Chapter Fifteen Flashcards
a loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan. 243-244
amortized loan
a loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index. 244
adjustable-rate-mortgage
a final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized. 243
balloon payment
a mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien upon repayment of a definite portion of the debt. 253-254
blanket loan
a financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, this reducing the monthly payments for a set time. 255
buydown
a form indicating the appraised value of a property being financed with a VA loan. 252
certificate of reasonable value (CRV)
Under the act, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in loa=cal community development and rehabilitation projects; and participate in loan programs for housing, small businesses and small farms. 258
Community Reinvestment Act of 1977 (CRA)
an electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers. 258-259
computerized loan origination (CLO)
a short-term loan usually made during the construction phase of a building project. 255
interim financing/construction loan
a loan that requires no insurance or guarantee. 247-248
conventional loan
The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, or marital status. 257-258
Equal Credit Opportunity Act (ECOA)
A government-sponsored enterprise established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders. 248
Fannie Mae
an independent federal agency that insures deposits in commercial banks. 240
Federal Deposit Insurance Corporation (FDIC)
The country’s central banking system, which is responsible for the nation’s monetary policy by regulating the supply of money and interest rates. 239
Federal Reserve System (Fed)
a loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHS’s regulations. 261
FHA loan
a government-sponsored enterprise established to purchase primarily conventional mortgage loans in the secondary mortgage market. 260
Freddie Mac
a government agency that plays an important role in the secondary mortgage market. It guarantees mortgage-backed securities using FHA and VA loans as collateral. 260
Ginnie Mae
a loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan.. 245
growing-equity mortgage
a loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property. 255-256
home equity loan
an objective economic indicator to which the interest rate for an adjustable-rate mortgage is tied. 244
index
a mortgage that only requires the payment of interest for a stated period of time with the principal due at the end of the term. 242
interest-only mortgage
the relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral. 247
loan-to-value (LTV) ratio
a premium added to the index rate representing the lender’s cost of doing business. 7-10
margin
The FHA insurance that the borrower is charged with a percentage of the loan as a premium. 259
mortgage insurance premium (MIP)
a mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage. 254
open-end loan
a real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings, and major appliances. 253
package loan
the mortgage market in which loans are originated and consisting of lenders such as commercial banks, savings associations, and mutual savings banks. 239-241
primary mortgage market
Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency. 261
private mortgage insurance (PMI)
a note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate. 253
purchase-money mortgage (PMM)
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees. 406-406
Real Estate Settlement Procedures Act (RESPA)
Implements the Truth in Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit. 262
Regulation Z
a loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan mst be repaid at a prearranged date, upn the death of the owner, or upon the sale of the property. 247
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 premises. 280
sale-and-leaseback
a market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market. 241
secondary mortgage market
a loan in which only interest is paid during the term of the loan, with the entire principal principal amount due with the final interest payment. 242
straight (term) loan
specific credit terms, such as down payment, monthly payment, and amount of finance charge or term of loan. 257
trigger terms
Federal government regulates the lending practices of mortgage lenders through this act. 256-257
Truth in Lending Act (TIL)
a mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs in order to limit the lender’s possible loss. 261
VA loan
a method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage. 254
wraparound loan
Primary Mortgage Market 240
Thrifts, Savings associations, Commercial banks, Insurance companies, Credit unions, Pension funds, Endowment funds, Investing group financing, Mortgage banking companies.
the legal process that results in the tenant’s being physically removed from the leased premises. 281
actual eviction
