Financing Sources - Secondary Market Flashcards
The Secondary Market consists of buying and selling ___ that were created in the ___ Market.
The Secondary Market consists of buying and selling Mortgages that were created in the Primary Market.
Promissory Notes (loans) are always ___ personal property that can be ___ by the mortgagee (lender).
Does this affect the borrower’s rights or obligations?
Promissory Notes (loans) are always negotiable personal property that can be sold by the mortgagee (lender).
No, it does not affect the borrower’s rights or obligations.
Lenders sell their notes in the secondary mortgage market to ___ ___ so they can ___ ___ ___.
Lenders sell their notes in the secondary mortgage market to generate funds so they can make more loans.
___ describes a line of credit extended by a commercial bank to a mortgage banker.
Warehousing
With Warehousing, the mortgage banker ___ (warehouses) loans in the commercial bank, and then ___ against this collateral to fund new loans. The loans serving as security are “warehoused” at the bank and later sold to ___ Market investors.
With Warehousing, the mortgage banker deposits (warehouses) loans in the commercial bank, and then borrows against this collateral to fund new loans. The loans serving as security are “warehoused” at the bank and later sold to Secondary Market investors.
Lenders may ___ loans to other lending institutions or assemble them into one or more ___ of loans to sell to one of 3 governmental organizations that provide a market for this purpose. Those three are:
Lenders may sell loans to other lending institutions or assemble them into one or more packages of loans to sell to one of 3 governmental organizations that provide a market for this purpose. Those three are:
1) Fannie Mae
2) Ginnie Mae
3) Freddie Mac
What was Fannie Mae originally called?
When was it founded?
It was founded by the US Gov’t to stabilize and provide a ___ Market for ___ mortgages.
When was it transformed by Congress into a “private corporation with a public purpose” - a for-profit corporation listed on the ___ ___ ___ ___.
Federal National Mortgage Association (FNMA)
Founded in 1938 by the US Gov’t to stabilize and provide a secondary market for residential mortgages.
It was transformed by Congress in 1968 into a “private corporation with a public purpose,” a for-profit corporation listed on the New York Stock Exchange.
What is the single largest holder of home mortgages in the US?
Fannie Mae
Who did the federal government take over on 9/7/08 to rescue it from insolvency caused by the mortgage industry crisis in the US?
Fannie Mae and Freddie Mac
What does Ginnie Mae stand for?
Government National Mortgage Association (GNMA)
When was Ginnie Mae founded?
It’s a government agency of what 3-letter acronym?
In 1968 when Fannie Mae was converted to a private corporation.
It is an agency of HUD (the government agency that guarantees Fannie Mae securities)
Ginnie Mae buys ___ ___ of all types to make capital available to ___ ___.
Ginnie Mae buys loan packages of all types to make capital available to lending institutions.
Ginnie Mae handles the ___ assistance and ___ management functions originally managed by Fannie Mae.
Ginnie Mae handles the housing assistance and loan management functions originally managed by Fannie Mae.
What does Freddie Mac stand for?
Federal Home Loan Mortgage Corporation (FHLMC)
When was Freddie Mac created by Congress?
It was created primarily to establish a reliable ___ Market for the sale of ___ mortgages by and for ___ and ___ Associations.
It subsequently became a ___ corporation.
1970
It was created primarily to establish a reliable secondary Market for the sale of conventional mortgages by and for Savings and Loan Associations.
It subsequently became a private corporation.
What is Freddie Mac an agency of?
Who primarily held Freddie Mac’s stock? But who may sell mortgages to Freddie Mac?
The Federal Home Loan Bank (FHLB) System.
Freddie Mac’s stock was held primarily by Savings and Loans Associations, but any financial institution insured by a federal agency may sell mortgages to Freddie Mac.
On what date was Freddie Mac stock converted into a class of stock that could be owned and traded by all investors?
On what date did Congress amend Freddie Mac’s charter to convert this class of stock into Voting Common Stock, granting its holders the right to elect 13 directors of the Company?
1/3/89
8/9/89
Freddie Mac sells ___-___ ___ (PCs) and ___-___ ___ (GMCs).
These are securities that represent what?
Freddie Mac guarantees payment of __ and ___ to purchasers.
Freddie Mac sells mortgage-participation certificates (PCs) and guaranteed-mortgage certificates (GMCs).
PCs and GMCs are securities that represent an undivided interest in specific pools of mortgages.
Freddie Mac guarantees payment of principal and interest to purchasers.
