Firm commitment-See "commitment".

Fiscal year-Annual accounting period of the Federal Government, beginning October 1 and ending September 30 of the subsequent calendar year. The fiscal year is designated by the calendar year in which it ends, so that fiscal year 1985 refers to the fiscal year beginning October 1, 1984 and ending September 30, 1985.

Flood insurance program-Program under which FEMA makes flood insurance available to participating communities under the National Flood Insurance Act of 1968.

Forebearance-The act of postponing or refraining from taking legal action against a mortgagor even though mortgage payments are in arrears.

Foreclosure-Legal procedure under which the property securing a loan is sold to pay the debt owed by a borrower who has defaulted.

Government National Mortgage Association-Federal corporation, and part of HUD, that provides a secondary market for federally guaranteed mortgages.

Graduated payment mortgage-A mortgage under which payments are comparatively low initially and then increase over a specified period before reaching a constant level.

Ground lease-Lease of land without improvements.

Growing equity mortgage-Mortgage under which payments increase over a specified period in order to accelerate the repayment of principal and thereby shorten the term of the loan.

Guaranteed loan-Loan in which a private lender is assured repayment by the Federal Government of part or all of the principal or interest, or both, in the event of a default by the borrower. Unlike an insured loan, no insurance fund exists and no insurance premiums are paid.

Hold-harmless provision-Statutory provision ensuring the continued eligibility of a specified class for certain assistance for a limited period of time. The most commonly cited examples are contained in paragraphs (4) and (6) of section 102(a) of the Housing and Community Development Act of 1974.

Home equity conversion mortgage-A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as security.

Housing allowance payments-Payments made by HUD under section 504 of the Housing Act of 1970 to assist families in meeting rental or homeownership expenses.

Housing assistance plan-A part of the CDBG application describing local housing conditions and sets quantitative goals for providing housing to low- and moderate-income residents.

Housing development grant-Grant made by HUD under section 17(d) of the United States Housing Act of 1937 for the new construction or substantial rehabilitation of rental housing.

Housing finance agency-State agency responsible for financing housing and administering assisted housing programs.

Housing preservation grant-Grant made by FmHA under section 533 of the Housing Act of 1949 for the rehabilitation of singlefamily housing, rental housing, or cooperatives for low- and very low-income families and persons.

Industrial revenue bond-A debt instrument issued by a municipality or development corporation to finance the development of revenue-producing projects. Project revenues are then used to pay the debt service on the bonds. Section 103(b) of the Internal Revenue Code of 1954 establishes certain limitations.

Installment land contract-See "land contract”.

Insured loan-Loan in which a private lender is assured repayment by the Federal Government of part or all of the principal or interest, or both, and for which the borrower pays insurance premi

ums.

Interest rate credits-Generally refers to the FmHA program of subsidized interest rate loans for single-family and multifamily housing for low or moderate income families under section 521(a)(1)(B) of the Housing Act of 1949. The subsidy may reduce the interest rate to as low as 1 percent.

Interest reduction payments-Periodic assistance payments by HUD to mortgagees to permit lower interest rate payments by lower income families (varying with fluctuations in incomes) on HUD insured mortgages financing homes, rental housing, or cooperative housing. See sections 235 and 236 of the National Housing Act.

Land contract-An agreement to transfer title to a property upon fulfillment of the contract conditions. Under an "installment land contract", the purchaser assumes possession immediately and makes periodic payments to the vendor (the owner of the property); title is transferred only when all payments have been made.

Leased housing-Low-rent housing provided by public housing agencies in housing leased from private owners.

Leveraging-The maximization of the effect of Federal assistance for a project by obtaining additional project funding from non-Federal sources. See section 119 of the Housing and Community Development Act of 1974.

Lien-Any legal claim on a property for payment of a debt. A mortgage is one example.

Loan-to-value ratio-The relationship between the amount of the mortgage loan and the appraised value of the property involved, expressed as a percentage of the appraised value. It is one of the traditional limitations on a mortgage eligible for mortgage insur

ance.

Lower income family-Generally, a family whose income does not exceed 80 percent of the median family income of the area involved.

Manufactured home-Housing, including a mobile home, that is factory-built or prefabricated.

Market rent-Rental that would be charged by the owner of a HUD-insured multifamily dwelling unit if the owner were paying interest on the loan at the HUD-approved market interest rate.

Metropolitan city-For purposes of the CDBG program, a city that is the central city of a metropolitan area or that has a population of not less than 50,000.

Metropolitan statistical area-Metropolitan area defined by the Office of Management and Budget. Previously referred to as standard metropolitan statistical area.

Minimum property standards-HUD regulations establishing minimum acceptable standards for properties to be purchased with HUD-insured mortgage loans.

Moderate income family-For purposes of the CDBG program, a family whose income exceeds 50 percent of the median family income of the area involved, but does not exceed 80 percent of the median family income of the area.

Moderate rehabilitation-Rehabilitation that is less comprehensive than substantial rehabilitation, such as repair or replacement of the heating or electrical system of a project.

Modernization-See "comprehensive improvement assistance". Mortgage-Conveyance of an interest in real property as security for repayment of a loan, including a loan made for the purchase or improvement of the real property.

Mortgage-backed securities-Obligations issued by an organization that has held and set aside mortgages as security for payment of the obligations. FNMA, GNMA, and FHLMC, as well as private organizations, issue such obligations.

Mortgage insurance programs-Generally refers to the insured loan programs carried out by HUD, through the FHA, under the National Housing Act.

Mortgage revenue bonds-Tax-exempt bonds issued by State and local governments and agencies to finance the sale or repair of single-family housing. The bonds are payable from revenues derived from repayments of interest on the mortgage loans financed from the proceeds of the bonds. Section 103A of the Internal Revenue Code of 1954 establishes certain limitations. Referred to as mortgage subsidy bonds in the Internal Revenue Code of 1954.

Mortgagee-A lender who is conveyed an interest in real property under a mortgage.

Mortgagor-A borrower who conveys an interest in real property under a mortgage.

Multifamily housing-Generally a project containing dwelling units for more than 4 families.

National Housing Partnership-A private limited partnership established under title IX of the Housing and Urban Development Act of 1969 for the purpose of carrying out the building, maintenance, or rehabilitation of housing and related facilities for lower or moderate income families. It can enter into partnerships or joint ventures, conduct research, provide technical assistance, and make loans or grants to accomplish its purpose.

National Institute of Building Sciences-A nonprofit nongovernmental organization established under section 809 of the Housing and Community Development Act of 1974 to make findings and to advise public and private sectors of the economy with respect to the use of building science and technology in achieving nationally acceptable standards for use in housing and building regulations. Negative amortization-A loan prepayment schedule under which payments do not cover the full amount of interest due. The unpaid interest is added to the principal and, as a result, the outstanding principal balance increases rather than decreases.

Neighborhood development grant-A grant made by HUD to an eligible neighborhood nonprofit organization under section 123 of the Housing and Urban-Rural Recovery Act of 1983 to assist the

organization in carrying out certain neighborhood development activities.

Neighborhood strategy area-Area in which concentrated housing rehabilitation and community development block grant activities are being undertaken.

Nonentitlement area-For purposes of the CDBG program, an area that is neither a metropolitan city nor urban county, and is therefore generally ineligible for direct grants from HUD.

Nonprofit sponsor-A group organized to undertake a housing project for reasons other than making a profit.

Notice of funding availability-A notice by HUD to inform potential project sponsors that contract authority is available.

Off-budget program-Federal program the transactions of which are not included in the Budget of the United States Government as a result of statutory requirement.

Operating subsidies-HUD payments to public housing agencies to assist the payment of operating expenses of public housing, or to the owners of certain multifamily projects for low income families. See section 9 of the United States Housing Act of 1937.

Participation loan-Loans made by the FmHA or others when another lender makes part of the loan.

Pass through-Principal and interest receipts on housing mortgages are "passed through" by GNMA, FNMA, FHLMC, or other organizations to the purchasers of their securities or obligations that have been sold and secured by the mortgages set aside as security for the obligations.

Planned unit development-Development and construction of a residential community as a unit in accordance with a plan for the entire development.

Pledged account mortgage-A graduated payment mortgage in which part of the buyer's down payment is deposited in a savings account. Funds are drawn from the account to supplement the buyer's monthly payments during the early years of the loan.

Pocket of poverty-For purposes of the UDAG program, a contiguous area of particularly severe poverty in a city or urban county. A city or urban county that fails to meet the general eligibility standards for UDAG assistance may be eligible if it contains such

an area.

Prepayment penalty-A penalty that may be levied for repayment of a loan before it falls due.

Price-level adjusted mortgage-Mortgage under which the outstanding balance is adjusted according to an established price index, while the interest rate remains fixed.

Principal-The amount of debt, exclusive of accrued interest, remaining on a loan. Before any principal has been repaid, the total loaned amount is the principal.

Private mortgage insurance-Insurance by private companies of lenders against losses on mortgage loans.

Program reservation-HUD action reserving funds for a specific approved public housing project. This reservation is subject to PHA fulfillment of all HUD requirements.

Public housing-Lower income housing owned and operated by a public housing agency and assisted under the United States Housing Act of 1937 (other than under section 8 or 17).

Public housing agency-Public agency established by a State or local government to finance or operate low-income housing assisted under the United States Housing Act of 1937.

Real estate investment trust-A trust established by real estate investors primarily for the management and control of investments in mortgages and to sell obligations secured by mortgages and property held by the trust.

Recapture-Requiring repayment of assistance provided, either because the assistance has not been used within a certain period of time or a specified event (such as the sale of assisted property) occurs that permits repayment of all or a part of the assistance. See section 235(c)(2) of the National Housing Act.

Refinancing-Payment of a loan with amounts borrowed under a

new loan.

Rehabilitation-The improvement or repair of property. Such term includes substantial and moderate rehabilitation, but excludes new construction.

Rehabilitation loans-Loans made by HUD under section 312 of the Housing Act of 1964 for the rehabilitation of property.

Reinsurance Program under section 249 of the National Housing Act to demonstrate possible advantages of having private mortgage insurance companies enter into reinsurance contracts with HUD, under which such private insurers would assume a percentage of the risk on certain single-family mortgages insured by HUD. Rent control-Limitation of annual rent increases by municipal ordinance, State, or Federal law.

Rent supplements-Annual Federal payments to owners of housing built with certain HUD mortgage insurance on behalf of prescribed types of lower income families.

Rental assistance payments-Generally refers to the FmHA program of rental assistance for low income families in rural areas under section 521(a)(2)(A) of the Housing Act of 1949.

Replacement cost-The basis of one of the limits placed on the amount of a mortgage that can be insured by HUD under certain programs, such as the mortgage may not exceed 90 percent of replacement cost of the housing when completed.

Reverse annuity mortgage-See "home equity conversion mortgage".

Rural area-A non-urban area meeting the requirements of section 520 of the Housing Act of 1949 and eligible assistance under the FmHA housing programs.

Second mortgage-A mortgage that grants rights subordinate to the rights granted by the initial mortgage. A second mortgage generally bears a higher rate of interest than the initial mortgage to reflect the greater risk of the lender.

Secondary mortgage market-Nationwide market for the purchase and sale of mortgages. FHLMC, FNMA, and GNMA are the 3 federally established entities that purchase mortgages in the secondary mortgage market, thereby increasing the availabilty of funds to financial institutions for additional residential loans.

Seed money-Advances, loans, or grants to cover preliminary expenses of constructing housing projects, such as the cost of planning and obtaining financing.