Term Tuesday: CC&R's

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CC&R's stand for Covenants, Conditions and Restrictions. These are rules that apply to limitations on the use of real or personal property in a specific neighborhood as outlined by the homeowners' association. Restrictions are generally included in the Homeowners' Associations' By-laws or can be requested from the County Recorder's office.

Here are several examples of provisions that may be outlined in a community's CC&R's:

• Construction guidelines, such as a height restriction of a wall surrounding a home
• Parking guidelines, such as no street parking
• Pet allowance or limitations
• Exterior decoration, such as flags or signage

CC&R's apply to homeowners as well as their guests or rental tenants, and unless a specific guideline conflicts with federal, state or local law, these rules are legally enforceable. Failure to abide by these rules may result in fines, forced compliance or lawsuits by the association.

Term Tuesday: TDS

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The Transfer Disclosure Statement (TDS) is a three-page document included in the seller's disclosure packet and is intended to disclose the condition of the home. It is imperative the TDS be filled out correctly and all pertinent information is disclosed.

Currently the TDS is required for transactions involving residential real property (1-4 Units), manufactured homes and for personal property/mobile home transactions an MHTDS is required (Mobile Home Transfer Disclosure Statement). All probate, bankruptcy, bank-owned property and trusts are exempt from the TDS at this time; these sales typically state in the MLS that the property is sold "as-is" and "seller has no knowledge of property condition."

Term Tuesday: NOD

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A notice of default, or NOD, is a legal document filed by a lien holder when a homeowner has defaulted on a home loan (stopped making the payments). The homeowner will have a predetermined amount of time to become current with payments or face foreclosure.

Once the NOD is registered the homeowner has three months to catch up on the late payments and fees. Immediately following the three month grace period, a notice of trustee sale is sent which informs the homeowner the date on which house is to be sold at auction.

If a homeowner is unable to bring the mortgage current, they can attempt a short sale or relinquish the property to the lien holder.

Term Tuesday: LTV

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The loan-to-value ratio, or LTV, represents the amount of the mortgage against the value of the property. For example, if a home is worth $200,000 and the outstanding balance of the loan is $150,000, the home has a 75% LTV.

LTV is an important gauge when securing a mortgage. For example, it is generally more difficult to qualify for a loan on a property with a high LTV (80% or more), and it will be subject to Private Mortgage Insurance. *Note: VA Loans are an exception to this rule.


If the property has more than one lien against it, they are added together to asses the Combined Loan to Value, or CLTV.

Term Tuesday: BPO

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A BPO, or Broker Price Opinion, is used by mortgage lenders, banks and others to determine the value of a home. They are often associated with, but not limited to, foreclosures and short sales. Similar to a CMA, companies will hire real estate agents to prepare an opinion on the value of a property based on similar properties that have sold in the area and current market conditions surrounding the subject property.

There are two main types of BPOs: drive-by and interior. A drive-by BPO is a simple opinion of the value of a property and will only require photos taken of the outside of the subject property. An interior BPO requires a much more in-depth evaluation including the inside of the subject property.

A real estate agent might be contracted to create a BPO for a specific property to avoid the cost of an appraisal, evaluate pending foreclosures and homes in delinquency or in a refinance situation on behalf of a lender.

Term Tuesday: VA Loan

A VA home loan is a loan available exclusively to Qualified Veterans, active duty personnel, Reservists/National Guard members and some surviving spouses. Qualified Veterans are those who meet specific criteria set by the US Department of Veterans Affairs. These criteria include length of service depending on the dates of service. For example, if you are currently on active duty, you are eligible after having served 181 days. You can see the full list of eligibility criteria here.

Benefits of VA financing include:

• No money down (VS 3.5% for FHA Loan)
• Competitive interest rates
• Seller can pay up to 4% of purchase price, usually in closing costs
• No PMI, instead there is a one-time VA funding fee rolled into the cost of the loan

To utilize VA financing, you must first apply online with the US Department of Veterans Affairs.

Term Tuesday: PMI

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Private Mortgage Insurance, or PMI, protects your lender in the event of a default.You must have PMI as part of your loan if the down payment on your home is less than 20% of the price.

It is possible to cancel private mortgage insurance on a conventional loan. Once the equity in your home rises above 20%, contact your lender to discuss this possibility. If you have an FHA loan, you may cancel your PMI after you have paid your loan to 78% of the original principal balance and after 5.5 years. PMI is not required for a VA loan.

Speak with your lender about various other ways to avoid PMI, including paying a higher interest rate or obtaining a HomePath mortgage.

Term Tuesday: MLS

A Multiple Listing Service, or MLS, is a service that allows real estate agents to post and view available properties and their market history within their local real estate organization. Using this system, a real estate agent can research available properties that fit their buyers' needs, create a Comparative Market Analysis, or track local real estate trends.

Information available in the MLS is similar to information available on public real estate websites such as Realtor.com, Zillow, or Trulia. A benefit of an MLS, however, is that agents can safely provide and access confidential information such as gate codes, lock box combinations, or tenant information.

The local MLS's for Southern California are Sandicor (San Diego) and CRMLS (California Regional Multiple Listing Service), which is the largest MLS in the country.

Term Tuesday: CMA

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A comparative market analysis, commonly referred to as a CMA, is a report created by a real estate agent to estimate a home's value. This method takes the following into account:

• Current active properties and how long they've been on the market
• Recent solds, generally within 90 days of the close of escrow
• Homes that were listed but did not sell

The homes chosen for comparison are of a close match to the subject property. For example, they will be similar in terms of age, square footage, lot size and amenities, such as a pool or view. Comparable properties may have their value "adjusted" if they are lacking features of the subject property, or if they have a feature the subject property does not. A pool, for instance, is generally valued as +/- $10,000.

Your agent will create a CMA both to help you gauge the value of your own home when preparing to sell or a home that you are considering to help you determine a fair offer price.