Ch 13 & 14 Flashcards
What is the primary market in real estate financing?
The market in which lenders originate loans and make funds available to borrowers.
List the primary loan sources involved with mortgage financing.
- Savings and Loan Associations
- Commercial Banks
- Life Insurance Companies
- Mortgage Companies
- Mortgage Brokers
- Municipal Bonds
- Credit Unions
What is disintermediation in the context of real estate financing?
The result created when lenders are required to pay high rates of interest for deposits while receiving long-term income from low-interest rate mortgage loans.
What is the purpose of the secondary market in real estate financing?
Provides a way for a lender to sell a loan.
Name two major purchasers in the secondary market.
- Federal National Mortgage Association (FNMA or Fannie Mae)
- Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac)
What is a commercial secondary market?
A market without government support where private conduits pool commercial and multi-family mortgage loans and issue commercial mortgage-backed securities (CMBS).
What is an Adjustable Mortgage Rate (ARM)?
The interest rate changes at fixed intervals based on a preselected economic index.
Fill in the blank: The adjustment period for an ARM is typically _______.
1 year
What is negative amortization?
Occurs when a loan payment is less than the interest charged, causing the loan balance to increase.
List three types of alternative financing options.
- Graduated Payment Mortgage
- Equity Sharing
- Shared Appreciation Mortgage (SAM)
What is a blanket mortgage?
A single mortgage that covers two or more pieces of real estate, allowing individual properties to be sold without retiring the entire mortgage.
What is a reverse mortgage?
Allows homeowners over the age of 62 to receive payments based on the equity they have in the home.
What is an affordable housing loan?
An umbrella term covering many different loans that target first-time home buyers and low- to moderate-income borrowers.
What is seller financing?
The current owner of the property agrees to accept part of the purchase price in the form of a loan.
What is a wraparound mortgage?
A type of financing that allows a seller to keep their mortgage while selling their home, with the buyer’s mortgage wrapping around the seller’s existing loan.
What is the Nehemiah Program?
A program that helps with down payments for home buyers.
Fill in the blank: A contract for deed is also known as an _______.
installment contract
What is the typical down payment for a 97% conventional loan?
3%
What is a Equity Mortgage
Typically home improvement loans and college loans, etc
