Reverse Mortgages.

203b limit:

The dollar limit in each county for how much of a home's value can be used to determine the amount of money available on a federally insured HECM reverse mortgage. The name comes from Section 203b of the National Housing Act.

AARP:

TA national nonprofit, nonpartisan membership organization dedicated to helping people age 50 and over improve the quality of their lives as they age.

Account Executive (AE):

The liaison between a broker or correspondent and MetLife Bank.

Adjustable rate:

An interest rate that adjusts, based on changes in a published market-rate index.

ADP code:

HUD designation on loans insured by the FHA. The HECM Direct Endorsement Codes are as follows:

• HECM Standard (New & Old) ADP Codes
• HECM Assignment/Fixed 951
• HECM Assignment/ARM 952
• HECM Condominium/Fixed 957
• HECM Condominium/ARM 958

• HECM SaverADP Codes
• HECM Assignment/Fixed 971
• HECM Assignment/ARM 972
• HECM Condominium/Fixed 977
• HECM Condominium/ARM 978

Annuity:

An insurance product providing a monthly cash advance for life.

Appreciation:

An increase in a property’s value.

CAIVRS:

HUD's Credit Alert Interactive Voice Response System. This system (which is now computerized, not voice-activated) indicates if a borrower is presently delinquent on a Federal loan or has had a claim paid within the previous three years on a loan insured by HUD.

Cap:

A limit on the amount an adjustable interest rate may go up or down during a specified time period.

Closing costs:

Loan fees charged to the customer at the time of closing, which may include but are not limited to:

appraisal, title insurance, FHA mortgage insurance premium, origination fee, recording fees and escrow/settlement fees. With a reverse mortgage, these costs may be financed into the loan.

Condemnation:

A court action saying a property is unfit for use. Also, the government taking private property to use for the public by the right of eminent domain.

Counseling:

Required from a third party for all reverse mortgage borrowers. The counseling must be completed and certificate received by the lender prior to processing the loan. AVM or preliminary title may be ordered prior to counseling.

Credit line:

A credit account that the borrower can access on an as-need basis; also known as a line of credit.

Current interest rate:

In the HECM program, the interest rate currently being charged on the outstanding loan balance; it equals the one-year rate for U.S. Treasury Securities, plus a margin.

Default:

A nonperformance or breach of the terms of the loan. Defaults on a reverse mortgage can include, but are not limited to:

failure to maintain property, failure to pay property taxes and/or insurance (hazard and/or flood), and failure to repay the loan after a repayment notice has been issued.

Depreciation:

A decrease in a property’s value.

EPLS:

Excluded Parties List System. General Services Administration's (GSA’s) List of Parties Excluded from Federal procurement or nonprocurement programs. See the EPLS website, www.epls.gov.

Expected rate:

In the HECM program, the rate used to determine a borrower's available loan amount; it equals the 10-year rate for U.S. Treasury Securities, plus a margin.

Fannie Mae:

A government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity, stability and affordability to the U.S. housing and mortgage markets. Fannie Mae operates in the U.S. secondary mortgage market, working with mortgage bankers, brokers and other primary mortgage market partners to help ensure that they have funds to lend home buyers at affordable rates.

Federal Housing Administration (FHA):

The part of the U.S. Department of Housing and Urban Development (HUD) that insures HECM loans.

Fixed monthly loan advances:

Payments of the same amount which are made to a borrower each month.

Fixed rate HECM:

A Home Equity Conversion Mortgage with a fixed interest rate set at closing for the life of the loan.

HECM:

Home Equity Conversion Mortgage (see definition below).

HECM fixed rate:

A Home Equity Conversion Mortgage with a fixed interest rate set at closing for the life of the loan.

Home Equity Conversion Mortgage (HECM):

The reverse mortgage program insured by the Federal Housing Administration (FHA), a U.S. government agency.

Home equity line of credit:

A mortgage loan that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified portion of the borrower's equity in a property.

HUD:

U.S. Department of Housing and Urban Development.

Initial interest rate:

The original interest rate of a mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). In the HECM program, the interest rate that is first charged on the loan balance beginning at closing; it equals the one-year rate for U.S. Treasury Securities, plus a margin.

LDP:

HUD’s Limited Denial of Participation list.

Lending limit:

A portion of the home’s value that is used when calculating the principal limit; varies by county for HECM products.

Line of credit:

A credit account that the borrower can access on an as-needed basis. Also known as a credit line.

Loan advances:

Payments made to a borrower from an established line of credit.

LOS:

Loan Origination System

Lump sum:

A single loan advance at closing.

Margin:

In the HECM program, the amount added to the one-year Treasury rate to determine the initial and current interest rates, and to the 10-year Treasury rate to determine the expected rate.

Maturity:

When a loan is due and payable.

Maximum claim amount:

In the HECM program, the lesser of the home’s appraised value or the maximum FHA 203b county limit for a one-unit building in the county where the property is located, even if the property is a 2-, 3- or 4-unit property. The lesser of the appraised value or the Fannie Mae single-family national lending limit.

MIP:

Mortgage insurance premium (see definition below)

Modified tenure:

A reverse mortgage product that combines a tenure loan with a line of credit.

Modified term:

A reverse mortgage product that combines a term loan with a line of credit.

Money supply:

The amount of money in circulation. M1 = cash + regular demand deposits + other check-type deposits. M2 = M1 + savings and small denomination time-deposits. When the money supply figure is up, it is an inflationary factor and, therefore, generates concern that the Federal Reserve will tighten money growth by allowing short-term interest rates to rise.

Mortgage insurance:

Protects the lender/investor against loss and risk if the borrower owes more than what can be collected from the sale of the property.

Mortgage Insurance Premium (MIP):

Guarantees that the borrowers will receive the promised loan advances and not have to repay the loan as long as they live in the home.

Non-recourse mortgage:

As relates to the reverse mortgage, when the loan becomes due and payable the borrowers or their estate may not have to repay more than the property's fair market value and no other assets may be attached if the mortgage balance is more than the property value. If the home is sold, the lender cannot claim more than the fair market price received as payment of the loan—even if the loan balance exceeds the fair market value at the time of sale—provided that the sale is an arm’s length transaction in accordance with HUD guidelines.

Origination:

The process of setting up a mortgage, including preparing documents.

Origination fee:

The fee charged to the borrower for processing the loan. The origination fee is stated in the form of points. One point is one percent of the mortgage amount. HECM origination fees are regulated by HUD.

Principal limit:

The total borrowing power available to the borrower at origination. With a reverse mortgage, it is calculated based on the borrower’s age, maximum claim amount, loan type and expected average interest rate.

Proprietary reverse mortgage:

A reverse mortgage product owned by a private company.

PUD:

Planned Unit Development — a real estate project in which the individual owners may have rights or nonexclusive rights to a common area in addition to the exclusive ownership of their own unit and residential lot (e.g., a street, clubhouse, pool, playground, etc.). HUD no longer requires PUD approval.

Repayment:

The point at which the reverse mortgage becomes due and payable, which occurs when the last surviving borrower sells or permanently leaves the home; the homeowner fails to pay taxes or homeowner’s insurance, or to maintain the home; or when other conditions of the loan are not met.

RESPA:

The Real Estate Settlement Protection Act, which governs mortgage lenders and loan origination.

Reverse mortgage:

A loan that enables homeowners age 62+ to borrow against the equity in their home. The loan proceeds may be paid to the borrower in a lump sum, monthly payments, line of credit, or a combination of these. Repayment is not required until the last borrower no longer occupies the home as their primary residence or defaults on the mortgage.

Servicing:

The process of administering a loan after closing, such as maintaining loan records, sending statements and remitting funds to the borrower.

Supplemental Security Income (SSI):

A federal monthly income program for low-income persons who are age 65+, blind or disabled.

Tango™:

MetLife Bank’s proprietary reverse mortgage point-of-sale system, used by our brokers and correspondent lenders to manage leads, generate loan scenarios, generate documents and submit loans for underwriting.

Tenure advances:

Fixed monthly loan advances for as long as a borrower lives in a home.

Term advances:

Fixed monthly loan advances for a specific period of time.

Total Annual Loan Cost (TALC) rate:

The projected annual average cost of a reverse mortgage including all itemized costs.

TPO:

Third-party originator.

T-rate:

The rate for U.S. Treasury Securities used to determine the initial, expected and current interest rates for the HECM program.

Unpaid Principal Balance (UPB):

At the time of closing, the UPB consists of the amount of funds actually disbursed (i.e., closing costs, lien advances, other draws and any other items paid at that time). After closing, the UPB will increase due to the addition of interest, payments to or for the borrower, and servicing fees actually incurred; it will decrease by any payments paid to reduce the principal.