Alternative mortgage instruments

Similar financial terms

Alternative Hypothesis
The hypothesis against which the null hypothesis is tested.

Mortgage sector
Securities backed by mortgage loans. These are loans obtained by borrowers in order to purchase residential property or and entity to purchase commercial property.

Federal National Mortgage Association (FNMA)
The FNMA is a US government-backed corporation which purchases mortgages from lenders and resells them to investors. It is financed by the issue of debt securities. Equity shares, known as Fannie Maes, are traded on the New York Stock Exchange.

Wholesale mortgage banking
The purchasing of loans originated by others, with the servicing rights released to the purchaser.

Stripped mortgage-backed securities (SMBSs)
Securities that redistribute the cash flows from the underlying generic MBS collateral into the principal and interest components of the MBS to enhance their use in meeting special needs of investors.

REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages secured by any type of real property and issue multiple classes of ownership interests to investors in the form of pass-through certificates, bonds, or other legal forms. A financing vehicle created under the Tax Reform Act of 1986.

RAMs (Reverse-annuity mortgages)
Mortgages in which the bank makes a loan for an amount equal to a percentage of the appraisal value of the home. The loan is then paid to the homeowner in the form of an annuity.

Open-end mortgage
Mortgage against which additional debts may be issued.

Mortgager
The borrower of a loan secured by property.

Mortgagee
The lender of a loan secured by property.

Mortgage-backed securities (MBS)
Securities backed by a pool of mortgage loans.

Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock Exchange that operates a clearing service for the comparison, netting, and margining of agency-guaranteed MBSs transacted for forward delivery.

Mortgage rate
The interest rate on a mortgage loan.

Mortgage-pipeline risk
The risk associated with taking applications from prospective mortgage borrowers who may opt to decline to accept a quoted mortgage rate within a certain grace period.

Mortgage pipeline
The period from the taking of applications from prospective mortgage borrowers to the marketing of the loans.

Mortgage pass-through security
Also called a passthrough, a security created when one or more mortgage holders form a collection (pool) of mortgages sells shares or participation certificates in the pool. The cash flow from the collateral pool is "passed through" to the security holder as monthly payments of principal, interest, and prepayments. This is the predominant type of MBS traded in the secondary market.

Mortgage duration
A modification of standard duration to account for the impact on duration of MBSs of changes in prepayment speed resulting from changes in interest rates. Two factors are employed: one that reflects the impact of changes in prepayment speed or price.

Mortgage bond
A bond in which the issuer has granted the bondholders a lien against the pledged assets. Collateral trust bonds

Mortgage
A loan secured by the collateral of some specified real estate property which obliges the borrower to make a predetermined series of payments.

Closed-end mortgage
Mortgage against which no additional debt may be issued.

Collateralized mortgage obligation (CMO)
A security backed by a pool of pass-throughs , structured so that there are several classes of bondholders with varying maturities, called tranches. The principal payments from the underlying pool of pass-through securities are used to retire the bonds on a priority basis as specified in the prospectus.

Conventional mortgage
A loan based on the credit of the borrower and on the collateral for the mortgage.

Growing-equity mortgage (GEM)
A fixed-rate mortgage that provides scheduled payment increases over an established period of time, with the increased amount of the monthly payment applied directly toward reducing the remaining balance of the mortgage.