Governmental National Mortgage Association (GNMA) – A federal agency within the Department of Housing and Urban Development (HUD) that guarantees the timely payment of principal and interest for mortgage-backed securities backed by FHA-insured, and VA-guaranteed mortgages.
Grace Period – A period of time after an obligation is due during which a borrower can perform without incurring a penalty and without being considered in default.
Graduated Payment Mortgage (GPM) – A type of flexible payment mortgage where the payments increase for a specified period of time and then level off. Usually results in negative amortization.
Hazard Insurance – Insurance coverage that provides compensation to the insured in case of property loss or damage.
Homeowner’s Policy – A multiple peril insurance policy available to owners of private dwellings that covers the dwelling and its contents, as well as personal liability.
HUD – The Department of Housing and Urban Development. A governmental entity responsible for the implementation and administration of housing and urban development programs. HUD was established by the Housing and Urban Development Act of 1965 to supersede the Housing and Home Finance Agency.
Impound – That portion of a mortgagor’s monthly payment held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.
Index – A published interest rate, such as prime rate, LIBOR, T-Bill, or the 11th District COFI. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns. On ARMs, a predetermined margin is added to the index to compute the interest rate adjustment.
Insured Loan – A loan insured by FHA, VA, or a private mortgage insurance company.
Interest – Consideration in the form of money paid for the use of money, usually expressed as an annual percentage. Also, a right, share or title in property.
Investor – Any person or institution that invests in mortgages or mortgage-backed securities.