Actual/Actual: Remittance option for which actual principal and actual interest payments are remitted.
Credit Enhancement: The process of reducing credit risk by requiring collateral, insurance, or other agreements. MI, SMI, and LRA are types of credit enhancements used by the MPP.
Delivery Option: Determines how much time the seller will have between the commitment date and settlement date. Standard delivery options of 7, 14, 28, 42, 56, and 91 days are available in LAS.
Extension: Pushing back the settlement date of an MDC to allow for the delivery of a loan without a price adjustment on the commitment. An MDC cannot be extended beyond the expiration date of the MCC.
LAS: FHLBI’s Loan Acquisition System.
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 on a best efforts basis 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.
MPP Advantage: MPP structure using enhanced LRA rather than SMI as the credit enhancement.
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 (Seller).
Pool Aggregation: Loans sold to the FHLBI under specific MCCs by multiple sellers aggregated into one pool for credit enhancement purposes.
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 for which scheduled principal and scheduled interest payments are remitted.
Settlement Date: The date that an MDC will fund.
SMI: Supplemental Mortgage Insurance.