Boom Bust and Blame

Crisis A-Z


Hedge fund:
A type of investment fund that is open to a limited number of investors (usually wealthy individuals or firms) which has the advantage of using aggressive investment strategies such as short selling, swapping, and program trading – activities that can't be exercised through a mutual fund. Usually investing in debt, commodities, and shares, hedge funds are restricted by law to not have more than 100 investors per fund. Such law gives way to very high minimum investment amounts. A performance fee is paid by the hedge fund to its investment manager, who also takes a percentage of the profit.

Home Affordability Index:
Created by the National Association of Realtors (NAR), the Housing Affordability Index is a standard that measures the financial ability of prospective buyers to purchase a home. The Index takes into consideration home prices, mortgage rates, and family income. It also provides indication on how strong an economy is. If the index rises, that can translate into economic strength, but if it decreases it can reflect that the economy is failing.

Home Equity Loan:
Also known as a second mortgage, a Home Equity Loan is a fixed or adjustable rate loan that is secured by the equity of the borrower's home. Such loan usually reduces the actual home equity of the borrower's house. There are two types of Home Equity Loans: closed end, where the borrower cannot take anymore money after the closing, and open end, where the borrower can choose when to take the money and affect home equity.

House of Cards:
Two-hour special CNBC documentary reported by award-winning correspondent David Faber. It originally aired on CNBC on February 12, 2009 and aimed to investigate the start and eventual development of the global financial crisis. David Faber gains and shares information provided by different important participants such as homebuyers, mortgage brokers, investment bankers and investors.

HUD – Housing and Urban Development:
Established in 1965 under President Lyndon Johnson, the HUD is a federal government department in charge of increasing home ownership in the United States and making affordable housing more accessible to U.S. citizens. Secretary Shaun Donovan, who has been at the post since January 2006, heads the HUD.

Hybrid ARM:
Also known as Fixed Period ARMs, Hybrid ARMs are a blend between an adjustable-rate mortgage and a fixed rate mortgage. Such mortgage will have a fixed interest rate period that will expire to then become an adjustable rate.