Non-conventional/Government loans Flashcards
What are non-conventional mortgages?
They are mortgages guaranteed or insured by government agencies such as the FHA, VA and USDA
The FHA does not make, buy or sell loans. But what DO they do?
Insure loans
What department oversees FHA lending?
The department of HUD (Housing and Urban Development)
HECM (Home Equity Conversion Mortgage) is FHA’s version of a reverse mortgage. At least how old must one be to qualify?
62 years old
The US Department of Veteran Affairs does not make loans. Instead, what do they do?
Guarantee’s loans. It’s a promise from the government to repay a portion of the loan amount to the lender in the case of a foreclosure.
What is the fee that is charged when a borrower is obtaining a VA loan?
The VA Funding Fee
What percentage do VA loans need to be at regarding DTI ratio/Back end ratio?
41 % DTI Ratio
What are section 502 loans?
USDA loans - loans for low income borrowers purchasing in rural areas.
There are 2 types of 502 loans. What are they?
USDA Direct loans- Loans that are funded directly by the U.S. government
USDA Guaranteed loans- Loans that are funded by private lenders, but guaranteed by the RHS in the event that the home goes into foreclosure.
What is CHARM?
Consumer Handbook on Adjustable Rate Mortgages. It’s what lenders provide to borrowers required by TILA.
Applicants for ARM’s must qualify based off of what rate?
“Fully Indexed Rate”.
With ARM’s, what is the “Margin”?
A fixed number that is not subject to change throughout the course of the loan. It’s a number presented as percentage points
The QM rule or the Qualified Mortgage rule was released by what agency?
The CFPB in 2014
The QM rule only applies to:
“covered Transactions”
The same definition that TILA gives to “residential mortgages”
What distinguishes qualified mortgages from others?
Sound underwriting and the absence of risky lending terms
