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Definitions
Adjustable Rate Mortgage (ARM) - A mortgage loan subject to changes in interest rates. When rates change, ARM monthly payments increase or decrease at intervals determined by the lender. The change in monthly payment amount generally is limited by a cap. Adjusted Gross Income - Income after standard deductions set by federal guidelines. Affordable Housing - Housing that costs no more than 30 percent of a household's income. Area Median Income (AMI) - Used to calculate eligibility for certain affordable housing programs. One-half of the incomes in the area are above the amount and one-half are below. Figures are published annually by HUD. Assisted Living - Services provided within a housing site that assists residents with daily living activities. (Such as bathing, dressing, cooking, etc.) Brownfields - Abandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. Environmental Protection Agency web site at www.epa.gov/swerosps/bf/glossary.htm Community and Housing Development Organization (CHDO) - A federally defined type of nonprofit housing provider that must receive a minimum of 15 percent of all Federal HOME Investment Partnership funds. The primary difference between CHDO and other nonprofits is the level of low-income resident participation on the Board of Directors. Community Development Block Grant Program (CDBG) - Authorized by the Housing and Community Development Act of 1974 replacing several community development categorical grant programs. CDBG provides eligible metropolitan cities and urban counties (called "entitlement communities") with annual direct grants that they can use to revitalize neighborhoods, expand affordable housing and economic opportunities, and/or improve community facilities and services, principally to benefit low- and moderate-income persons. Community Development Financial Institution - Specialized financial institutions created for the purpose of promoting community development by providing credit, capital or development services to small businesses or home mortgage assistance to individuals including, but not limited to, capital access programs, micro-lending, franchise financing, and guaranty performance bonds; the community development financial institution is created with the goal of providing a majority of its services to low-income individuals, minorities, females or rural areas; and maintains, through representation on its governing board, accountability to person's in need of the institution's services. Condominium - A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex. The owner also shares financial responsibility for common areas. Consolidated Plan - Developed by local and state governments with the input from citizens and community groups, the Consolidated Plan serves four functions:
- It is a planning document for each state and community, built upon public participation and input;
- It is the application for funds under HUD's formula grant programs (CDBG, HOME, ESG, and HOPWA);
- It lays out local priorities; and
- It lays out a 3-5 year strategy the jurisdiction will follow in implementing HUD programs.
Entitlement - An underlying formula governing the allocation of Block Grant funds to eligible recipients. Entitlement grants are provided to larger urban cities (i.e., population greater than 50,000) and larger urban counties (greater than 200,000).
Extremely Low-Income - An adjusted income that does not exceed the 30 percent of the area median income (AMI) adjusted for household size for the county or Metropolitan Statistical Area.
Fair Housing - Federal law that makes discrimination based on race, color, national origin, religion, sex, family status, or disability illegal when trying to rent or buy a home.
Fair Housing Act - Legislation first enacted in 1968 and expanded by amendments in 1974 and 1988, which provides the Secretary with investigation and enforcement responsibilities for fair housing practices. Prohibits discrimination in housing and lending based on race, color, religion, sex, national origin, handicap, or familial status.
Fair Market Rent (FMR) - Rent guidelines for various size units (studio, 1BR, 2BR, etc.) set by HUD for their affordable housing programs based on market rents for the area. (Sec. 8, S+C, etc.). FMRs are published annually by HUD.
Fair Market Rents (FMR) - Rent Schedules published in the Federal Register that establish maximum eligible rent levels allowed under the Section 8 program by geographic area.
Federal Housing Administration (FHA)
- An insuring entity established by legislation, administered by the Assistant Secretary for Housing, who is responsible for the Department's various mortgage insurance programs.
Fixed Rate Mortgage
- A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
Government National Mortgage Association
- Also known as (GNMA or Ginnie Mae); major departmental organization responsible for administering secondary market programs involving insured mortgage loans such as the Mortgage-backed Securities Program.
Gross Income
- Household Income as calculated before taxes or deductions are subtracted.
HOME - Provides funds to local governments and states for new construction, rehabilitation, acquisition of standard housing, assistance to homebuyers, and tenant-based rental assistance.
Home Mortgage Disclosure Act (HMDA)
- The Home Mortgage Disclosure Act of 1975, as amended in 1989, requires most financial institutions and mortgage lenders that make mortgage loans, home improvement loans, or home refinance loans to collect and disclose information about their lending practices.
HOPE VI
- HOPE VI, or the Urban Revitalization Program, enables demolition of obsolete public housing, revitalization of public housing sites and distribution of supportive services to the public housing residents affected by these actions.
HUD
- U. S. Department of Housing and Urban Development; A cabinet agency of the federal government established for the purposes of providing affordable housing and overseeing housing, economic and community development.
Lease Purchase
- Assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy. The rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.
LIHTC - Low Income Housing Tax Credits; A federal tax code that assists individuals and groups in financing low-income rental housing. As with any other subsidy program, specific rules and eligibility requirements pertain to units funded with LIHTC.
Low Income
- An adjusted income that is greater than 50 percent, but that does not exceed 80 percent of the area median income (AMI) adjusted for household size for the county or Metropolitan Statistical Area where the property is or will be located.
Low Income Housing Tax Credits (LIHTC) - A way of obtaining financing to develop low-income housing. Government programs provide dollar-for-dollar credit toward taxes owed by the housing owner. These tax credits can be sold, or used to back up bonds that are sold, to obtain financing to develop the housing.
Market Rate - A rent level that is set without any subsidy or assistance from a public program. Market rate rents are generally comparable to non-subsidized area rents.
Mixed-Income - Refers to a resident mix that includes families with various income levels within one development. Mixed-income developments combine low, moderate and upper income residents in order to decrease the economic and social isolation of lower income families.
Moderate Income - An adjusted income that is greater than 80 percent but that does not exceed 120 percent of the area median income (AMI) adjusted for household size for the county or Metropolitan Statistical Area.
Mortgage Insurance - A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan. Mortgage insurance is required primarily for borrowers with a down payment of less than 20 percent of the home's purchase price.
Officer Next Door - A HUD Program designed to revitalize distressed neighborhoods by encouraging police officers to live in them. The homes have been acquired through foreclosure on defaulted mortgages insured by the Federal Housing Administration (FHA) at half off the FHA-listed price. Each participating officer signs a contract agreeing to live in the home at least three years. Those who receive an FHA-insured mortgage can buy homes with a down payment of as little as $100. Working with local elected officials, HUD designates neighborhoods as revitalization areas -- of which there are now over 500 -- for participation. The neighborhoods are typically in low- and moderate-income areas, have many vacant properties, and often have high crime rates, but are considered good candidates for economic development and improvement. HUD web site at http://www.hud.gov/offices/hsg/sfh/reo/goodn/ond.cfm
PITI Ratio - The amount paid by a borrower for principal, interest, taxes and insurance, divided by repayment income.
Rehabilitation Mortgage - A mortgage that covers the costs of rehabilitating (repairing or improving) a property.
Section 8 - Housing Assistance Payments Program, authorized by the Housing and Community Development Act of 1974.
Single Room Occupancy (SRO) - Private rooms that contain either food preparation or sanitary facilities, or both, and are designed for occupancy by a single individual. HUD's Section 221(d) program provides mortgage insurance for such properties.
Special Needs Housing - Housing developed for and occupied by people with a variety of disabilities who are at risk of homelessness but may not have been literally or chronically homeless.
Total Debt Ratio - The amount paid by the borrower for principal, interest, taxes and insurance and any recurring monthly debt, divided by repayment income.
Very Low Income - An adjusted income that does not exceed 50 percent of the area median income (AMI) adjusted for household size for the county or Metropolitan Statistical Area.
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