Chapter 3 vocab

Question 1

Commercial Bank

Answer 1

Specialize in short term, larger non-residential lending

Question 2

Credit Unions

Answer 2

Owned by their depositors and are involved to a lesser degree in the mortgage lending

Question 3

Disintermediation

Answer 3

Savings institutions loose money to higher paying investments

Question 4

FDIC

Answer 4

Federal Deposit Insurance corp. provides insurance for depositors.
provides security in the banking system as well as security for depositors

Question 5

Federally Related Transaction

Answer 5

Any transaction that involves an institution that is federally regulated

Question 6

FIRREA

Answer 6

Financial Institutions Reform, Recovery, Enforcement Act

• applies to federally related loan transactions.
• protects federal deposit insurance funds from bank failure

Question 7

Hard Money Loan

Answer 7

the borrower receives cash secured by real property.

typically issued by private investors or companies.

Question 8

Money Market Funds

Answer 8

Non insured Private market investment fund

Question 9

Mortgage Banker

Answer 9

Lend their own money

may originate service and sell the loans

Question 10

Mortgage Broker

Answer 10

Financial go between and shops for the lions rather then lend their own money.

Question 11

Mortgage Warehousing

Answer 11

line of credit used by mortgage bankers .
-short term revolving line of credit extended by a financial institution
-

Question 12

Nationwide Mortgage Licensing System and Registry

Answer 12

NMLS
-Unique identifier number, must be obtained by anyone who touches the loan.
-

Question 13

Office of thrift supervision

Answer 13

OTS

-Crested to regulate the S&L

Question 14

Participation Loan

Answer 14

Loan that is made in exchange for a portion of the borrowers equity in the secured property.
-AKA shared appreciation mortgage

Question 15

Pension Funds

Answer 15

Fund set up by an entity to pay pension benefits to retired workers.
Invest billions in the stocks, bonds, and real estate.
-major force in regulating the supply and demand of markets.

Question 16

Piggy back loan

Answer 16

single loan divided into parts of varying degree of risk which may be sold to multiple lenders.

Question 17

Portfolio loan

Answer 17

held by the lender as an investment

Question 18

Primary Market

Answer 18

Loans made directly to the borrowers

Question 19

Real Estate Investment Trust

Answer 19

REIT’s

• sells shares of stock in a corporation that owns and operates income-producing real estate.
• Avoid Corp double taxation because they must pay out 90%of their total revenue to investors annually.

Question 20

Real Estate Investment Trust Act

Answer 20

Congress made it possible for investors to enjoy the flow through tax advantages of a partnership

Question 21

Resolution trust corporation

Answer 21

Formed to liquidate assets of Fraud and failed S&L’s

Question 22

Savings Associations Insurance Fund

Answer 22

SAIF

-Replaced the old FSLIC insuring banks

Question 23

Seasoned Loan

Answer 23

one that has been held for a sufficient time that the borrower is making payments.-usually 6-12 months

Question 24

Secondary Market

Answer 24

• sale of existing loans many of which will be seasoned.

- Largely made up by Freddie Mac and Fannie Mae

Question 25

Second Mortgage

Answer 25

- junior trust or deed | - often a source of funds when a lender will not loan the full amount

Question 26

Soft Money Loan

Answer 26

-Cash does not exchange hands because the seller finances the buyer for some of the equity being transferred.