Financing Flashcards
What is warehousing?
The correct answer is:
the process in which lenders assemble loans and pledge them with a commercial bank to serve as security for a line of credit
Explanation:
This is a common business transaction between a lender and a bank to keep the lender in credit and the bank in securities comprised of loans.
What are points or discount points?
The correct answer is:
prepaid interest charges to get a mortgage at a lower interest rate
Explanation:
Some borrowers want a lower rate on their loans and pay “points” before the loan is finalized to drop the rate for the life of the loan.
What does it mean for a loan to be conforming?
The correct answer is:
The loans meet Fannie Mae and Freddie Mac standards.
Explanation:
Most conventional loans fit this description, allowing the lender to sell the loan for use on the secondary mortgage market with Fannie and Freddie. Most of the transactions on the secondary market involve Fannie and Freddie, so they set the standards.
What is a jumbo loan?
The correct answer is:
a loan for an amount in excess of Fannie Mae and Freddie Mac standards
Explanation:
Jumbo loans are frequently over a million dollars, so are more risky and require further underwriting standards/expectations than those Fannie and Freddie would require.
What is an acceleration clause within the provisions of a note?
The correct answer is:
It allows lender to declare an unpaid balance due upon the default of any/all terms.
Explanation:
If the borrower defaults on any terms of the note, the lender can declare the remaining loan amount due.
Foreclosure的前奏
What is a strict foreclosure?
The correct answer is:
a judicial foreclosure where the lender gets the property instead of a sale
Explanation:
This is the result of a court ruling where the lender simply is given the property, compared to a standard foreclosure sale where the property is sold at auction.
In a foreclosure, what is the buyer’s equitable right of redemption?
The correct answer is:
the right to pay off mortgage, debt, and interest prior to foreclosure
Explanation:
At the start of foreclosure proceedings, a notice is given and the buyer has an equitable right of redemption period to pay off all debts with interest prior to being foreclosed upon by the lender or bank.
What is a deficiency judgment against a borrower?
The correct answer is:
a court ordered judgment for the lender against the borrower if the amount produced by the foreclosure auction isn’t enough to cover the debt and costs
Explanation:
If, after a foreclosure auction, the lender is still owed a considerable sum, they ask the court for a deficiency judgment against the borrower to bridge the gap in costs.
What is a participation mortgage?
The correct answer is:
the type most often used in large commercial projects where the lender/bank gets part ownership
Explanation:
To entice a lender/bank to offer a large commercial loan, a borrower can offer a lender/bank part ownership using a participation loan.
What is a blanket mortgage?
The correct answer is:
a mortgage that covers more than one parcel of real estate
Explanation:
This is a mortgage that isn’t very common and involves more than one parcel of land.
What is a wraparound mortgage?
The correct answer is:
a second mortgage that includes the amount of the first mortgage
Explanation:
Sometimes, when a borrower is seeking a second mortgage, the first and the second are combined using a wraparound mortgage.
What is a package mortgage?
The correct answer is:
a mortgage in which a borrower uses both real and personal property as security for a loan
Explanation:
Providing further collateral assets for a loan can help the borrower obtain better rates or terms.
What is a reverse mortgage or a reverse annuity mortgage?
The correct answer is:
a mortgage for which the applicant must be 62 years or older and the mortgage converts equity into cash
Explanation:
These are usually utilized by retirees who need extra cash for living expenses and are able to trade home equity for cash using this type of financial vehicle.
