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Bulk REO Terminology
Here is some of the more commonly used bulk reo terminology to help you get off to a good start in building up your vocabulary:
Bulk REO = Bulk Real Estate Owned
This term has many, many equivalents. I could fill this entire page with other terms. Some other common terms are 'bulk foreclosures', 'reo portfolios' and 'bank owed real estate'. They all imply real estate owned by a bank or other institution as an end result of the foreclosure process.
LOI = Letter of Intent
The buyer provides an LOI. It outlines the parameters of the intended purchase, including price, locations and types of properties.
MFA = Master Fee Agreement
The MFA outlines the parties involved in a bulk REO transaction and how each group will be compensated.
Sub Fee = Sub Fee Protection Agreement
This sub-fee protection agreement (“SFPA”) is issued on behalf of the Payer (also known as the “Payer”: Company involved in the sale of the Commodity identified by the above Contract Number. Commission payment/s will be made after the delivery and payment for each shipment. The commission will be paid by the Intermediaries’ Beneficiary Paymaster to the intermediaries named in this SFPA for all contracted agreements.
NCND = Non-Circumvent / Non-Disclosure Agreement
The NCND is signed off by all parties in a transaction. It's an agreement not to circumvent any party in the transaction or to disclose confidential sources.
SPOF = SOFT Proof Of Funds
The bank will usually require SPOF before proceeding to prepare a bulk REO package. It takes a lot of work to put together a package, per the buyers LOI. Therefore, the bank will first require SPOF to ensure the the bulk REO buyer has 10% available to be able to start the transaction. It can be a escrow account or bank account or attorney letter.
POF = Proof Of Funds
The bank will usually require POF before proceeding to prepare a bulk REO package. It takes a lot of work to put together a package, per the buyers LOI. Therefore, the bank will first require POF to ensure the the bulk REO buyer is able to complete the transaction.
Vetting = means careful or critical examination
Lenders take bulk REO buyers through a validation process to confirm they meet the criteria of a ready, willing and able buyer
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