Glossary & abbreviations

The key terms and abbreviations used in this guide, in plain English. If a servicer or negotiator uses a word you don’t recognize, it’s probably here.

The players

Term	What it means
Servicer	The company you send your payment to and that handles your short sale review. Usually not the owner of your loan.
Investor	The owner of your loan (e.g., Fannie Mae, Freddie Mac, a bank’s own portfolio, or a private trust). The investor’s rules govern your short sale.
GSE — Government-Sponsored Enterprise	Fannie Mae and Freddie Mac — the two federally chartered companies that own or guarantee most U.S. conventional mortgages.
Fannie Mae (FNMA)	The Federal National Mortgage Association, a GSE. Publishes the Servicing Guide many short sale rules in this guide come from.
Freddie Mac (FHLMC)	The Federal Home Loan Mortgage Corporation, the other GSE, with its own closely parallel guide.
HUD — U.S. Department of Housing and Urban Development	The federal agency that oversees FHA and publishes the rules for FHA short sales.
FHA — Federal Housing Administration	Part of HUD; insures loans made to borrowers with lower down payments. FHA’s short sale program is the PFS (below).
VA — U.S. Department of Veterans Affairs	Guarantees home loans for eligible veterans and service members. Its short sale version is the compromise sale.
USDA — U.S. Department of Agriculture	Guarantees rural-housing loans through its Rural Development program, with its own loss-mitigation rules.
CFPB — Consumer Financial Protection Bureau	The federal regulator of mortgage servicers. Its rules restrict dual tracking, and its complaint portal is your escalation tool of last resort.
IRS — Internal Revenue Service	The federal tax agency. Appears in short sales twice: transcript verification (Form 4506-C) and taxation of canceled debt (Chapter 7).
MI / PMI — (Private) Mortgage Insurance	Insurance that protects the lender if you default, typically on loans with less than 20% down. The MI company often must consent to a short sale.
MIP — Mortgage Insurance Premium	The FHA version of mortgage insurance. An “MIP” line on your statement is a strong sign you have an FHA loan.
Junior lienholder	Anyone with a claim behind the first mortgage — a second mortgage, HELOC lender, HOA, or judgment creditor. Every one must release its lien for the sale to close.
HOA — Homeowners Association	A community association whose unpaid dues can become a lien on the property.
HELOC — Home Equity Line of Credit	A revolving credit line secured by the home; a common junior lien.

The process

Term	What it means
Short sale	Selling the home for less than the total owed, with the lienholders’ written agreement to release their liens for the net proceeds.
PFS — Pre-Foreclosure Sale	FHA’s name for its short sale program.
Compromise sale	VA’s name for its short sale program.
Loss mitigation	The umbrella term for every alternative to foreclosure — modifications, forbearance, short sale, deed-in-lieu. Also the name of the servicer department you’ll deal with.
BRP — Borrower Response Package	The complete financial application (Form 710 plus supporting documents) the servicer reviews. “Complete” is what starts the decision clock.
Form 710	The Mortgage Assistance Application — the standard Fannie/Freddie intake form for hardship, income, expenses, and assets.
Form 4506-C	The IRS form authorizing your servicer to pull your tax transcripts directly from the IRS to verify income.
Form 191 / arm’s-length affidavit	The sworn statement that buyer and seller are unrelated, with no side deals, hidden rent-backs, or buy-back plans.
BPO — Broker Price Opinion	A real estate broker’s estimate of the home’s value — cheaper and faster than an appraisal; the valuation most servicers order for a short sale.
Appraisal	A licensed appraiser’s formal value opinion. FHA and VA require one; conventional servicers may use either.
Net proceeds	Sale price minus closing and transaction costs — the number the lienholder actually receives, and the number the approval is written around.
ATP — Approval to Participate (form HUD-90045)	FHA’s up-front approval letter that sets your marketing period and minimum net-proceeds tiers before you list.
Approval letter	The lienholder’s written terms for the short sale: required net, deficiency treatment, conditions, and an expiration date.
Dual tracking	A servicer advancing foreclosure while a complete loss-mitigation application is under review — restricted by CFPB rules (Regulation X).
Imminent default	The finding that default is unavoidable even though you’re still current — the doorway to a short sale for borrowers who haven’t missed a payment yet.
Equator (and similar portals)	Online platforms some servicers use to manage short sale files and communication.

The money and the aftermath

Term	What it means
Deficiency	The gap between what you owed and what the lender received. The single most important word in your approval letter — see Chapter 7.
Deficiency waiver	Written language stating the lender accepts the net proceeds as full satisfaction and will not pursue the gap.
Cash contribution	A payment the servicer may request from a borrower with meaningful reserves, applied toward the shortfall.
Promissory note	An unsecured repayment agreement sometimes offered in place of a cash contribution.
Relocation assistance	Money paid to the borrower at closing for completing the sale — up to $7,500 (GSE) or up to $3,000 (FHA), subject to program rules.
COD income — Cancellation of Debt	Forgiven debt the IRS may treat as taxable income, reported on Form 1099-C. Exclusions exist — Chapter 7.
Form 1099-C	The tax form a lender files when it cancels $600 or more of debt.
Insolvency exclusion	An IRS rule (Form 982) that lets you exclude canceled debt from income to the extent your debts exceeded your assets.
FMV — Fair Market Value	What a willing buyer would pay a willing seller — the benchmark for valuations and for deficiency calculations in many states.
SOL — Statute of Limitations	The legal deadline for filing a lawsuit, including a deficiency claim.
PITI	Principal, Interest, Taxes, and Insurance — the components of a full monthly housing payment.
UPB — Unpaid Principal Balance	The remaining loan balance, excluding arrears and fees.
FICO	The most widely used credit score (from Fair Isaac Corporation), typically 300–850. Several program rules key off it.
Entitlement (VA)	The dollar amount of VA loan guaranty a veteran can use; a compromise sale ties up the portion used to cover the loss.

How this guide uses abbreviations

Abbreviations are spelled out the first time they appear in a chapter wherever practical, then shortened after that. If you’re reading a single chapter on its own and hit an unfamiliar term, this appendix is the fastest path to the answer.