Flashcards in Chapter 15 yellow Gov't involvement in Financing Deck (45)
Federal Reserve System
is to maintain sound credit conditions
help counteract inflationary and deflationary trends, and create a favorable economic climate.
consists of 12 reserve district banks
regulates the flow of money and interest rates
the interest rate set by the FED that member banks are charged when they borrow money through the fed
Primary Mortgage Market
lenders who originate mortgage loans directly to home buyers.
Savings associations, thrifts, commercial banks
fiduciary lenders subject to the standards and regs of the (OCC) office of the comptroller of the currency.
The secondary Mortgage Market
in which loans are bought and sold only after they have been funded.
helps lenders raise capital to mean additional mortgage loans and is especially useful when money is in short supply.
It stimulates both the housing construction Market and the mortgage market
conventional, FHA and VA loans
buys from a lender a block or pool of mortgages that may then be used as collateral for mortgage-backed securities that are sold on the global market
GSE Govt Sponsored enterprises
mostly conventional loans.
privately owned and pubilicflly traded
Created by congress to create a secondary market of agricultural mortgage and rural utilities loans and the portions of agricultural and rural development loans guaranteed by the USDA
a division of HUD. organized as a corporation without capital stock.
administers special-assistance programs and guarantees investment securities issued by private offerors and backed by pools of FHA insured and VA guaranteed mortgage loans
The ginnie Mae Pass through certificate
a security interest in a pool of mortgages that provides for a monthly pass-through of principal and interest payments directly to the certificate holder. These certificates are guaranteed by Ginnie Mae.
LTV Loan to Value
The ratio of debt to the value of the property, where the value is the sales price or appraised value, whichever less.
The lower the the ratio of debt to value, the higher the down payment by the borrower.
For the lender, the higher downpayment means a more secure loan, which minimizes risk.
most secure because the LTV ratios are often the lowest. The ratio may be 80% of the value of the property or less because the borrower may make a down payment of at least 20%.
Not backed by govt.
private mortgage insurance is required by most lenders when less than 20% is given as a downpayment.
The borrower purchases insurance that provides the lender with funds in the event of borrower default on the loan.
allows the lender to obtain deficiency judgement against the borrower's assets after foreclosure.
meet the Fannie Mae guidelines of housing costs not exceeding 28% of Monthly Gross Income and other expenses not exceeding 36% of Monthly Gross Income.
They are eligible to be sold on the secondary market
nonconforming loans or jumbo loans
exceed the stated limits and are not marketable
FHA insured loans
operates under HUD.
it is a loan that is insured by the FHA.and must be made by an approved lending institution.
Mortgage Insurance Premium
The borrower is charged MIP for all FHA loans. It is an up front premium charged at closing and can be financed into the mortgage loan.
A unit of measurement used for various loan charges, one point = 1% of the amount of the loan
The interest rate set by the FED that member banks are charged when they borrow money through the FED.
a qualified buyer may assume an existing FHA insured loan.
HUD home Sales
Foreclosures of FHS insured home by HUD provide opportunities for both homebuyers and investors.
guarantee loans used to purchase amor construct home for eligible veterans and their spouses.
CRV Certificate of reasonable value
issued by the VA for the property being purchased. It states the property's current market value based on a VA approved appraisal.
VA and FHA insured Loans
can both repay the loan at any time with out a prepayment penalty
includes all real and personal property. They include furniture, drapes, appliances as part of the sales price of the home.
covers more than one parcel or lot. used by developers to finance a subdivision. but can also be used to finance the purchase of improved properties or to consolidate multiple loans on a single property.
Usually includes a provision called a Partial release clause
Partial Release Clause
permits the borrower to obtain the release of any one lot or parcel from the blanket lien by repaying a certain amount of the loan.