Mortgages Flashcards

Question

Blanket Mortgage Loan 🛌

Answer 1

Imagine you have a big security blanket that covers all your teddy bears (properties). If you can't pay, the blanket gets taken away along with all your teddy bears.

Answer 2

Picture selling your bike (house) to your friend and then renting it back. You still get to ride it, but your friend owns it now. This way, you get some cash but still enjoy your bike.

Answer 3

It's like taking a loan using your treehouse (home equity) as collateral. If you can't repay, you might have to give up your treehouse.

Answer 4

Think of it as a magical money well in your backyard (home equity). You can scoop out money as needed, but there's a limit to how much you can scoop, and you pay for what you take out.

Answer 5

Imagine you want to buy a cool skateboard, but you don't have enough money. The skateboard shop owner (seller) sees your passion and offers to lend you some cash in addition to your allowance (bank loan). You agree to pay them back over time. In this case, the skateboard shop owner is like the seller offering financing to help you buy the skateboard.

Answer 6

The seller originates financing for only one property in a 12-month period. The seller is a person, state, or trust. The seller has not constructed or acted as a contractor for a residence on the property. The financing does not result in negative amortization. The financing is fixed rate, or does not adjust for the first five years.

Answer 7

The seller originates financing for no more than three properties in a 12-month period. The seller is a person or organization (partnership, corporation, association, cooperative, trust, estate, government unit, or proprietorship). The seller has not constructed or acted as a contractor for a residence on the property. The loan is fully amortizing. The financing is fixed rate, or does not adjust for the first five years. The seller has determined that the borrower has the ability to repay the loan according to its terms.

Answer 8

deficiency judgement

Answer 9

Think of this like riding a tandem bike. You're pedaling, but your friend is sitting in the front seat (the seller is still responsible for the loan). You're helping move the bike forward by making payments directly to the lender. If you stop pedaling (miss payments), your friend might have to take over (pay the debt), and that's not fun for them. It's like teamwork, but it can be risky if someone doesn't hold up their end. Short Sale - Bargain Shopping:

Answer 10

Imagine you're at a yard sale, and you find a cool toy (the property) that used to cost $20 (the outstanding loan balance). But the seller (the borrower) really needs money, so they agree to sell it to you for just $15. You want to buy it, but you have to ask the seller's mom (the lender) if it's okay. If she says yes (lender approves the sale), you get the toy for a great deal, and the seller gets some money, avoiding a yard sale disaster (foreclosure).

Answer 11

Portfolio lenders are usually a bank or other institution that originates mortgage loans and then keeps the debt in a portfolio of loans.

Answer 12

Mortgage bankers are essentially direct lenders. They work for financial institutions (banks or mortgage companies) that have the funds to lend to borrowers. These institutions provide the money for mortgage loans. Mortgage brokers act as intermediaries between borrowers and lenders. They do not lend their own money but instead help borrowers connect with lenders. Mortgage brokers work with multiple lenders and have access to a variety of loan products. They help borrowers shop for loans by gathering their financial information and presenting it to different lenders to find the best terms and rates.

Answer 13

is the name for the process of creating a go-between in the economic process. In the financial system, commercial banks are the intermediaries – they collect and hold much of the funds that move between the government and consumers.

Answer 14

removes the middle man, or the intermediary, from the transaction. In real estate terms, this amounts to the money going directly from investor to borrower without passing through all the usual channels of banks, mortgage brokers, and mortgage bankers.

Answer 15

The primary mortgage market is where lenders underwrite loans to borrowers seeking to purchase real property.

Answer 16

your lender verifies your income, assets, debt and property details in order to issue final approval for your loan.

Answer 17

mortgages are bought and sold.

Answer 18

a government-sponsored enterprise (GSE) that purchases FHA and VA loans, as well as conventional, conforming loans. Fannie Mae packages the mortgages they buy and sells them.

Answer 19

on buying conventional loans from depository institutes (although it also purchases VA and FHA loans). Buying loans from depository institutions encourages further lending by returning working capital back to the banks and essentially means the loans are insured by the U.S. government.

Answer 20

Today, Fannie Mae and Freddie Mac are completely independent of each other. They have the same business model and often compete with each other. The only significant difference between Fannie Mae and Freddie Mac is the size of the financial institutions from which they purchase their mortgage loan bundles. Fannie Mae deals with larger commercial banks, whereas Freddie Mac works with the smaller “thrift” banks. Fannie buys from the big boys, Freddie buys from the little guys.

Answer 21

To make it easier to package and sell loans on the secondary market, Fannie Mae and Freddie Mac have certain standards for the loans they buy. A loan that meets these standards is known as a conforming loan.

Answer 22

loan providers investors

Answer 23

These special companies, called "government-sponsored enterprises" or GSEs for short, are like a weird mix of government and private businesses. They're created by the government and are meant to help the public, but they are owned by private individuals or companies. It's a bit like having one foot in the government world and the other in the business world. But here's the catch: These companies are most focused on making money for their owners and investors, not necessarily on helping everyone. So, their main responsibility is to make profits for their owners.

Answer 24

So, in the world of home loans, Ginnie Mae is a bit like the organizer who collects all the mortgage loans (picnic tickets) from borrowers (like you) and bundles them into "Picnic Baskets" (MBS) to attract investors (your neighbors). This helps more people like you get the funding they need to buy homes, making homeownership accessible to more folks.

Answer 25

In other words, Freddie Mac and Fannie Mae's loans are guaranteed by Freddie Mac and Fannie Mae, but Ginnie’s loans are guaranteed by the U.S. government. This is an important distinction to make, but one that makes sense when you remember that Freddie Mac and Fannie Mae are government-sponsored, while Ginnie Mae is government-owned! One thing Fannie Mae, Freddie Mac, and Ginnie Mae all have in common? They all work to increase mortgage availability.

Answer 26

Government-sponsored enterprises buy loans from lenders, increasing mortgage availability.

Answer 27

Fannie Mae (Federal National Mortgage Association): Fannie Mae is a government-sponsored enterprise (GSE) that specializes in purchasing loans from large, commercial banks. Its main goal is to provide stability and affordability in the housing market by buying and securitizing mortgages, making it easier for banks to lend money for home purchases. Freddie Mac (Federal Home Loan Mortgage Corporation): Like Fannie Mae, Freddie Mac is a GSE, but it specializes in purchasing loans from smaller "thrift banks" or savings and loan associations. Freddie Mac operates with a similar goal of supporting the housing market by making it easier for thrift banks to provide mortgages. Ginnie Mae (Government National Mortgage Association): Ginnie Mae is unique among the entities listed because it's a government-owned enterprise, not a GSE. Its primary focus is on buying loans to support housing assistance and government-backed mortgage programs. Ginnie Mae helps ensure that funds are available for these programs by securitizing the loans it purchases. Farmer Mac (Federal Agricultural Mortgage Corporation): Farmer Mac is another GSE, but it specializes in agricultural loans. It operates similarly to Fannie Mae and Freddie Mac but focuses on making credit available for various types of agricultural real estate mortgage loans, rural housing mortgage loans, and rural utility cooperative loans.

Answer 28

investment instruments that have mortgages as collateral. Think of it kind of like buying stocks, but instead of buying stocks in a company, you are buying stock in a bunch of people's mortgages.

Answer 29

the conversion of an asset, especially a loan, into marketable securities, typically for the purpose of raising cash by selling them to other investors.

Answer 30

Mortgage Backed Securities: 1. Homebuyers sign a promissory note (aka mortgage) in exchange for a loan. 2. The bank sells conforming mortgages to GSEs to get more cash to make loans. 3. Mortgages are sorted into pools by the GSE according to risk (low risk, medium risk, and high risk). 4. The GSE sells portions of these pools to investors. These portions are called mortgage-backed securities. 5. The investors now receive the monthly payments from the homebuyers

Answer 31

is a statement of facts that is signed by the borrower who is taking out a mortgage loan. In this document, the borrower will certify: The amount that is owed on the loan The rate of interest The date to which the interest has been paid

Answer 32

next-level originators. Not only do they originate loans, but they also purchase newly originated loans from smaller originators.

Answer 33

people or firms who buy and sell securities for their own account, whether through a broker or otherwise

Answer 34

TILA is intended to ensure that credit terms are disclosed in a meaningful way so consumers can compare credit terms more readily and knowledgeably. Before TILA's enactment, consumers were faced with a bewildering array of credit terms and rates. It was difficult to compare loans because they were seldom presented in the same format. Consumers were basically left comparing apples to oranges. 🍎 🍊 Now, all creditors must use the same credit terminology and expressions of rates. TILA seeks to do exactly what its name implies: create truth in lending.

Answer 35

Okay, so when we talk about TILA, what we’re actually talking about is Regulation Z. You see, TILA is a law passed by Congress. In that law, Congress gave the Federal Reserve Board (and later the CFPB) the power to administer the law. Regulation Z explains how the provisions in the law will be carried out in practical terms. 🛞

Answer 36

that if someone is using an already owned house as ocllaterol, thye can pull out of the loan within 3 days

Answer 37

you cannot state the mortgage payment amount in advertizing

Answer 38

the TOTAL cost of getting that loan, expressed as a percentage.

Answer 39

Real Estate Settlement Procedures Act (RESPA) in 1974 as a response to abuses in the real estate settlement process, including the practice of kickbacks, referral fees, or fee splitting, which had the effect of needlessly increasing the costs of settlement services.

Answer 40

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, named after U.S. Senator Christopher J. Dodd and U.S. Representative Barney Frank, became law. This act aimed to reform Wall Street and protect consumers from unfair financial practices. It created a new agency called the Consumer Financial Protection Bureau (CFPB) to prevent mortgage and payday loan companies from exploiting people. Dodd-Frank introduced various financial reforms, including the Volcker Rule, which restricted banks from risky investments. The law also increased the amount of money insured by banks and established real estate lending standards. Overall, Dodd-Frank was a significant effort to prevent another financial crisis.

Answer 41

Basically, the Consumer Financial Protection Bureau exists to protect borrowers from dishonest lending practices. "Know Before You Owe"

Answer 42

Loan Estimate and the Closing Disclosure

Answer 43

three business days

Answer 44

three business days

Answer 45

prohibits lending discrimination on the basis of race, color, religion, national origin, sex, marital status, age, use of public assistance, or sexual orientation or gender identity.

Answer 46

FCRA was enacted with the intention of protecting consumers from the willful and negligent inclusion of inaccurate information in their credit reports.

Answer 47

The Fair and Accurate Credit Transaction Act (FACTA) is an amendment to the Fair Credit Reporting Act that requires the three major credit reporting agencies to provide credit reports free of charge to consumers once every 12 months upon request. Everyone deserves to know what their credit report says. That's not an opinion; that's a FACTA, Makayla.

Answer 48

dodd-frank

Answer 49

dodd-frank

Answer 50

included the cost of everything related to the loan including the loan itself, interest, points, and fees/miscellaneous costs

Answer 51

provides guidelines for updated loan disclosures, including the Loan Estimate and the Closing Disclosure

Answer 52

fair and accurate credit transaction act

Answer 53

fair credit reporting act

Answer 54

fair credit reporting act

Answer 55

fair and accurate credit transaction act

Answer 56

a guarantee that they'll give them a mortgage at a certain interest rate.

Answer 57

cannot exceed 31%

Answer 58

In order to determine whether or not to approve a loan, the underwriter needs to evaluate both the borrower AND the property.

Answer 59

100% (which means no down payment)

Answer 60

96.5% (a 3.5% down payment)

Answer 61

uniform residental loan application

Answer 62

28% 31% 36% 43%