Chapter 15 - Financing II: Primary and Secondary Markets Flashcards

1
Q

A ___ loan is made to finance the construction of improvements on real estate under which the lender disburses the loan proceeds while the building is being constructed. Generally bears a higher interest rate because of the risk assumed by the lender.

A

Construction loan

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2
Q

A cooperative organization for savers and borrowers is a ___ ___.

A

Credit union

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3
Q

Sets standards and buys mortgages is ___ ___.

Those loans are then pooled together and sold to investors as mortgage backed securities.

A

Fannie Mae (formerly Federal Home Loan Mortgage Company)

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4
Q

Warehouse packages of mortgages is done by ____ __.

Purchases mortgage loans from smaller banks and credit unions, also known as “thrift” savings institutions. Those loans are then pooled together and sold to investors as mortgage backed securities.

A

Freddie Mac

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5
Q

Pools mortgages for investors.

Ginnie Mae guarantees mortgage backed securities of those loans that are the following: FHA-Federal Housing Administration; VA-Veterans Affairs; RD-Rural Development; and PIH- Office of Public and Indian Housing. Under HUD

A

Ginnie Mae

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6
Q

Additional borrowings for homeowner: type of second mortgage is a ___ ___ ___.

A

Home equity loan

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7
Q

Bridge or swing loan to cover the gap between purchase of a new home and sale of the old one, is considered ___ financing.

A

Interim financing

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8
Q

Loan for higher amount than those bought by the secondary market is a ___ loan.

A

Jumbo loan

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9
Q

___ ___ is an institution set up to make loans. Use money borrowed from other institutions and funds of their own to make real estate loans that may later be sold to investors. Subject to considerably fewer restrictions than commercial banks.

A

Mortgage banker

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10
Q

Frequently used to obtain additional funds to improve their property one would look for an ___-__ mortgage. The borrower opens the mortgage to increase the debt after it has been reduced by payments over a period of time. The lender is not obligated to advance the additional funds.

A

Open-end mortgage

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11
Q

A ___ mortgage covers not only the real estate but also all fixtures, appliances and the premises. In recent years it has been used extensively in financing furnished condominium units.

A

Package mortgage

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12
Q

Loan not intended for sale in the secondary market is a ___ loan.

A

Portfolio loan

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13
Q

Lenders who make individual loans directly to borrowers. In effect these lenders supply funds as an investment this is called the ___ ___ ___,

A

Primary mortgage market

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14
Q

Percentage of income a borrower is allowed to spend on mortgage payments is called the ___ __.

A

Qualifying ratio

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15
Q

___ __ implements the Truth-in Lending Act. requires lenders to inform borrowers of the true cost of obtaining credit so consumers can compare the costs various lenders and avoid uninformed use of credit, requires borrowers to be informed of all charges, as well as true annual interest rate (APR), defines creditor as anyone who makes 25 loans a year, or more than 5 times if a dwelling is used as security, three-day right of rescission, and adverting restrictions based on triggering terms.

A

Regulation Z

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16
Q

Mortgage through which elderly homeowner can draw against equity, building up a gradual debt with no repayments until moving out is a ___ mortgage.

A

Reverse mortgage

17
Q

A __-___ transaction is one in which the owner sells their improved property and, as part of the same transaction, signs a long-term lease as to remin in possession of the premises.

A

Sale-leaseback

18
Q

A ___ ___ mortgage is a 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.

A

Shared equity mortgage

19
Q

Applies to Regulation Z with respect to advertising in that is any one of the following ___ terms is used, three further items of information must be included:

A

Triggering terms

  • Amount or percentage of down payment,
  • Number of payments or period of repayment, amount of any payment
  • Amount of any finance charge.

Any advertising must include the words “to a qualified borrower”.

20
Q

The ___-__-___ Act is implemented by Regulation Z.

A

Truth-in-lending

21
Q

___ is process by which the lender investigates the application information, studies credit reports and appraisal of the property before deciding whether to grant the loan. The lenders acceptance is written in the form of a loan commitment.

A

Underwriting

22
Q

A ___ mortgage is 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.

A

Wraparound mortgage

23
Q

A mortgage covering more than one parcel of real estate is a ___ mortgage.

A

Blanket mortgage

24
Q

Seller buyer financing arraingements the (5) are:

A
  • Seller financing
  • Lease-option (tenant option to buy property, unilateral)
  • Lease-purchase (tenant under contract for sale, bilateral)
  • Land contract (seller financing, seller maintains title), ends in balloon payment)
  • Sale-leaseback