Chapter 9 - Financial Institutions Flashcards
Inflation: When the value of something decreases, the value of MONEY _______.
Increases; think of it as… more money can buy you more things.
Deflation: Caused when the Feds restrict the amount of money available, thus causes the prices of goods to go ______.
Down; because people have less money to buy things with.
Seller’s Market:
When home prices increase because there’s not many selling.
Buyer’s Market:
When prices decrease because there are too many homes to be sold.
When the Fed increases the amount of available loan funds, interest rates go _______.
Down; does this by buying back bonds
When the Fed decreases the amount of available loan funds, interest rates go ______.
Up; does this by selling bonds.
________ is determined based upon a borrower’s savings, valuable property, and income, and is evaluated in terms of the reliability of these assets.
Capacity
________ is the ease and rate with which an asset can be converted into a medium of exchange (like cash).
Liquidity
The three areas of demand for borrowing money are:
- Construction funds to build
- Financing a purchase
- Refinancing
FDIC stands for:
Federal Deposit Insurance Corporation for your Institutional Lenders
The bank finances long-term loans for existing land and the buildings.
First Trust Deed Loans
Money is provided for the construction of a building, to be repaid when the construction is complete.
Construction Loans (or Interim Loans)
Permanent long-term loans are made to pay off the interim lender upon completion of construction of commercial or apartment projects and are called “takeout loans” because they take out the interim lender.
Take-Out Loans (Repayment of Interim Loans)
This type of loan is for repairing and modernizing existing buildings.
Home Improvement Loans
_________ Loans are not insured or guaranteed by the US Government.
Conventional Loans
For your credit unions you have NCUA (?) insurance covering up to 250k.
National Credit Union Administration
RETI (?) is a type of company that sells securities to invest in real estate properties.
Real Estate Investment Trust
For home improvement loans to a maximum of $25,000. The funds can be used only for home improvement purposes only. Which FHA loan?
FHA Title I: Home Improvement Loans
For Home purchases or building loans. Which FHA Loan?
FHA Title II
MPRs (?) are minimum quality standards established by the FHA and VA.
Minimum Property Requirements
A CRV (?) is an appraisal of the property to be purchased by the veteran. The amount of down payment is determined by the CRV.
Certificate of Reasonable Value; the appraisal expires after 6 months.
For a VA Loan, there are no prepayment penalties and there is no down payment for any amount, but California lenders will only make a loan up to $________.
$417,000 and usually over 30 years.
Land contracts are used by the California Department of Veterans Affairs, who ________ legal title until the loan is paid in full.
Retains legal title.
Freddie Mac, Ginnie Mae, or Fannie Mae?
Federal National Mortgage Association
Government National Mortgage Association
Federal Home Loan Mortgage Corporation
Fannie Mae
Ginnie Mae
Freddie Mac
________ Loans are higher than the $729,750 set by Fannie Mae and Freddie Mac.
Jumbo Loans
__________ ____________ is the requirement of reporting annual and quarterly loan activity (review of trust fund) to the DRE if, within the past 12 months, the broker has negotiated any combination of 20 or more loans to a subdivision or a total of more than $2,000,000 in loans.
Threshold Reporting
Article ____: Broker Restrictions; you cannot pool funds.
Article 5
Article _____: Real Property Securities Dealer; A DRE broker’s license and endorsement are required. A $100 fee plus a $10,000 surety bond (for Commissioner’s permit). DRE permit is required to sell specific security.
Article 6
RPSD (?) is any persona acting as principal or agent who engages in the business of selling real property securities (such as promissory notes or sales contracts). Endorsement fee of $100 along with the 10k.
Real Property Securities Dealer
