Ch 2 Section 4 Real Estate Finance Flashcards
financing
Refers to that part of the purchase price that is exclusive of the down payment
reserve account or reserve fund
An account used by lenders to hold money that will be used for future payments of items such as taxes, insurance, and deferred maintenance
Secondary mortgage
market for the purchase and sale of already existing mortgages
liquidity
is the ability to sell an asset and convert into cash
intermediation
The process by which individuals place their money with financial institutions and savings accounts and time accounts
Disintermediation
Occurs when private individuals decide to invest their own money, rather than deposit it in banks, and allow the banks to invest it for them
Federal reserve board
- Known as the feds
- is a central banking system that 12 districts each served by a federal reserve bank
interest
The cost of borrowing money
usury
is charging a rate of interest in excess of that which is permitted by law
Primary mortgage market
consist of direct lenders, also known as prime lenders or originators who make mortgage loans directly to borrowers
savings and loan associations
from the 1950s to the early 1980s savings and loan associations originated the majority of mortgage loans. They were originally created to make mortgage loans and for many years that is the only type of loan they made
Mortgage banker
A mortgage banker may be a person, firm, or corporation
Mortgage brokers
Is usually contacted by the person who wants to borrow the money
Life insurance Companies
Have large sums of money to invest and are more concerned about the financial soundness of a project and its long-term stability than they are about their fund’s liquidity
Secondary Mortgage market
Designed to provide liquidity for the funds used by the primary lenders
