Let’s begin this week’s Money IQ column with two examples of financial institution lingo.
- It is a dark, cold afternoon when you notice that your deposit account is overdrawn. You call your financial institution to ask about the situation. You are told, “Your DD wasn’t received from the FRB ACH and a POS posted against your DDA, which caused an OD and NSF item.”
You stop by your financial institution to ask them what the status is on your mortgage loan refinance request. The response you receive is, “Your FNMA form 1003 was incomplete so we were unable to send you an early TIL and GF. We also need to speak to you about getting more information so we can complete your VOE, VOD, and VOC. At this time, your LTV ratio looks good, as does your DI, your FICO is okay, and we need to confirm what amort you are requesting.”
If you do not know financial institution lingo, your response might be, “Please provide a translator so I can understand what you are saying. I don’t know bank or credit union jargon and acronyms!”
While most financial institutions train their employees to avoid jargon and acronyms when speaking with customers, it is not uncommon for these abbreviations to make their way into conversations with customers. Your financial institution is (hopefully) there to respond to your requests for products and services as well as provide you with information regarding your accounts in a clear and concise manner. I know all of you have heard the saying “Effective and meaningful communication is the key to a healthy relationship.” This is especially true when it comes to the relationship you have with your financial institution.
Don’t ever be shy about asking questions or pointing out to an employee at your financial institution that you don’t understand what they are saying. Ask for detailed explanations and request (better yet, insist) that they avoid using jargon and acronyms. In most cases, the employee will not realize that he or she is using financial institution lingo until you point it out. Hopefully, they will respond in a manner similar to, “Thank you for pointing out that I was speaking in terms that are unfamiliar to you. I apologize. Please give me the opportunity to answer your question again.”
Many of you may be able to translate the two examples of financial lingo noted above, but in case you aren’t, here are the translations:
- “Your DD (direct deposit) wasn’t received from the FRB ACH (Federal Reserve Bank Automated Clearing House – used to process electronic transactions between financial institutions) and a POS (point of sale – a debit card transaction in which you used your personal identification number (PIN) when you paid) posted against your DDA (demand deposit account a.k.a. checking account) which caused an OD (overdraft) and a NSF (non-sufficient funds) item.
- “Your FNMA form 1003 (Fannie Mae mortgage loan application) was incomplete so we were unable to send you an early TIL (Truth in Lending Disclosure) and GF (Good Faith Estimate of Closing Costs.) We also need to speak to you about getting more information so we can complete your VOE, VOD, and VOC (Verification of Employment, Deposit, and Credit). At this time, your LTV ratio (loan to value – loan amount/value of your home) looks good as does your DI (debt to income ratio.) Your FICO is okay (FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score. This is a type of credit score that makes up a substantial portion of the credit report that lenders use to assess an applicant’s credit risk and whether or not to extend a loan.) We need to also confirm what amort (amortization schedule – the term of the loan. For mortgage loans, this is usually stated in number of years) you are requesting.
Hopefully you won’t experience financial institution lingo in the future, but if you do, don’t hesitate to point this out so it can be corrected. If it isn’t, you may have a failed relationship.
Editor’s Note: Fidel Gutierrez has worked for LANB for 26 years and is a Senior Vice President.
- Look for the Money IQ column periodically in the Los Alamos Daily Post.