Glossary

Plain-language definitions of the lending and investing terms used across our site. Have a question that isn't answered here? Contact us.

Accredited Investor

An individual or entity the SEC allows to invest in private, unregistered offerings. For individuals, this generally means earned income above $200,000 ($300,000 with a spouse or partner) in each of the last two years, or a net worth over $1 million not counting a primary residence. Holders of certain securities licenses also qualify.

ACH (Automated Clearing House)

The U.S. electronic network that moves money directly between bank accounts. Borrowers are set up for automatic ACH drafts so loan payments are collected on schedule without paper checks.

Broker's Price Opinion (BPO)

An estimate of a property's value prepared by a real estate broker or agent, based on comparable sales and the property's condition. A BPO is faster and less expensive than a full appraisal and can be used in its place on some loans.

First Trust Deed

A deed of trust recorded in first position against a property, securing the loan used to buy or refinance it. Because it is paid before any other liens if the property is sold or foreclosed, it carries the highest priority and the lowest risk of any lien on the property.

MLP (Master Limited Partnership)

A publicly traded limited partnership, most common in energy and natural resources. Investors buy units on an exchange and share in the partnership's income, but do not hold a direct claim on any specific asset.

Mutual Fund

An investment company that pools money from many investors to buy a portfolio of stocks, bonds, or other securities. Each investor owns shares of the fund rather than the underlying investments themselves.

Pooled Investment

Any arrangement where money from many investors is combined and managed as one fund. Investors own a share of the pool, not a specific loan or property, and decisions about individual investments are made by the fund manager.

REIT (Real Estate Investment Trust)

A company that owns, operates, or finances income-producing real estate and pays most of its taxable income to shareholders as dividends. REIT investors hold shares in the company rather than a lien on any particular property.