MORTGAGE FINANCING Flashcards
FHA Section 203 (b
s a fixed rate program. It is the mostly widely used of all FHA programs. It requires minimum down payment and closing costs.
FHA 234 (c)
for loans on condominiums (Condominiums MUST be FHA certified for these loans)
FHA 245-
Graduated Payment Plan Mortgage
FHA 203K-
llows the purchaser to borrow enough money to rehabilitate a property. (this program will be retired in 2015)
FHA Reverse Mortgage
Owners 62 years of age or older
FHA also has 251
an adjustable Rate Mortgage Program (ARM).
Loan Assumption
FHA loans are assumable, however the rules have been modified through the years. Loans before December 1986 required no pre-approval. Loans acquired after this date require a creditworthiness process for the buyer assuming the loan. Local FHA offices determine specific closing costs which will be borne by the buyer.
VA LOANS
VAG - GUARANTEE
Vetaran assumes liability
does not pay the mortgage there will be a foreclosure
VA LOANS ARE Qualified
A qualified veteran may borrow up to 100% of the loan with no down payment.
Veteran first apply for a
Certificate of Eligibility
Vetaran Appraisial
Certificate of reasonable value
VA does not allow
prepayment penalties
Conventional loans
neither guaranteed nor insured by the federal government - loans are made through savings and loan, mortgage brokers, mortgage bankers, banks and credit unions. 20% min down payment - most loans are packaged by the lenders and sold in the 2ndary market Federal home loan mortgage corps.
Abstract and opinion
A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status. The abstract of title does not guarantee or ensure the validity of the title of the property. It is a condensed history that merely discloses those items about the property that are of public record. It does not reveal such things as encroachments and forgeries.
Chain of Title
The recorded history of matters that affect the title to a specific parcel of real estate, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title. The chain of title shows the successive changes of ownership, each one linked to the next so that a “chain” is formed
Title insurance-
A comprehensive indemnity contract under which a title insurance company warrants to make good a loss arising through defects in title to real estate or any liens or encumbrances thereon. Title insurance protects a policyholder against loss from some occurrence that has already happened, such as a forged deed somewhere in the chain of title.
Savings and Loans
Specialize in long term residential loans. They are one of the largest lenders of residential funds. They may be either federally or state chartered. They are part of the Federal Home Loan Bank system. Deposits must be insured for at least $100,000.
Banks
Make short term loans. They are becoming more active in home mortgage loans, FHA, and VA. Examples of short term loans are: Automobile, mobile home, and household loans.
Insurance companies
Prefer large commercial projects, but will make residential loans. They like to have an equity position. They are sometimes partners with developers. This type of lending is called:
Participation financing - A mortgage in which the lender participates in the income of the mortgaged property beyond a fixed return, or receives a yield on the loan in addition to the straight interest rate
Mortgage Loan Originators
The Dodd Frank Wall Street Mortgage and Consumer Protection Act created criteria for those who take or assist applications and negotiate terms of mortgages. Mortgage Loan originators who finance any federally related transactions must be registered with the Nationwide Mortgage Licensing System (NMLS). Tthose originators who are not required to be registered with the Nationwide system must be licensed through the Florida Office of Financial Regulation
Mortgage Brokers
A person, corporation, or firm not otherwise in banking or finance, which negotiates, sells, or arranges loans for compensation. They do not finance loans.
Mortgage Bankers
provide their own funds for loans. Sometimes this person or entity services the loan as well.
Private individuals
such as sellers financing their own properties or private investors, through mortgage brokers. Sellers who finance more than one property in a two year timeframe may be required to register as a Mortgage Loan Originator.
Local governments
for bond programs such as community improvement money.
Promissory note
considered to be PERSONAL PROPERTY
Equal Credit Opportunity Act (ECOA)
Prohibits discrimination in loan underwriting on the basis of sex, marital status, race, religion, age or national origin.
Prohibits discriminatory treatment of income from alimony, child support, public assistance, or part-time employment;
Prohibits inquiry about, or consideration of, child bearing plans or potential for child bearing.
Conditional Loan approval
is given, meaning the lender has agreed to lend the money but certain conditions remain to be completed such as the sale of the previous house, or the taxes being brought up to date. This condition is not actually changed until closing.
