Chapter 4

Question 1

Freddie Mac’s fixed-rate mortgage products

Answer 1

1. 15-, 20-, 30- and 40-year terms
2. Affordable Merit Rate Mortgages
3. Guaranteed (Section 502) Rural Housing (GRH) 4. Mortgages
4. HUD–Guaranteed Section 184 Native American Mortgages

Question 2

Freddie mac other mortgages not the fixed rate ones ?

Answer 2

1. adjustable and balloon mortgages
2. mortgages designed for borrowers with less-than-perfect credit

Question 3

Home Possible Mortgages

Answer 3

these mortgages offer flexible underwriting, low-to-no down payments, expanded loan-to-value (LTV) ratios, and other special underwriting features to underserved qualified borrowers.

Question 4

Freddie Mac => ( affordable rents to families with low- and very low-incomes through what programs ?)

Answer 4

Forward Commitment
# Bond Credit Enhancement
# Low-Income Housing Tax Credit Investments
# LIHTC Tax Credit Moderate Rehabilitation
=> Freddie Mac has been instrumental in developing initiatives and tools for consumers.

Question 5

Real Estate Mortgage Investment Conduit (REMIC)

Answer 5

A major advantage of REMICs is tax incentives.
Hold commercial & residential Mortgages issue securities to investors. / undivided interests/ REMIC IS owned by investors.

Question 6

REMIC tax considerations

Answer 6

1. Income of the REMIC is passed through to the investors Who report their income on their individual tax returns.
2. REMIC is exempt from federal tax. but the income earned by the investor is taxable.

Question 7

Major issuers of REMIC ?

Answer 7

FANNIE MAE And FREDDIE MAC / mortgage banker, saving institutions, mortgage insurance companies may issue

Question 8

A-Minus Mortgage ( Freddie Mac )

Answer 8

This product is designed for borrowers whose credit histories are less than perfect.

Borrowers can get a fixed-mortgage or an ARM to either purchase or refinance a 1-4 family residence, a second home, or an investment property.

Question 9

Home Possible Mortgages ( freddie Mac)

Answer 9

guidelines for Home Possible 97.

Available for 1- to 4-unit primary residences
Available for a manufactured home purchase
Requires a 3% down payment on single-family homes
Requires a 5% down payment on 2- to 4-unit residences and manufactured homes
Available as fixed or ARM
Requires 2 months’ reserves – monies held to cover 2 months payments – on 2- to 4-unit homes
Reserves cannot come from gift funds

Question 10

LIHTC Tax Credit Moderate Rehabilitation ( freddie Mac product)

Answer 10

This product provides up-front financing to accomplish moderate rehabilitation for properties funded entirely or in part with low-income housing tax-credits. Tenants are allowed to remain in place during rehab.

Question 11

Bond Credit Enhancement ( FREDDIE MAC)

Answer 11

This credit enhancement program allows these bond issuers to receive or maintain an “AAA” credit rating, so their cost of borrowing is kept low and they can make the rents on multifamily developments more affordable.

Question 12

Federal Agricultural Mortgage Corporation (FAMC)

Answer 12

secondary mortgage market for farmers, ranchers, and rural homeowners.

Question 13

Farmer Mac has two programs :

Answer 13

Farmer Mac I – Farmer Mac purchases or commits to purchase eligible loans.
Farmer Mac II – Farmer Mac purchases the “guaranteed” portions of loans guaranteed by the United States Department of Agriculture.

Question 14

Pass-through certificates

Answer 14

Mortgage-backed securities which are pools of mortgages used as collateral for issuing securities.

Question 15

Pass-through security

Answer 15

Process when monthly principal and interest payments are collected from the borrowers and then “passed through” to the investors.

Question 16

Straight pass through

Answer 16

Pass-through certificate in which the security holder receives the actual principal and interest payments as they are received from the mortgages in the pool.

Question 17

Fully modified pass-through

Answer 17

Pass-through in which the security holder receives payment of both principal and interest, whether or not is has been collected.

Question 18

Modified pass-through.

Answer 18

Pass-through certificate in which the security holder receives the interest portion of the payment, whether or not it has been collected, and the principal payment when it is collected.

Question 19

Conforming & NON-conforming LOANs

Answer 19

Conforming loan. Any loan that falls within Fannie Mae limits and meets other Fannie Mae guidelines.

Nonconforming loan. Any loan that doesn’t meet the Fannie Mae guidelines, including the loan limits.

Question 20

minimum pool size manufactured home under GNMA II

Answer 20

$ 350,000 Manufactured home
$ 1,000,000 Single Family, $ 500,000 all types of pools

Question 21

borrower payment history ( credit score) percentage

Answer 21

35 %

Question 22

The payment reporting builds credit ( PRBC)

Answer 22

use rental and utility payment to create “ report Card” on scale from A to D