Chapter 15: Financing To: Primary And Secondary Markets. Key Terms Part 2 Flashcards
Portfolio loan
A loan not intended for resell on the secondary market.
Primary mortgage maker
The lending institutions that make mortgages and loans to the public.
Purchase-money mortgage
This is seller financing.
Qualifying ratio
A percentage of income a Borrower may spend on their housing expense.
Regulation Z
This implements the truth in lending act or the true cost of obtaining credit. This requires that the borrower be fully informed of all financing charges. The lender must computer and disclose the annual percentage rate (APR). Amendments to the act extended coverage to mortgage loans on vacation homes as well as principal dwellings. Not only purchase money mortgage is, but also refinances and home equity loans are included.
Reverse mortgage
A mortgage in which the lender sends regular checks to the owner whereby they are building up the owners debt until the sale of the home.
Sale-leaseback
An arrangement by which the seller becomes the tenant.
Shared equity mortgage
A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the mortgagor receives when the property is eventually sold. Simply a loan in which the investor shares payments and profits.
Triggering term
Words in an advertisement that require disclosure of all financing conditions. The fast talking man at the end of an advertisement disclosing all the qualifications of financing.
Truth in lending act
The regulation of consumer loans. A federal law that obligates a lender to fully disclosed in writing all fees, terms and conditions associated with obtaining credit.
Underwriting
The process of deciding whether to make a specific loan.
Wraparound mortgage
A larger loan that does not disturb the underlying mortgage. An additional mortgage in which another lender refinances a borrower by lending an amount including the existing first mortgage amount without disturbing the existence of the first mortgage.
