For an adjustable-rate mortgage (ARM), the amount that is added to the
index to establish the interest rate on each adjustment date, subject to
any limitations on the interest rate change.
A homeowners' association in a large condominium or planned unit
development (PUD) project that is made up of representatives from
associations covering specific areas within the project. In effect, it is
a "second-level" association that handles matters affecting the entire
development, while the "first-level" associations handle matters affecting
their particular portions of the project.
The date on which the principal balance of a loan, bond, or other
financial instrument becomes due and payable.
A mortgage amount that is within 5 percent of the highest
loan-to-value (LTV) percentage allowed for a specific product. Thus,
maximum financing on a fixed-rate mortgage would be 90 percent or higher,
because 95 percent is the maximum allowable LTV percentage for that
merged credit report
A credit report that contains information from three credit
repositories. When the report is created, the information is compared for
duplicate entries. Any duplicates are combined to provide a summary of a
The act of changing any of the terms of the mortgage.
money market account
A savings account that provides bank depositors with many of the
advantages of a money market fund. Certain regulatory restrictions apply
to the withdrawal of funds from a money market account.
money market fund
A mutual fund that allows individuals to participate in managed
investments in short-term debt securities, such as certificates of deposit
and Treasury bills.
monthly fixed installment
That portion of the total monthly payment that is applied toward
principal and interest. When a mortgage negatively amortizes, the monthly
fixed installment does not include any amount for principal reduction.
monthly payment mortgage
A mortgage that requires payments to reduce the debt once a month.
A legal document that pledges a property to the lender as security for
payment of a debt.
A company that originates mortgages exclusively for resale in the
secondary mortgage market.
An individual or company that brings borrowers and lenders together
for the purpose of loan origination. Mortgage brokers typically require a
fee or a commission for their services.
The lender in a mortgage agreement.
A contract that insures the lender against loss caused by a
mortgagor's default on a government mortgage or conventional mortgage.
Mortgage insurance can be issued by a private company or by a government
agency such as the Federal Housing Administration (FHA). Depending on the
type of mortgage insurance, the insurance may cover a percentage of or
virtually all of the mortgage loan. See private mortgage insurance.
mortgage insurance premium (MIP)
The amount paid by a mortgagor for mortgage insurance, either to a
government agency such as the Federal Housing Administration (FHA) or to a
private mortgage insurance (MI) company.
mortgage life insurance
A type of term life insurance often bought by mortgagors. The amount
of coverage decreases as the principal balance declines. In the event that
the borrower dies while the policy is in force, the debt is automatically
satisfied by insurance proceeds.
The borrower in a mortgage agreement.
Properties that provide separate housing units for more than one
family, although they secure only a single mortgage.
A residential mortgage on a dwelling that is designed to house more
than four families, such as a high-rise apartment complex.
Fannie Mae provides financing for multifamily (buildings with five or
more units) rental properties through a nationwide network of mortgage