Real Estate Finance Flashcards
(38 cards)
Primary Mortgage Market
Process of originating, processing, underwriting, closing and funding mortgage loan
Secondary Mortgage Market
When lenders sell the mortgage to an investor to receive funds to that they can make additional mortgage loans to others
Commercial Banks
Financial institutions that provide a variety of financial services, including loans
Savings and loan associations (S&Ls) aka Thrifts
financial institutions that specialize in taking savings deposits and making mortgage loans
T/F
One purpose of the primary mortgage market is to buy loans to free up money to make more loans available.
False - that is secondary mortgage market
Mortgage Bankers
Persons or entities in the business of making mortgage loans - lenders of money
MUST BE LICENSED
Mortgage Brokers
Persons or entities in the business of soliciting, processing, placing, or negotiating mortgage loans for others
MUST BE REGISTERED WITH SUPERINTENDENT
Surety Bond for Mortgage Banker
$50,000 - $500,000
Surety Bond for Mortgage Broker
$10,000 - $100,000
Promissory Notes
Financing instruments that is evidence of a promise to pay a specific amount of money to a specific person within a specific time frame.
T/F
Borrower is mortgagor and the lender is mortgagee
True
T: Mortgages are the primary security instrument used in lien theory states
T:When property is pledged as security for a debt, but the borrower still holds legal title and possession, it is known as hypothecation
T: In a title theory state, the borrower has possession of the property, but until the debt is fully paid, the borrower has only equitable title.
T: Mortgages are the primary security instrument used in lien theory states
T:When property is pledged as security for a debt, but the borrower still holds legal title and possession, it is known as hypothecation
T: In a title theory state, the borrower has possession of the property, but until the debt is fully paid, the borrower has only equitable title.
Lien Priority
Refers to the different positions a mortgage and other liens may have and what that can mean to the lender.
T/F
Real estate tax liens always have the highest priority in the event of a foreclosure
True
First Mortgage (lien position when there are multiple mortgages)
a security instrument that has a first lien position. First mortgage holder is paid first if there is a foreclosure
Second Mortgage (lien position when there are multiple mortgages)
security instrument in a second lien. more risky position because a first mortgage gets paid first out of foreclosure proceedings in the event there is a default. If there is nothing left, second mortgage holder gets nothing. Second mortgage may be used to help buy the property or it could be a home equity loan used for home improvements or repairs or to send a child to college
T/F
In the event of a foreclosure, the mortgage holder in the second lien position has less risk than the holder in the first lien position
False - second lien holder has more risk.
Conventional Loan
a mortgage loan NOT insured or guaranteed by a government entity, meaning FHA or VA
Can be conforming or nonconforming loans
Conforming Loan
When a loan meets the criteria necessary to be sold in the secondary market
T/F
Traditional conventional loans may be long term, fully amortized, and fixed rate
True
Long Term loans generally have total paymebts spread out over how long?
25-30 years
Balloon Payment
A final lump sum that pays any remaining principal and/or interest at the end of a loan term
Fully Amortized Loans
apply payments to the principal and interest. Total payments over the life of loan will pay off entire balance of principal and interest due at the end of the term.
-even though the payment stays the same for the life of the loan, the amount applied to principal and amount applied to the interest are adjusted each month. If all payments are made on time, the loan will be paid off in full with the last scheduled payment
