Reverse Mortgages (effective June 30, 2003)

 

Effective June 30, 2003.  Final treatment for reverse mortgages effective with the 2Q03 capital classification.  Final treatment reflects acceptance of an interim treatment applied to prior quarters classifications.

 

 

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.