Hazard Insurance
A form of insurance purchased by the borrower and required by the lender in which, the insurance company protects the insured from specified losses, such as fire, windstorm and the like. Also known as homeowner insurance.
HECM
An acronym for Home Equity Conversion Mortgage, a reverse mortgage program authorized by Congress in 1988. With a HECM, the FHA insures both the lender against loss in the event the loan balance at termination exceeds the value of the property, and the borrower that any payments due from the lender will be made, even in the event the lender fails.
Homebuyer protection plan
A plan intending to protect FHA homebuyers against property defects which, is defective in its own right.
Home equity line of credit (HELOC)
A home mortgage set up as a flexible line of credit whereby a borrower can draw up to a maximum amount as opposed to a loan based on a fixed dollar amount.
Home equity loan
A second mortgage on a home that also has a second-priority claim against a property in the event the borrower defaults.
Home Keeper
A reverse mortgage program, which is administered by Fannie Mae.
Home Valuation Code of Conduct (HVCC)
A statute instilled by Fannie Mae and Freddie Mac, effective May 1, 2009, stipulating that the agencies would, from then onwards, only purchase mortgages supported by an independent appraisal.
Housing bubble
A distinct increase in the cost of home prices partly fueled by the expectation of prices continuing to rise.
Housing expense
Same as PITI and “monthly housing expense”; the sum total of mortgage payment, hazard insurance, property taxes and homeowner association fees.
Housing expense ratio
Also known as Housing Expenses-to-Income Ratio, it is the ratio of housing expense to borrower income, which is used (along with the total expense ratio and other factors) in qualifying borrowers. The ratio, expressed as a percentage, results when a borrower’s housing expenses are divided by his/her gross monthly income. See debt-to-income ratio.
Housing investment
The amount invested in a house that is equal to the sale price less the loan amount.
HUD-1 Statement
A document a borrower receives at closing providing an itemized listing detailing all the payments and receipts among the parties in a real estate transaction, including borrower, lender, home seller, mortgage broker and various other service providers. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. Each item appearing on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 form define the seller’s net proceeds and the buyer’s net payment at closing.
Hybrid ARM
An ARM with an initial rate that holds for a determined period, during which it is “fixed-rate” and, after which it becomes adjustable rate. The term is usually applied to ARMs with initial rate periods of 3 years or longer.
