Chapter One

Question 1

Mortgage

Answer 1

a written instrument using real property

to secure repayment of a debt.

Question 2

Primary market

Answer 2

where borrowers and lenders
come together to negotiate terms for mortgages. It is
where we, as consumers, obtain mortgages

Question 3

Commercial Banks

Answer 3

Variety of financial services

Question 4

Mortgage Broker

Answer 4

Company or individual who, for a
fee, places loans with lenders, but does not service
such loans

Question 5

Mortgage Banker

Answer 5

Company, individual, or entity that
originates, processes, underwrites, closes/funds, and
services mortgage loans.

Question 6

Savings and Loan Associations

Answer 6

(Thrifts)

Question 7

Credit Unions

Answer 7

Cooperative financial
institutions owned and controlled by their
members.

Question 8

Finance Companies

Answer 8

Specialize in making

higher-risk loans at higher interest rates.

Question 9

Mutual Savings Banks

Answer 9

State-chartered
banks that are owned by depositors
(Thrifts).

Question 10

Secondary Market

Answer 10

where existing

mortgage loans are bought and sold

Question 11

Types of Secondary Market

Answer 11

• Fannie Mae
• Freddie Mac
• Ginnie Mae
• The Federal Home Loan Bank System
• Private investors

Question 12

Types of Primary Market

Answer 12

Mortgage Banker
Mortgage Broker
Commercial Banks

Savings and Loan Associations (Thrifts)
Credit Unions
Finance Companies
Mutual Savings Banks

Question 13

Fannie Mae

Answer 13

- Created in 1938 as a means to
assist the housing sector in the midst of the
Great Depression.
–Federal National Mortgage Association
(FNMA).
–Fannie Mae is a Government-Sponsored

Enterprise (GSE) that acts as a quasi-
governmental agency for the purpose of

making a secondary market for mortgages.
– Fannie Mae is the nation’s largest
mortgage investor.

Question 14

Freddie Mac

Answer 14

Freddie Mac is the second major GSE.
Freddie Mac was created by Congress in 1970
to provide a secondary market for mortgages
originated by savings and loan associations.
–Its full name is the Federal Home
Loan Mortgage Corporation (which
sometimes appears in abbreviated
form as “FHLMC”).

Question 15

Ginnie Mae

Answer 15

Ginnie Mae - Created by Congress in 1968,
Ginnie Mae is now part of the Department of
Housing and Urban Development (HUD).
– It does not purchase or sell loans on the secondary
market.
– Ginnie Mae does the same things as Fannie Mae and

Freddie Mac except that Ginnie Mae is a government-
owned entity.

– Rather, Ginnie Mae issues guarantees on bond pools
that are comprised exclusively of government-backed
(FHA/VA/USDA) loans.
– Its full name is the Government National Mortgage
Association (sometimes abbreviated as “GNMA”).

Question 16

A ____________ is a written instrument using real property to secure repayment of a debt

Answer 16

Mortgage

Question 17

Company or individual who, brings borrowers and lenders together for loan origination on the primary market is a ______

Answer 17

Mortgage Broker

Question 18

When borrowers and MLOs come together to negotiate terms and close mortgage loan transactions, this is referred to as

Answer 18

The primary mortgage market

Question 19

Which statement about Ginnie Mae is TRUE?

Answer 19

Ginnie Mae guarantees mortgage-backed securities

Question 20

Which of the following government sponsored enterprises (GSE) holds the largest amount of home loan mortgages?

Answer 20

Federal National Mortgage Association