Chapter 1: Mortgage Lending Overview Flashcards
Federal Reserve Act
- Created the Federal Reserve System. This Act established a federal charter for banks that permitted them to make real estate loans.
Federal Home Loan Bank Act
- Established Federal Home Loan Banks, which had the authority to lend money to thrifts—savings and loan associations (S & Ls), credit unions, and savings banks—so that they could finance home mortgages in their neighborhoods.
Banking Act
- AKA the Glass-Steagall Act, created the Federal Deposit Insurance Corporation (FDIC) to insure depositors against bank default.
National Housing Act
- Extended FDIC protection to savings and loan depositors with the creation of the Federal Savings and Loan Insurance Corporation (FSLIC)
Federal Home Loan Banks
- Established by the Federal Home Loan Banking Act, are twelve regional cooperative banks that U.S. lending institutions use to finance housing and economic development in their communities.
Federal Housing Administration
- FHA. FHA provided mortgage insurance so banks would not have to incur losses for defaults on home loans. Largest insurer of mortgage loans with over 34 Million. 1965 became part of HUD.
Federal Deposit Insurance Corporation
FDIC. Established by Congress in 1933 that insures up to $250,000 for each depositor for most member commercial banks and S & Ls.
Office of Thrift Supervision
OTS. A division of the U.S. Department of the Treasury, was established in 1989 to supervise, charter, and regulate federal thrift institutions. (Savings banks, savings and loans, cooperative banks, and credit unions)
Office of Comptroller of Currency
(OCC) charters, regulates, and supervises all national banks and federal branches/agencies of foreign banks.
National Credit Union Administration
(NCUA) is the independent federal agency that charters and supervises federal credit unions.
Federal Financial Institutions Examination Council
(FFIEC) is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the FDIC, the NCUA, the OCC, and the OTS.
Federal Housing Finance Agency
(FHFA) is an independent federal agency created by the Federal Housing Finance Regulatory Reform Act of 2008. The purpose of the FHFA is to promote a stronger, safer U.S. housing finance system.
Mortgage
Written instruments using real property to secure repayment of a debt
Commercial banks
Financial institutions that provide a variety of financial services, including loans.
Demand Deposit
Money that a customer may withdraw from the bank at any time.
Savings and Loan Associations
Also called thrifts—are financial institutions that specialize in taking savings deposits and making mortgage loans.
Disintermediation
Loss of deposits to competing investments (e.g., money market funds and government bonds) that offered much higher returns.
Mortgage Banking Companies
Institutions that specialize in mortgage loans for consumers.
Mortgage Banker
A company, individual, or entity that originates, processes, underwrites, closes/funds, and services mortgage loans.
Service Release Premium
The payment received by a lending institution, such as a bank or retail mortgage lender, on the sale of the right to service a closed mortgage loan.
Mortgage Broker
A company or individual who, for a fee, places loans with wholesale lenders, but does not service such loans.
Credit Unions
Cooperative financial institutions owned and controlled by their members in order to pool their deposits, receive better interest rates, and loan money to fellow members.
Finance Companies
Organizations that specialize in making higher-risk loans at higher interest rates.
Mutual Savings Banks
State- or federal-chartered banks that are owned by depositors and operate for their benefit.
Portfolio Lending
Financial institutions that make real estate loans keep and service those loans in-house as part of their investment portfolios instead of selling on the secondary market.
Secondary Mortgage Markets
Secondary markets are private investors or government agencies that buy and sell real estate mortgages.
Mortgage-Backed Securities
Debt obligations that represent claims to the cash flows from pools of mortgage loans.
Securitization
the procedure where an issuer designs a marketable financial instrument by merging or pooling various financial assets into one group. The issuer then sells this group of repackaged assets to investors.
Fannie Mae
FNMA. Federal National Mortgage Association. Nation’s largest investor in residential mortgages.
Ginnie Mae
GNMA. Government National Mortgage Association. Promotes investment by guaranteeing the payment of principal and interest on FHA, VA, Rural Housing Service, or HUD’s Office of Public and Indian Housing federally-insured or guaranteed mortgages through its mortgage-backed securities program.
Freddie Mac
FHLMC. Federal Home Loan Mortgage Corporation
Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd Frank. To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.
Title X - Dodd Frank
Consumer Financial Protection Act. Consumer Financial Protection Bureau. To enforce consumer financial protection laws.
Title XIV - Dodd Frank
Title XIV of the Act amends the Truth in Lending Act, the Equal Credit Opportunity Act, and other consumer financial laws to prevent mortgage-related abuses and to improve availability of responsible, affordable mortgage credit. It addresses compensation-based incentives; inappropriate steering, discrimination, and other abusive, unfair, deceptive, or predatory practices; minimum federal lending standards; high-cost mortgages; mortgage servicing; and appraisals.
