CHAPTER FOUR: FINANCING Flashcards
___ ___ system- The federal banking system of the United States under the control of central board of governors (Federal Reserve Board) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.
Federal Reserve System
___ ____ market- The marketplace whereby loans are originated. Turn to a bank to secure a loan.
Primary Mortgage Market
___ ____ market- The market where lenders sell their loans to the large secondary marketing agencies (FNMA, FHLMC, and GNMA) or to other investors.
Secondary Mortgage Market
primary mortgages then enter into secondary mortgages
investors within the secondary market
___ ___ ___ Association- A New York stock exchange company. It is a public company that operates under a federal charter and is the nation’s largest source of financing for home mortgages. Fannie Mae does not lend money directly to consumers, but instead works to ensure that mortgage funds are available and affordable, by purchasing mortgage loans from institutions that lend directly to consumers.
Federal National Mortgage Association (FNMA) (Fannie Mae)
___ ___ ___ ___ Corporation- An independent stock company which creates a secondary market in conventional residential loans and in FHA and VA loans by purchasing mortgages.
- protects investors from borrower default but reduces interest rates and down payment requirements to borrowers.
- FHA- good for first time home buyers or VA people
Federal Home Loan Mortgage Corporation (FHLMC) (Freddie Mac)
___ ___ ___ Association- A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies. Popularly known as “Ginnie Mae”.
Government National Mortgage Association (GNMA) (Ginnie Mae)
