GLOSSARY OF MORTGAGE TERMS

GLOSSARY OF MORTGAGE TERMS - M

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Margin
An amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Market Data Approach to Value
The estimation of the market value of a property by comparing it with similar properties in the general area that have sold recently under comparable conditions.

Market Price (Market Value)
For securities traded through an exchange, the last reported price at which a security was sold; for securities traded 'over-the-counter,' the current price of the security in the market.

Market Value (Market Price)
For securities traded through an exchange, the last reported price at which a security was sold; for securities traded 'over-the-counter,' the current price of the security in the market.

Marketable Title
Title to property that is free of defects and that will legally be accepted without objection. Also known as perfect title, clear title, and good title.

Maturity
(a) The end of the period of time for which credit, an insurance contract, or a mortgage loan is written. (b) The date(s) on which some types of investments such as bonds may be redeemed at face value. (c) The date on which a note, time draft, bill of exchange, bond, certificate of deposit or other negotiable instrument becomes due and payable.

Maturity Date of MBS
The last possible date on which the last payment of the longest loan may be paid (also known as 'stated maturity').

Mechanic's Lien
A legal, enforceable claim for payment to a person who has performed work or supplied materials used in the construction or repair of a building. The building and land is attached as security for payment of the claim. Mechanic's liens are permitted by the laws of most states. Also called a materialmen's lien.

Merged Credit Report
Reports the raw data from two or more major credit repositories.

MI (Mortgage Insurance)
A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.

Minimum Gross Yield
The sum of the required net yield and the required servicing spread in a Freddie Mac purchase contract.

Minimum Servicing Spread
The minimum amount of mortgage interest income to be retained by the originating lender (seller/servicer) as compensation for servicing mortgages purchased in whole by Freddie Mac.

MIP (Mortgage Insurance Premium)
The money paid for mortgage insurance, either to a government agency (such as the FHA) or to a private company.

Mobile Home Loan
A loan to finance the purchase of a mobile home, secured by the lender's claim on the mobile home. The loan may include funds for associated costs such as transportation of the mobile home and setup on a new site.

Modification Agreement
A written agreement between a financial institution and a borrower that changes one or more terms of an existing mortgage loan such as the interest rate, number of years allowed for repayment, or amount of monthly payment.

Monthly Housing Expense
The total monthly expenses, including principal, interest, taxes and insurance, paid by the borrower. Can establish affordability when used with total income.

Mortgage
A lien on the property that secures the Promise to repay a loan.

Mortgage Banker
A company that originates loans and resells them to secondary mortgage lenders (such as Fannie Mae or Freddie Mac).

Mortgage Bond
A bond secured by a mortgage on real property.

Mortgage Broker
A firm that originates and processes loans for a number of lenders.

Mortgage Derivative
Any of several types of securities that pay their investors with cash flows generated by the payments of principal and interest to an underlying pool of mortgages. Mortgage derivative products include collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), stripped mortgage-backed securities such as interest-only securities (IOs) and principal-only securities (POs), and pass-through mortgage-backed securities with senior/subordinated structures.

Mortgage Discount
An amount paid by the borrower to increase the yield of a mortgage to the lender. Sometimes called points, loan brokerage fee, or new loan fee. The discount is computed on the amount of the loan, not the selling price of the property.

Mortgage Insurance (MI)
A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.

Mortgage Insurance Premium (MIP)
A monthly payment, usually part of the mortgage payment and paid by a borrower for mortgage insurance.

Mortgage Life and Disability Insurance
An insurance policy on the life of a borrower that repays an outstanding mortgage debt upon the death of the insured.

Mortgage Loan
An advance of funds from a lender, called the mortgagee, to a borrower, called the mortgagor, secured by real property and evidenced by a document called a mortgage. The mortgage sets forth the conditions of the loan, the manner and duration of repayment, and reserves to the mortgagee the right to repossess the pledged property if the mortgagor fails to repay any portion of principal and interest.

Mortgage Loans Outstanding
The total dollar amount of money that is owed by mortgagors.

Mortgage Modification
A loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

Mortgage Note
A written promise to repay a specified sum of money plus interest at a specified rate. While the mortgage itself pledges the title to real property as security for a loan, the mortgage note states the amount of debt and the rate of interest, and makes the borrower who sign's the note personally responsible for repayment.

Mortgage Origination
The making of a new mortgage, including all steps taken by a lender to attract and qualify a borrower, process the mortgage loan, and place it on the lender's books.

Mortgage Participation
The division of a mortgage or pool of mortgages into units that are sold to one or more investors, each of whom participates in receiving payments of principal and interest.

Mortgage Pool
A group of mortgages assembled to form the collateral for securities. Mortgage payments of principal and interest into the pool are used to pay those who invest in the securities.

Mortgage Portfolio
The total of all mortgage loans held by a lender or investor.

Mortgage Revenue Bonds
Tax exempt bonds issued by state and local governments. Funds raised by the sale of the bonds are used to finance home mortgages. Revenue from mortgage payments is used to repay the bonds.

Mortgage Servicing
The activity of keeping a mortgage loan current, including collecting monthly mortgage payments, forwarding principal and interest payments to the current mortgage holder (if the loan has been sold), maintaining escrow accounts, paying taxes and insurance premiums, and taking steps to collect overdue payments. Mortgage servicing may be performed by the original lender, or the lender may sell the right to service a mortgage to another company, which performs the service for a fee. Some companies, including some savings associations, specialize in servicing mortgages, both their own and those made by other lenders. The original lender may sell the mortgage servicing rights to one company and sell the mortgage itself to another company. See mortgage servicing rights. See recourse servicing. See PMSR.

Mortgage Servicing Rights
The right to service a mortgage. See Mortgage Servicing.

Mortgage Take Back
A mortgage loan issued by the seller of the mortgaged property.

Mortgage-Backed Bonds
Bonds that are secured by mortgages. Unlike mortgage-backed pass through securities, mortgage-backed bonds do not convey ownership of any portion of the underlying pool of mortgages. However, mortgage-backed bonds do offer a more predictable maturity and thus offer a form of call protection.

Mortgage-Backed Pass through Securities
Securities that convey ownership of a fractional part of each mortgage in a pool of mortgages backing the securities. Mortgage payments are sent to the issuer of the securities and then passed through to those who bought the securities. Each security owner shares proportionally the interest and principal payments generated by the underlying pool of mortgages.

Mortgagee
The institution, group or individual that lends money secured by pledged real estate; the lender. See mortgagor.

Mortgagor
The owner of real estate who pledges the property as security for the repayment of a debt; the borrower. See Mortgagee.

Multi-dwelling Units
Properties that acquire a single mortgage, but provide housing units for two or more families.

Multiple Issuer Pool
A mortgage-backed securities pool, formed as a Ginnie Mae II MBS, normally consisting of more than one loan package. All of the loan packages in the pool will have similar characteristics. The resulting pool backs a single issuance of securities.

Mutual Fund
An organization that creates a portfolio by investing funds in securities, such as Ginnie Mae securities. Mutual funds are 'open-ended' so that the portfolio investment may change. Ginnie Mae does not directly guarantee owners of fund shares; therefore, these owners must look to their mutual fund for payment, even if the portfolio consists solely of Ginnie Mae securities.

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