Government Involvement in Real Estate Financing

Question 1

Primary Mortgage Market

Answer 1

made up of the lenders that originate mortgage loans

Question 2

Secondary Mortgage Market

Answer 2

where loans are bought and sold

Question 3

Fannie Mae

Answer 3

buys from a lender a block or pool of mortgages; under congressional supervision

Question 4

Freddie Mac

Answer 4

secondary market for conventional mortgage loans

Question 5

Farmer Mac

Answer 5

privately owned, publicly traded - guaranteed by the USDA

Question 6

Ginnie Mae

Answer 6

government national mortgage association

Question 7

Loan to Value

Answer 7

ratio of debt to the value of the property

Question 8

Conventional Loans

Answer 8

most secure; lower LTV, borrower makes a down payment of at least 20%

Question 9

Private Mortgage Insurance

Answer 9

provides the lender with funds in the event of borrower default on the loan

Question 10

FHA-insured Loan

Answer 10

must be made by an FHA approved lending institution

Question 11

Package Loan

Answer 11

includes real and personal property

Question 12

Blanket Loan

Answer 12

covers more than one parcel or lot; used by developers

Question 13

Open-End Loan

Answer 13

provides a security interest when a note is executed by the borrower to the lender but also secures any future advances of funds made by the lender to the borrower

Question 14

Construction Loan

Answer 14

made to finance the construction of improvements on real estate; lender disburses the funds in progress payments or draws

Question 15

Sale and Leaseback

Answer 15

finance large commercial or industrial properties; land and building are sold to an investor, the real estate is leased back to the seller

Question 16

Buydown

Answer 16

temporarily or permanently lowers the interest rate on a mortgage or deed of trust loan; paid by lump sum at closing

Question 17

Home Equity Loan

Answer 17

source of funds that takes advantage of the equity built up in the home

Question 18

Truth in Lending Act

Answer 18

requires that credit institutions inform borrowers of the true cost of obtaining credit

Question 19

Creditor

Answer 19

any person who extends consumer credit more than 25 times each year or more than five times each year if the transactions involve dwellings as security

Question 20

Triggering Terms

Answer 20

specific credit terms like down payment, monthly payment etc

Question 21

Equal Credit Opportunity Act

Answer 21

prohibits lending discrimination based on race, color, religion national origin, sex marital status, age or receipt of public assistance

Question 22

Real Estate Settlement Procedures Act

Answer 22

applies to any residential real estate transaction involving a new first mortgage loan; fully informs buyer and seller