Reverse Mortgages
(effective
Effective
1. 11 proxy
securities for each reverse mortgage program are created.
2. A 10%
conditional payment rate is used to create the zero-coupon securities that will
mature in every year of the stress test.
The zero-coupon securities are a laddered series of floating-rate
coupon-bearing accreting bonds with a first payment date at maturity.
3. The 11th
zero-coupon security will mature three months after the stress test to reflect
the 35% of UPB not paid down during the stress period.
4. An OFHEO
credit rating equivalent to AAA for the FHA insured programs and AA for other
reverse mortgage programs is assigned.