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WAC (Weighted Average Coupon)
The average coupon rate of the underlying mortgage loans or pools that serve as collateral for a security, weighted by remaining principal balance.
WALA (Weighted Average Loan Age)
The average number of months since the date of note origination of the mortgages in a PC pool, weighted by remaining principal balance.
WAM (Weighted Average Maturity)
The weighted average of remaining terms to maturity of a mortgage, with the weighted factor being the balance of each mortgage as of its issue date.
Warehouse Fee
A fee charged by a mortgage firm to offset losses caused when the prime rate of interest is higher on short term loans than on standard mortgage loans.
Weighted Average Coupon (WAC)
The average coupon rate of the underlying mortgage loans or pools that serve as collateral for a security, weighted by remaining principal balance.
Weighted Average Loan Age (WALA)
The average number of months since the date of note origination of the mortgages in a PC pool, weighted by remaining principal balance.
Weighted Average Maturity (WAM)
The average remaining term to maturity of the underlying mortgage loans that collateralize a security, weighted by remaining principal balance.
With Full Recourse
A term used in the secondary mortgage loan market, referring to a written clause in a sales agreement by which a lender sells mortgages to an investor. It means the seller/lender will fully reimburse the buyer/investor for any losses resulting from the purchased loans. This may be accomplished by the seller taking back any loans that become delinquent.
With Partial Recourse
A secondary mortgage market term, referring to a clause in the sales contract by which lenders sell their mortgage loans to investors. It means the seller/lender is obligated to reimburse the buyer/investor for an agreed-on portion of any losses resulting from default or other problems in the purchased loans.
Without Recourse
A term used in the secondary mortgage market. It is a clause in a sales contract by which a lender sells mortgage loans to an investor. It means the seller/lender is under no obligation to reimburse the buyer/investor for any losses resulting from the purchased loans. See with full recourse.
Wraparound Mortgage
A financing device that permits an existing loan to be refinanced and new, additional money to be advanced at an interest rate between the rate charged on the old loan and the current market interest rate. The creditor combines or 'wraps' the remainder of the old loan with the new loan at the intermediate rate. The borrower makes one payment, to the new lender, who in turn makes the monthly payments to the original lender. The amount of the wraparound mortgage is the total of the outstanding principal of the first mortgage (which remains in effect) and the additional outstanding funds advanced by the wraparound lender.
Yield
The annual percentage rate of return earned on a security, as computed in accordance with standard industry practices. Yield is a function of a security's purchase price, coupon rate and maturity.
Yield to Maturity
The average annual yield of a fully amortized loan, that is held by an investor for the life of the loan. The average rate takes into the account the fact that the outstanding principal, and consequently the amount of interest, declines each year until the loan is fully paid. When the term is used in reference to a bond or other security, it means the average annual rate of return of the security when held to maturity, taking into account discounts or premiums paid when the security is purchased and capital gains or losses.
Zero-Percent Financing
A loan that requires not interest payments; in the U.S., the Internal Revenue Service assigns 10 percent for the borrower and for the lender.
Zoning
A community’s ability to determine how its land may be used.
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