Finance 5 - Sources of Funds: Institutional, Noninstitutional, and Other Lenders

Question 1

Interest is paid to any person having the bonds in the person’s possession.

Answer 1

bearer bonds

Question 2

Another name for mortgage brokers who both originate and service mortgage loans on behalf of investors.

Answer 2

correspondents

Question 3

A type of corporate bond with interest coupons attached that may be cashed by the bearer of the bond.

Answer 3

coupon bonds

Question 4

Unsecured bonds that are a claim against the general assets of a corporation.

Answer 4

debentures

Question 5

Bank deposits that must be available on demand (e.g., checking accounts.

Answer 5

demand deposits

Question 6

A relationship that implies a position of trust or confidence wherein one person is usually entrusted to hold or manage property or money for another.

Answer 6

fiduciary responsibility

Question 7

Sources that make real estate loans. Also called primary lenders. Usually manage and guard entrusted funds over a period of time.

Answer 7

financial intermediaties

Question 8

System of financing in which the community is held responsible for making payments for capital improvements, usually included in property taxes.

Answer 8

general obligation bonds

Question 9

Bonds backed by a state’s bonding credit to raise funds for the purchase and improvement of land for industrial and office parks.

Answer 9

industrial revenue bonds (IRBs)

Question 10

A short-term loan usually made during the construction phase of a building project( often referred to as a construction loan.

Answer 10

interim financing

Question 11

Any type of secondary (or tertiary) loan where there is a first mortgage in place.

Answer 11

junior financing

Question 12

A mortgage loan company that originates, services, and sell loans to investors.

Answer 12

mortgage bankers

Question 13

An agent of a lender who brings the lender and the borrower together. The broker receives a fee for this service.

Answer 13

mortgage brokers

Question 14

Tax-exempt bonds used to make below-market interest rate loans to developers in redevelopment projects or for low-cost mortgages for first-time homebuyers.

Answer 14

mortgage revenue bonds

Question 15

Bonds issues by a municipality, county, or state to finance community improvements.

Answer 15

municipal bonds

Question 16

Fee charges by a lender to cover costs of originating the loan; frequently 1% of the loan amount.

Answer 16

origination fee

Question 17

When the lender requires an equity position in the property being finances.

Answer 17

participation financing

Question 18

Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invest the money in real property and distributes the profits back to the investors free of corporate income tax.

Answer 18

real estate investment trust (RIET)

Question 19

A business trust, similar to a REIT, that invests in mortgage securities rather than in real estate.

Answer 19

real estate mortgage trust (REMT)

Question 20

Bonds issued to a specific owner that cannot be transferred without the owner’s endorsement; interest is paid to the last registered owner.

Answer 20

registered bonds

Question 21

Bonds to be repaid by the fees charged for the use of the funded project.

Answer 21

revenue bonds

Question 22

Designed to provide more control over those dealing with financial issues for the consumer.

Answer 22

Secure and Fair Enforcement Mortgage Licensing Act (SAFE Act)

Question 23

A generic term for a savings association.

Answer 23

thrifts

Question 24

Funds committed by a commercial bank that mortgage brokers can draw in, enabling them to close individual home loans that may become part of a larger package.

Answer 24

warehouse of funds

Question 25

A bond purchase at a discount and redeemed after a stated period of time for a full value; patterned after World War II savings bonds.

Answer 25

zero-coupons bonds