Key Terms Unit 13

Question 1

Covers more than one parcel or lot. Usually used by a developer to finance a subdivision.

Answer 1

Blanket Loan

Question 2

A way to temporarily lower interest rate on a mortgage of deed of trust loan.

Answer 2

Buydown

Question 3

States the properties current market value based on a VA-approved appraisal.

Answer 3

Certificate of reasonable value (CVR)

Question 4

The responsibility of financial institutions to help meet their communities needs for low income and moderate income housing.

Answer 4

Community Reinvestment Act of 1977 (CRA)

Question 5

Finance construction of improvements on real estate (office buildings, homes, apartments). The lender disburses payments as draws during construction.

Answer 5

Construction Loan

Question 6

The most secured loan because their LTV are lower. 80% of the value of the property of less because the borrower pays at least a 20% down payment. A loan with less then 20% requires PMI.

Answer 6

Conventional Loan

Question 7

Prohibits discrimination

Answer 7

Equal Credit Opportunity Act (ECOA)

Question 8

___ buys from a lender a block or pool of mortgages that may then be used for collateral for mortgage-backed securities that are sold on global market.

Answer 8

Fannie Mae

Question 9

A secondary market for agricultural and rural development loans.

Answer 9

Farmer Mac

Question 10

Deposits in insured institutions are covered up to the specified limit, currently $250,000 per depositor, per account, by the _____.

Answer 10

Federal Deposit Insurance Corporation (FDIC)

Question 11

Their role is to maintain sound credit conditions, help counteract inflationary and deflationary trends, and create a favorable economic climate.

Answer 11

Federal Reserve System (Fed)

Question 12

A loan that is insured by the agency.

Answer 12

FHA-Insured Loan

Question 13

Continues to provide a secondary market for mortgage loans, primarily conventional loans.

Answer 13

Freddie Mac

Question 14

Administers special assistance programs and guarantees investment securities issues by private offerers. They do not buy or sell loans.

Answer 14

Ginnie Mae

Question 15

Organizations created by the fed government to help increase loan opportunities for buyers. Fannie Mae, Freddie Mac, Farmer Mac, Ginnie Mae

Answer 15

Government-sponsored enterprises (GSEs)

Question 16

A source of funds that takes advantage of the equity buildup in a home. Only the amount borrowed will be subject to the higher interest rate.

Answer 16

Home equity loan

Question 17

The FHA insurance that is a percentage of the loan amount that the borrower is charged as a premium.

Answer 17

Mortgage insurance premium (MIP)

Question 18

Govern’t agency which sets standards and regulations for fiduciary lenders.

Answer 18

Office of the Comptroller of the Currency (OCC)

Question 19

Provides a security interest when a note is executed by the borrower to the lender and future advances from the lender to the borrower.

Answer 19

Open-end loan

Question 20

Loans that include real and personal property as part of the sales price of the home. ie home, drapes, furniture, dishwasher.

Answer 20

Package loan

Question 21

Made up of the lenders that originate mortgage loans. These lenders make money available directly to borrowers.

Answer 21

Primary mortgage market

Question 22

the borrower purchases an insurance policy that provides the lender with funds in the event of borrower default on the loan.

Answer 22

Private mortgage insurance PMI

Question 23

Requires that credit institutions inform borrowers of the true cost of obtaining credit.

Answer 23

Regulation Z

Question 24

The buyer becomes the landlord (new owner) and the original owner (the seller) becomes the tenant.

Answer 24

sale-and-leaseback

Question 25

Loans are bought and sold only after they have been funded (closed). They help lenders raise capital to make additional mortgage loans and is especially useful when money is in short supply.

Answer 25

secondary mortgage market

Question 26

Specific credit terms (lingo) such as downpayment, monthly payment, dollar amount of finance charge.

Answer 26

triggering terms

Question 27

Guarantee loans used to purchase or construct homes for eligible veterans and their spouses. There is no VA limit on the loan, it is determined by credit factors. Debt can be pre-payed w/o penalties.

Answer 27

VA-guaranteed loan