Chapter 14 Flashcards
Made up of the lenders that originate mortgage loans
Primary mortgage market
The role of this is to maintain sound credit conditions, help counteract inflationary and deflationary trends, and create a favorable economic climate
Federal reserve system
This purchases ,services, and sometimes re-sells existing mortgages and mortgage backed securities created by the primary mortgage market
Secondary mortgage market
One of the 3 major types of secondary market
- government owned
- has the authority to purchase mortgages pool them and use them as security for binds sold on the open market but doesn’t guarantee payment of mortgages
Fannie Mac
Exists as a corporation without capital stock and has always been a division of HUD
Government agency
Administers special assistance programs
Guarantees mortgage backed securities using fHA and Va loans as collateral
Ginnie Mac
Government owned
Creates mortgage backed securities using pool of mortgages as collateral
Deals in conventional, FHA, and VA loans
Fannie Mae
A mortgage that was based on a loan that was given to a borrower with a credit rating below what is required for regular loans
Subprime mortgage
A loan that is not backed-that is made,insured,or guaranteed by any gov. agency
Lender bears all risk
Conventional loan
A mortgage loan is generally classified based on its _____,which is the ratio of debt to value of the property
Loan to value ratio
A standardized conventional loan that meets Fannie Mae or Freddie Mac purchase requirements
Conforming loan
Nonconforming loans include loans that exceed the max loan limits for conforming loans are______
Jumbo loans
This is a way that a borrower can obtain a conventional mortgage loan with a smaller down payment
Private mortgage insurance
A loan insured by the federal housing administration and made by an approved private lender in accordance with the FHA’s regulations
FHA loan
A mortgage loans on approved property made to a qualified veteran by an authorized lender and guaranteed by the department of veterans affairs to limit the Leander’s possible loss
VA-guaranteed loan
A form indicating the appraisal value of a property being financed with a VA loan
Certificate of reasonable value
“Seller financing”
Owner financing given at the time of purchase to facilitate the sale and refers to the instrument given by the purchaser to a seller who takes back a note and mortgage for part or all of the purchase price
Purchase money mortgage
Includes not only the real estate sale but also all is tires and appliances installed on the premises
Package loan
Covers more than one parcel of land and usually is used to finance subdivision developments usually include a provision called partial real se clause that that the borrower may obtain the release of any one lot or parcel from the lien by repaying a definite amount if the loan at closing w/o triggering a due on sale clause for the rest of the financed property
Blanket mortgage
Used as a method of refinancing real property or financing the purchase of real property when an existing mortgage cannot be prepaid
“Buddy system”
Wraparound loan
This acts as a line of credit or equity line, allowing the mortgagee to make additional future advances of funds to the mortgagor and are generally set up as home equity loans
Open end mortgages
Made to finance the construction of improvements on real estate- homes, apartments, office buildings, etc..
Constriction loan
Used rather extensively as a mean of financing large commercial or industrial plants
Sale and leaseback
A way to lower the initial interest rate on a mortgage or deed or trust loan
Buy down
Are a source of funds for homeowners who wish to finance the purchase of expensive items; consolidate existing installment loans on credit card debt; or pay medical, educational, home improvements, or other expenses
Home equity loan
