GLOSSARY OF TERMS
The current economic crisis has brought these esoteric terms into mainstream conversation.
| TERMS | | Credit Loss Ratio
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Credit-loss ratio: compares losses related to delinquencies and foreclosure to the overall scale of a firm’s mortgage business.
For example, during the mortgage meltdown, and prior to the government takeover, Fannie Mae was feeling the ill effects of the housing bubble burst, leaving them holding the bag when the mortgages they backed defaulted.
Looking ahead, the company has affirmed its forecast for full-year credit loss ratio of 0.23% to 0.26% and anticipates the ratio will increase further in 2009 compared with 2008. It continues to expect home price declines of 7% to 9% in 2008 and said the declines would likely be at the top end of that range.
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