Government Involvement in Real Estate Flashcards
consists of 12 district banks. Regulates the flow of money and interest rates.
Federal Reserve
consists of lenders that originate mortgage loans.
Primary Mortgage Market
loans are bought and sold after being funded.
Secondary Mortgage Market
has shareholders but is under the conservatorship of the Federal Housing Finance Agency (FHFA).
Fannie Mae
using pool of mortgages as collateral; and deals in conventional, FHA, and VA loans.
Mortgage-backed securities
also has shareholders and is under the conservatorship of FHFA. It has authority to purchase mortgages, pool them, and use them as security for bonds sold on the open market.
Freddie Mac
is entirely a government agency, a division of the Department of Housing and Urban Development (HUD), organized as a corporation but without corporate stock, that administers special-assistance programs, and guarantees mortgage-backed securities using FHA and VA loans as collateral.
Ginnie Mae (Government National Mortgage Association)
not government-insured or guaranteed.
Conventional loan
(jumbo loans) must be retained in the lender’s investment portfolio
Non-conforming loans
backed by the U.S. Department of Veterans Affairs and are available to eligible veterans and spouses.
VA-guaranteed loans
part of the Department of Agriculture and has programs to help families purchase or operate family farms, including the Rural Housing and Community Development Service (RHCDS) and the Farm Credit System (Farm Credit).
The Farm Service Agency (FSA), formerly Farmers Home Administration (FmHA)
includes all personal property and appliances as well as real estate.
package loan
covers more than one parcel or lot
blanket loan
allows a borrower to pay off part of a loan to remove the liens from one parcel or lot at a time.
partial release clause
secures the current loan to the borrower and future advances made by the lender to the borrower.
open-end loan
used to finance construction of property improvements.
Construction loans
an arrangement can be used to finance large commercial or industrial properties.
sale and leaseback
payment made at closing to reduce the interest rate on the loan.
buydown
A loan or line of credit based on the equity available in a property
Home equity loan or HELOC
implemented by Regulation Z, now enforced by the Consumer Financial Protection Bureau, and requires that, when a loan is secured by a residence, the lender must inform the borrower of the true cost of obtaining credit.
Truth in lending act
gives individuals the option to cancel certain residential loans within three business days of receiving and signing the paperwork.
three day right of recission
prohibits discrimination in granting or arranging credit on the basis of race, color, religion, national origin, sex, marital status, age (as long as the applicant is not a minor), or receipt of public assistance.
Equal Credit Opportunity Act (ECOA)
requires that reasons for a loan application rejection be provided to the applicant within 30 days and that the applicant be given the right to a free copy of any credit report that was considered in the loan application process.
Fair Credit Reporting act
requires financial institutions to help meet the need for affordable housing in their communities.
Community Reinvestment Act
covers costs related to the closing of a residential transaction.
Real Estate Settlement Procedures Act (RESPA)
The provisions of the Truth in Lending Act (Regulation Z) require all of the following to be disclosed to a residential buyer
a loan origination fee.
loan interest rate
discount points.
Funds for FHA-insured loans are usually provided by
approved lenders
Who is NOT a participant in the secondary mortgage market?
Credit Union
The conservatorship of Fannie Mae and Freddie Mac is the responsibility of
the Federal Housing Finance Agency.
The real estate financing market comprises
the primary and secondary mortgage markets, plus government influences such as the Federal Reserve system.
The government-sponsored enterprise that provides a secondary market for conventional, FHA- insured, and VA-guaranteed loans is
fannie mae
The Federal Deposit Insurance Corporation (FDIC) does which of these?
Insures deposits in insured institutions up to $250,000 per depositor, per account
The ECOA prohibits discrimination in granting credit based on
race, color, religion, national origin, sex, marital status, age, and receipt of public assistance.
A loan that secures any future advances of funds made by the lender to the borrower is
an open-end loan
One of the federal laws requiring disclosure to a loan applicant who is rejected for a loan on the basis of a credit report is
the Fair Credit Reporting Act.
Programs to help families purchase or operate family farms are provided by
Farm service agency
Conventional loans are generally viewed as the most secure loans because
they have relatively low loan-to-value ratios.
The three-business-day right of rescission that is provided by Regulation Z of the Truth in Lending Act does not apply to
an owner-occupied residential first mortgage loan.
The lower the ratio of debt to value,
the higher the down payment made by the borrower.
If a mortgage lender discriminates against a loan applicant on the basis of marital status, what law is violated?
Equal Credit Opportunity Act (ECOA)
The document that sets forth the maximum loan guarantee to which a veteran is entitled is
the certificate of eligibility.
A mortgage broker is
an intermediary.
When the Fed increases the reserve requirements of member banks
funding is more difficult to obtain.
One way a borrower can obtain a conventional mortgage loan with a lower down payment than 20% of the purchase price is by
obtaining private mortgage insurance.
