Finance Flashcards
public finance
tax systems, government expenditures, budget procedures, stabilization instruments, debt issues and other government concerns
corporate finance
managing assets and debt for a business
real estate finance
provides the flow of money and credit needed to complete transactions for the purchase and/or development of real property
mortgage lending activity
loan originations as well as purchases and sales of loans through the secondary mortgage market
cycles
periodic, irregular, up and down movements in economic activity
short term fluctuations
occur within a year
NBER
National Bureau of Economic Research
modest inflation rate
between 2%-4%
3 major financial markets in the world
NY, London, Tokyo
capital market
long term or intermediate term securities are traded
heterogeneous
each property has unique features
bond
debt instrument
fiscal policy
the gov’t policy on taxes and gov’t spending and affects demand
monetary policy
influences the cost and availability of credit to promote economic growth
expenditure approach
focuses on total expenditures on goods and services produced in the period
income approach
focuses on the payments to the factors of production involved in those production activities in a period
FOMC
federal open market committee - sets nations monetary policy
aggregate demand
total spending
GDP
gross domestic product
quantitative easing
the purchase of varying financial assets from commercial banks
functions of federal reserve system
- acts as the banker for the us treasury
- supervises and regulates banking institutions and certain consumer protection laws
- acts as lender of last resort to nations bank
- determines monetary policy
federal reserve funds
overnight loans banks use to meet the reserve requirements at the end of each day
mint
manufacture, distribute, and circulate precious metal and collectible coins and national medals
OCC
office of the comptroller of the currency
FinCEN
financial crimes enforcement network
FDIC
federal deposit insurance company
FHFA
federal housing finance agency
GSE
government sponsored enterprise
housing GSE’s
Fannie Mae, Freddie Mac and federal home loan bank system
who regulates the GSE’s
FHFA
Fannie Mae
formed to the secondary market for FHA loans after the great depression
Freddie Mac
links main st to wall st by purchasing, securitizing and investing in home mortgages
2 anti trust laws
federal trade commission act and the clayton act
USDA guaranteed loan
gov’t insured 100% purchase loan for properties in rural areas
CFPB
Consumer financial protection bureau
Regulation C
requires a lending institution to post a notice about the availability of HMDA data in the lobby
HMDA
home mortgage disclosure act
FCRA
federal credit reporting act
FACTA
fair and accurate credit transactions act
RESPA
Real estate settlement procedures act, ensures disclosures and fees are done and shared in a timely manner
finance charge
the dollar amount the credit will charge
consummation
occurs when the borrower becomes contractually obligated to the lender on the loan
page 1 of disclosure
loan terms
projected payments
costs at closing
page 2 of closing disclosure
loan costs table
other costs table
page 3 of closing disclosure
calculating cash to close
summaries of transactions
page 4 of closing disclosure
loan disclosures
adjustable payment table
adjustable interest rate table
page 5 of closing disclosure
loan calculations table
other disclosures
contact information
portfolio lenders
hold loans permanently and originates mortgage loans
mortgage banker
direct lender that lends its own money
mortgage broker
originates loans with the intention of brokering them to lending institutions
mortgage backed security
a type of asset backed security that is protected by a collection of mortgages usually with similar characteristics
REMIC
real estate mortgage investment conduit - holds commercial and residential mortgages in trust
tranche
a part or segment of a structured security
stripped mortgage backed securities
pass through securities that are created by separating the principal and interest payments from underlying mortgage assets
third party originators
originate but do not underwrite or fund a loan
commercial banks
all purpose lender
types of thrift institutions
savings and loan
savings banks
mutual savings bank
savings and loan
pools the savings of individuals to fund residential mortgages
savings banks
specialize in consumer and commercial loans
mutual savings banks
owned by depositors, each of whom have rights to net earnings of the bank
credit union
owned and operated by members
exempt from federal taxation
NCUAB
national credit union association board
supervises and insures
life insurance companies
major supplier of money for large commercial loans to developers and builders
take out loan
long term permanent financing used to pay off a construction loan
financial semi fiduciaries
non depository lenders
mortgage company and real estate investment trust
warehouse line
revolving line of credit extended to a mortgage company from a warehouse lender to make loans to borrowers
REIT
real estate investment trust
a security that sells like a stock on the major exchanges
crowdfunding
the practice of funding a project by raising small amounts of money from a large number of people typically via the internet
loan correspondent
third party originator that originates loans for a sponsor
table funding
the lenders ability to provide loan funds on the same day the transaction is signed by all parties
amortization
the liquidation of a financial obligation on an installment basis
index
a measure of interest rates
margin
an extra amount the lender adds
note rate
the interest rate on the ARM loan at the time it is funded
negative amortization
an increase in the principal balance caused by low monthly payments that do not pay all the interest due on the loan
assumable feature
allows a borrower to transfer a loan to another borrower, if the new buyer qualifies for the loan
recasting
automatic payment adjustment on ARM
conventional loan
any loan without government insurance or guarantees
conforming loan
a conventional loan that follows the guidelines of fannie mae or freddie mac
DTI
debt to income ratio
PITI
principal, interest, taxes, insurance
MPS
minimum property standards
direct endorsement lenders
lenders who have met FHA standards
seasoned
money has been in the bank for at least 3 months
front ratio
the percentage of the borrowers monthly gross income that is used to pay the monthly housing expense
how to calculate front ratio
divide the housing expense by the borrowers gross monthly income
back ratio
income needed to pay for all recurring debt
entitlement
the maximum guaranty that the VA will provide for the veterans home loan
CRV
certificate of reasonable value - appraisal for VA loan
