Key Terms

Actual/Actual: Remittance option where actual principal and actual interest payments are remitted.

Delivery Option: Determines how much time the seller will have between the commitment date and settlement date. Delivery options of 7, 14, 28, 42, 56, and 91 days are available.

Extension: Pushing back the settlement date of an MDC to allow for the delivery of a loan without a price adjustment on the commitment.

LRA: Lender Risk Account - the lender risk account established by the seller for each master commitment to provide first loss coverage after private mortgage insurance, if applicable, for expected losses.

MCC: Master Commitment Contract - an agreement between the FHLBI and the seller to sell a specified aggregate principal balance of mortgages with specified characteristics over a fixed period of time.

MDC: Mandatory Delivery Commitment - a transaction that obligates a seller to sell a specified dollar amount of mortgages with specified characteristics to the FHLBI at a specified purchase price on a specified settlement date.

MERS: Mortgage Electronic Registration System.

MI: Mortgage insurance.

MPP: Mortgage Purchase Program.

Pairoff: The amount by which an MDC must be reduced for failure to deliver mortgages according to the terms of the MDC. Subject to fee.

PFI: Participating Financial Institution.

QA: Quality assurance.

Roll: The extension of an MDC that results in a price adjustment to reflect the additional time needed for delivery.

Scheduled/Scheduled: Remittance option where scheduled principal and scheduled interest payments are remitted.

Settlement Date: The date that an MDC will fund on.

SMI: Supplemental Mortgage Insurance.

Updated: February 25, 2008