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	Adjustable-rate mortgage (ARM) - A mortgage with an interest rate and payment that may change periodically over the life of the loan, based on changes in a specified index.

	Callable debt - A debt security with an issuer who has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity.

Charge-off - The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.

Common stock - A security that represents ownership in a company but gives no legal claim to a definite dividend or to a return of capital.

Conventional mortgage - A mortgage loan that is not insured or guaranteed by the federal government.

Credit enhancement - A method that reduces credit risk by requiring collateral, letters of credit, mortgage insurance, corporate guarantees, or other agreements, in an effort to provide an entity with some assurance that it will be recompensed to some degree in the event of a financial loss.

Credit loss ratio - The ratio of credit-related losses to the dollar amount of mortgage-backed securites (MBSes; see below) outstanding and total mortgages owned by the corporation.

Credit scoring - A process that uses recorded information about individuals and their loan requests to assess -- in a quantifiable, objective, and consistent manner -- their future performance regarding debt repayment.

Credit-related expenses - The sum of foreclosed property expenses plus the provision for losses.

Credit-related losses - The sum of foreclosed property expenses plus charge-offs.

	Debt security - A security in which the issuing company generally agrees to repay the principal (typically, the original amount borrowed) and make interest payments according to an agreed schedule.

Default - The failure of a borrower to comply with the terms of a note or provisions of a mortgage.

Delinquency - A mortgage loan in which a payment has not been made by the due date.

Duration - The weighted-average life of the present value of all future cash flows, both principal and interest, of a security. It is used as a measure of the sensitivity of the value of a security to changes in interest rates.

	Fixed-rate mortgage - A mortgage loan in which the interest rate does not change during the entire term of the loan.

Forbearance - The lender's postponement of legal action when a borrower is delinquent. It is usually granted when a borrower makes satisfactory arrangements to bring the overdue mortgage payments up to date.

Foreclosure - The legal process by which property that is mortgaged as security for a loan may be sold to pay a defaulting borrower's loan.

	Guaranty fee - Compensation paid by a lender to the issuer for the guarantee of timely payments of principal and interest to MBS security holders.

	Interest rate swap - A transaction between two parties in which each agrees to exchange payments tied to different interest rates or indices for a specified period of time, generally based on a notional principal amount.

Intermediate-term mortgage - A mortgage loan with a contractual maturity at time of purchase equal to or less than 20 years.

	Lender option commitments - An agreement giving a lender the option to deliver loans or securities by a certain date, at agreed-upon terms.

Loan servicing - The tasks a lender performs to protect a mortgage investment, including collecting monthly payments from borrowers and dealing with delinquencies.

Loan-to-value (LTV) ratio - The relationship between the dollar amount of a borrower's mortgage loan and the value of the property.

Loss mitigation - Activities designed to reduce either the likelihood of the corporation suffering financial losses on a loan or the final dollar value of those losses in the event of a borrower default.

	Mandatory delivery commitment - An agreement that a lender will deliver loans or securities by a certain date at agreed-upon terms.

Medium-term notes - Unsecured general obligations with maturities of one day or more and with principal and interest payable in U.S. dollars.

Modification - Any change to the original terms of a mortgage.

Mortgage - A legal document that pledges property to a lender as security for the repayment of the loan. The term also is used to refer to the loan itself.

Mortgage-backed security (MBS) - A security that represents an undivided interest in a group of mortgages. Principal and interest payments from the individual mortgage loans are grouped and paid out to the MBS security holders.

Multifamily housing - A building with more than four residential rental units.

	Nonperforming asset - An asset, such as a mortgage, that is not currently accruing interest or on which interest is not being paid.

Notional principal amount - The hypothetical amount on which interest rate swap payments are based. The notional principal amount in an interest rate swap generally is not paid or  received by either party.

	Preforeclosure sale - A procedure in which the borrower is allowed to sell his or her property for an amount less than what is owed on it to avoid a foreclosure. This sale fully satisfies the borrower's debt.

	Real estate mortgage investment conduit (REMIC) - A security that represents a beneficial interest in a trust having multiple classes of securities. The securities of each class entitle investors to cash flows structured differently from the payments on the underlying mortgages.

Repayment plan - An agreement between a lender and a borrower who is delinquent on his or her mortgage payments, in which the borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments.

Reverse mortgage - A financial tool that provides a senior with funds from the equity in their home. Generally, no payments are made on a reverse mortgage until the borrower moves or the property is sold. The final repayment obligation is designed to not exceed the proceeds from the sale of the home.

Risk-based capital - The amount of capital necessary to absorb losses throughout a hypothetical 10-year period marked by severely adverse circumstances.

	Secondary mortgage market - The market in which residential mortgages or mortgage securities are bought and sold.

Security - A financial instrument showing ownership of equity (such as common stock), indebtedness (such as a debt security), a group of mortgages (such as MBS), or potential ownership (such as an option).

Serious delinquency - A single-family mortgage that is 90 days or more past due, or a multifamily mortgage that is two months or more past due.

Stripped MBS (SMBS) - Securities created by "stripping" or separating the principal and interest payments from the underlying pool of mortgages into two classes of securities, with each receiving a different proportion of the principal and interest payments.

	Transfer agent - A bank or trust company charged with keeping a record of a company's stockholders and canceling and issuing certificates as shares are bought and sold.

	Underwriting - The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's ability and willingness to repay the debt, and the value of the property.