Have you ever overheard a lender use an acronym that made you pause and think "what are they talking about?"
Both of our industries use a lot of acronyms to describe things.
Here are some common acronyms that you may see lenders use from time to time. This list will clear up some confusion!
1003 - The form number for the Universal Residential Loan Applications
APR - Annual Percentage Rate - Describes the rate of interest + financing charges a consumer will be paying over the life of a line of credit.
AUS - Automated Underwriting System. This is a general term for the software run by GSEs to approve or deny files
CD - Closing Disclosure, the new settlement statement that replaced the HUD-1 in October 2015
CFPB - Consumer Financial Protection Bureau - Federal agency responsible for consumer protection in the financial sector
COL - Crying out loud - what borrowers are doing by the time they send us everything we have asked for these days to process a loan
DTI - Debt to Income Ratio - The ratio of a buyers total monthly gross income compared to their monthly debt. An important tool used in qualification
DU - Desktop Underwriter - Fannie Mae's AUS software
FHA - Federal Housing Administration - Government agency that insures loans made by banks and other private lenders for home building and financing
GFE - Good Faith Estimate - the now replaced document that sought to disclose the terms of overall costs and fees to consumers to comparing lenders and brokers to one another.
GSE - Government Sponsored Enterprise. A general term for systems like Fannie Mae & Freddie Mac whose function is to enhance the flow of credit to targeted sectors of the economy.
GUS - Guaranteed Underwriting System - USDA's AUS software
HOI - Homeowners Insurance
HUD - (The US Department of) Housing and Urban Development - Cabinet in the executive branch that develops and executes policies on housing and urban development
LE - Loan Estimate, the form that replaced and consolidated the Good Faith Estimate & Truth in Lending in October 2015
LOX/LOE - Letter of explanation, sometimes abbreviated LOE or LOX, it is a signed and dated letter stating or clarifying certain conditions on a loan that come directly from the buyer to underwriting.
LP - Loan Prospector - Freddie Mac's AUS Software
LTV - Loan to Value - The percentage of a loan amount compared to the purchase price of a home. Example - if a person is putting 20% down, the LTV would be 80%
MLO/LO - (Mortgage) Loan Originator - a licensed individual whose job it is to procure a mortgage loan for consumers
NMLS - Nationwide Multistate Licensing System & Registry - System in place for mortgage licensing, not to be confused with MLS - Multiple Listing Service!
PITI - Principal, Interest, Taxes, Insurance - Term used to describe the complete monthly payment on a mortgage that carries an escrow account.
POA - Power of Attorney - When one person assumes the authority to sign documents on behalf of another
POC - Paid Outside of Closing - Describes a line item in a settlement statement that was paid before settlement.
RESPA - Real Estate Settlement Procedures Act - Congressional Act passed in 1974 whose main purpose is to protect homeowners by assisting them to become better educated while shopping for real estate services
TIL - Truth in Lending Disclosure - the now replaced document that sought to disclose the terms of financing to consumers to comparing lenders and brokers to one another
TILA - Truth in Lending Act - Congressional Act passed in 1968 to promote informed use of consumer credit.
TRID - TILA-RESPA Integrated Disclosure - The act that created and consolidated the GFE & TIL documents into the new LE
USDA - United States Department of Agriculture - A department of the executive branch dealing mostly in agriculture matters, but also guarantees loans for banks and other private lenders for housing in rural areas.
VA - (US Department of) Veterans Affairs - Government-run military veteran benefit system that has a mortgage financing arm
VOE - Verification of Employment
VOM - Verification of Mortgage
VOR - Verification of Rental
XPN/EFX/TU - The three credit bureaus Experian, Equifax, & Transunion