Growing-equity mortgage (GEM)

Similar financial terms

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.

Alternative mortgage instruments
Variations of mortgage instruments such as adjustable-rate and variablerate mortgages, graduated-payment mortgages, reverse-annuity mortgages, and several seldom-used variations.

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.

GEMMs
Gilt-edged market makers (GEMMs) are those who are authorized to deal in UK Government securities. At the moment (2004) there are 16 GEMMs in the UK: ABN AMRO Bank NV Barclays Capital Citigroup Global Markets Limited Credit Suisse First Boston Limited Deutsche Bank AG (London Branch) Dresdner Bank AG (London Branch) Goldman Sachs International Limited HSBC Bank PLC JP Morgan Securities Limited Lehman Brothers International (Europe) Merrill Lynch International Morgan Stanley & ...

Arrangement Fee
Whilst some lenders charge an administration fee others may charge an arrangement fee. The arrangement fee is charged to cover administration and primarily reserving the funds for fixed rate and/or discounted rate mortgages. This fee may be paid separately added to the mortgage or in rarer cases taken from the mortgage loan.
Arrangement fee is commonly added to the spread in eurosyndicated and syndicated loans.

Working capital management
The management of current assets and current liabilities to maximize short-term liquidity.

Top-down equity management style
A management style that begins with an assessment of the overall economic environment and makes a general asset allocation decision regarding various sectors of the financial markets and various industries. The bottom-up manager, in contrast, selects the specific securities within the favored sectors.

Target zone arrangement
A monetary system under which countries pledge to maintain their exchange rates within a specific margin around agreed-upon, fixed central exchange rates.

Risk management
The process of identifying and evaluating risks and selecting and managing techniques to adapt to risk exposures.

Passive investment management
Buying a well-diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities.

Mangement's discussion
A report from management to the shareholders that accompanies the firm's financial statements in the annual report. This report explains the period's financial results and enables management to discuss other ideas that may not be apparent in the financial statements in the annual report.

Management fee
An investment advisory fee charged by the financial advisor to a fund based on the fund's average assets, but sometimes determined on a sliding scale that declines as the dollar amount of the fund increases.

Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.

Management/closely held shares
Percentage of shares held by persons closely related to a company, as defined by the Securities and exchange commission. Part of these percentages often is included in Institutional Holdings -- making the combined total of these percentages over 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.

Bottom-up equity management style
A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks.

Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days.

Corporate financial management
The application of financial principals within a corporation to create and maintain value through decision making and proper resource management.

Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of charge but agree to pay all operating and financing charges of the project.

Management BuyIn (MBI)
This is when a small group of shareholders organise a take-over of a company and form a new management team. The opposite of a Management Buyout.

Agency incentive arrangement
A means of compensating the broker of a program trade using benchmark prices for issues to be traded in determining commissions or fees.