Chapter 15: Financing II: Primary and Secondary Markets Flashcards
an acronym to remember the six items that the lender must obtain before issuing a Loan Estimate (LE)
- Address of the subject property
- Loan amount
- Income
- Estimate of property value
- Name of borrower(s)
- Social Security Number
ALIENS
a mortgage covering more than one parcel of real estate
blanket mortgage
straight loan for short building period
construction loan
cooperative organization for saver and borrowers
credit union
(formerly Federal Home Loan Mortgage Corporation), sets standards and buys mortgages
Fannie Mae
(Federal Home Loan Mortgage Corporation), warehouses packages or mortgages
Freddie Mac
(Government National Mortgage Association), Pools mortgages for investors
Ginnie Mae
additional financing for homeowner; type of second mortgage
home equity loan
bridge or swing loan to cover the gap between the purchase of a new home and sale of the old one
interim financing
loan for a higher amount than those generally bought by the secondary market
jumbo loan
a 3-page, TRID required document that itemizes important details of the mortgage loan; lender must provide the borrower within 3 business days after recieving the borrower’s intent to proceed
Loan Estimate (LE)
institution set up to make mortgage loans
mortgage banker
agent who brings together lender and borrower for a fee
mortgage broker
a mortgage loan that is expandable back to its original amount after the principal has been reduced
open-end mortgage
mortgage covering both real and personal property
package mortgage
loan not intended for sale in the secondary market
portfolio loan
lenders who make individual loans directly to borrowers
primary mortgage market
a note secured by a mortgage given by a buyer, as a mortgagor, to a seller as a mortgagee. Also any mortgage for purchase rather than refinancing
purchase-money mortgage
percentage of income a borrower is allowed to spend on mortgage payments
qualifying ratio
implements the Truth in Lending Act
Regulation Z
mortgage through which an elderly homeowner can draw against equity, building up a gradual debt with no repayment until moving out
reverse mortgage
a transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premise
sale-leaseback
a mortgage loan in which the lender in exchange for a loan with a favorable interest rate, participates in the profits (if any) the mortgagor receives when the property is eventually sold
shared equity mortgage
words in an advertisement that require disclosure of all financing conditions
triggering terms
an acronym for the rule that combines the disclosure required by the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA)
TRID
a federal law that obligates a lender to fully disclose in writing all fees, terms and conditions associated with obtaining credit
Truth in Lending Act
process of deciding whether to make a specific loan
underwriting
an additional mortgage in which another lender refinances a borrower by lending an amount including the existing first mortgage amount without disturbing the existence of the first mortgage
wrap around mortgage
