foreclosure to an investor.

Front 16

fair market value (FMV)

Back 16

The price a reasonable, unpressured buyer would pay for property on the open market.

Front 17

Federal Fair Housing Act (FFHA)

Back 17

A collection of policies designed to prevent discrimination in the access to housing based on an occupant’s inclusion in a protected class.

Front 18

graduated payment mortgage (GPM)

Back 18

A mortgage providing for installment payments to be periodically increased by predetermined amounts to accelerate the payoff of principal.

Front 19

home inspection report (HIR)

Back 19

A report prepared by a home inspector disclosing defects in improvements on a property and used by the seller’s agent to complete a TDS and assure prospective buyers about a property’s condition.

Front 20

Home Mortgage Disclosure Act (HMDA)

Back 20

A regulatory scheme requiring lenders to publically release loan data.

Front 21

homeowners’ association (HOA)

Back 21

An organization made up of owners of units within a common interest development (CID) which manages and operates the project through enforcement of conditions, covenants and restrictions (CC&Rs).

Front 22

lender-paid mortgage insurance (LPMI)

Back 22

Default mortgage insurance provided by private insurers in which the lender pays the mortgage insurance premium and recovers the cost through a higher interest rate.

Front 23

loan-to-value ratio (LTV)

Back 23

A ratio stating the outstanding mortgage balance as a percentage of the mortgaged property’s fair market value. The degree of leverage.

Front 24

mortgage-backed bonds (MBB)

Back 24

An asset-backed security representing a claim on the cash flows received on a mortgage loan.

Front 25

mortgage insurance premium (MIP)

Back 25

The cost for default insurance incurred by a borrower on an FHA-insured mortgage set as a percent of the mortgage amount paid up front and an annual rate on the principal balance paid with monthly principal and interest for the life of the mortgage.

Front 26

mortgage interest deductions (MID)

Back 26

An itemized deduction for income tax reporting allowing homeowners to deduct interest and related charges they pay on a mortgage encumbering their primary or second homes.

Front 27

mortgage loan originator (MLO)

Back 27

A Department of Real Estate (DRE) licensee who receives fees to arrange a consumer mortgage other than a carryback.

Front 28

multiple listing service (MLS)

Back 28

An association of real estate agents pooling and publishing the availability of their listing properties.

Front 29

Natural Hazard Disclosure Statement (NHD)

Back 29

A report provided by a local agency or NHD vendor and used by sellers and seller’s agents to disclose natural hazards which exist on a property held out for sale.

Front 30

net operating income (NOI)

Back 30

The net revenue generated by an income producing property as the return on capital, calculated as the sum of a property’s gross operating income less the property’s operating expenses

Front 31

notice of default (NOD)

Back 31

The notice filed to begin the nonjudicial foreclosure process. Generally, the NOD is filed following three or more months of delinquent mortgage payments.

Front 32

private mortgage insurance (PMI)

Back 32

Default mortgage insurance coverage provided by private insurers for conventional loans with loan-to-value ratios higher than 80%.

Front 33

real estate owned (REO) property

Back 33

Property acquired by a mortgage holder through foreclosure

Front 34

Real Estate Settlement Procedures Act (RESPA)

Back 34

Legislation prohibiting brokers from giving or accepting referral fees if the broker or their agent is already acting as a transaction agent in the sale of a one-to-four unit residential property which is being funded by a purchase-assist, federally-related consumer mortgage.

Front 35

Structural Pest Control (SPC) report

Back 35

A report disclosing any active infestations, damage from infestations or conditions which may lead to infestations.

Front 36

Transfer Disclosure Statement (TDS)

Back 36

A mandatory disclosure prepared by a seller and given to prospective buyers setting forth any property defects known or suspected to exist by the seller, generically called a condition of property disclosure.