Primary and Secondary Markets Flashcards

1
Q

purchase-money mortgage

A

any mortgage placed when property is bought

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2
Q

refinancing

A

further borrowing after the realty is already owned

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3
Q

reverse mortgage

A

a financial agreement in which a homeowner relinquishes equity in their home in exchange for regular payments

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4
Q

home equity loans

A

a form of second mortgage where homeowners whose property has appreciated in value may borrow up to new loan-to-value ratios

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5
Q

interim financing

A

loans used most often in the case that people need to buy a house before selling their own

usually lasts fro no longer than six months, and provide for interest-only payments

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6
Q

shared equity mortgage

A

purchaser receives financial help in the form of a contribution to down payment, concessionary interest rate, or assistance with monthly payments

partner receives hare of profit when property is sold

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7
Q

package mortgage

A

loan in which the personal property and furniture is included in the purchase price of the house

used often in financing furnished condos

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8
Q

blanket mortgage

A

a single mortgage that covers more than one parcel of land

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9
Q

partial release clause

A

a mortgage provision that allows some of the collateral to be released from a mortgage after the borrower pays a certain amount of the loan

used in blanket mortgages

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10
Q

wraparound mortgage

A

a type of junior loan which wraps or includes, the current note due on the property

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11
Q

open-end mortgage

A

mortgage where borrowers can obtain additional funds to improve property

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12
Q

construction loan

A

loan made to finance the construction improvements on real estate

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13
Q

what are the three seller-buyer arrangements?

A

seller financing and land contracts
lease-option
sale-leaseback

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14
Q

seller financing and land contracts

A

buyer makes payments to seller, until total sum has been paid at which time the seller issues a satisfaction of the mortgage lien

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15
Q

Institutions to get mortgage loans

A

1.savings and loan associations
2. commercial banks
3. mutual savings banks
4. life insurance companies
5. mortgage banking companies
6. mortgage brokers
7. credit unions

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16
Q

lease-option

A

an agreement that gives a renter a choice to purchase the rented property during or at the end of the rental period

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17
Q

sale-leaseback

A

an asset that is previously owned by the seller is sold to someone else and then leased back to the first owner for a long duration

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18
Q

primary mortgage market

A

where prospective homeowners connect with primary lenders to secure mortgages for both owner-occupant and investment properties

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19
Q

mortgage bankers

A

people that use money borrowed from other institutions and funds of their own to make real estate loan that may be later sold to investors

20
Q

mortgage brokers

A

individuals who are licensed to act as intermediaries in briningng borrowers and lenders together

21
Q

credit unions

A

cooperative organizations in which members place money in savings accounts, usually higher interest rates than other savings institutions offer

22
Q

underwriting

A

the process lenders use to evaluate the honesty, creditworthiness, and risk of a potential customer

23
Q

credit history

A

how timely applicant repaid debt

24
Q

preapproval

A

a solid written commitment from lender to hold a mortgage up to a given amount

better than prequalification

25
prequalification
estimates the maximum amount the borrower is likely to qualify for
26
qualifying ratios
financial ratios used by mortgage lenders to qualify a potential home-buyer for a mortgage loan 28/36: borrower is allowed to spend up to 28% of gross monthly income for PITI or up to 36% of income including other payments of long term debts
27
federal reserve system
helps to maintain sound credit conditions, counteracts inflationary and deflationary trends, creates favorable economic climate
28
Fannie Mae
formerly FNMA buy VA and FHA loans, sell bonds to investors to make them money not he return largest buyer/seller on the secondary mortgage market
29
Truth in Lending Act
law that requires credit institutions to inform consumers of the true cost of obtaining credit so consumer can compare costs of various vendors
30
Regulation Z
prohibits certain practices relating to payments made to compensate mortgage brokers and other loan originators.
31
portfolio loans
a kind of mortgage that a lender originates and retains instead of offloading on the secondary mortgage market the lender gets to pick the standards for the loans – what kind of credit score they’ll approve and how much money they’ll offer to the borrower
32
jumbo loans
a mortgage used to finance properties that are too expensive for a conventional conforming loan. The maximum amount for a conforming loan is $647,200
33
triggering terms
a word or phrase that, when used in advertising literature, requires the presentation of the terms of a credit agreement
34
FICO credit scores
a three-digit number based on the information in your credit reports
35
Ginnie Mae
sells certificates to investors (stocks) gives a dividend as a return to hte investor purchases low and moderate income homes, high risk loans
36
Freddie Mac
lower risk loans, conventional mortgages
37
APR
annual percentage rate the interest rate for a whole year as applied to a loan
38
creditor
one who extends consumer credit more than 25 times a year
39
penalties for noncompliance with Regulation Z
1. violation of administrative order = $10000/day 2. engaging in deceptive practice = up to $10000
40
Equal Credit Opportunity Act
prohibits lenders from discriminating against applicants on basis of race, color, religion, national origin, sex, age, marital status
41
Real Estate Settlement Procedures Act
ensures buyer and seller in transaction with first mortgage loan have knowledge of all settlement costs
42
TILA-RESPA Integrated Disclosure (TRID)
combines disclosures required by Truth-in lending act and RESPA
43
intent to proceed
unofficial commitment to a lender
44
ALIENS
required for a loan to be considered complete Address of property Loan amount requested Income Estimated property value name social security number
45
secondary mortgage market
where home loans and servicing rights are bought and sold between lenders and investors
46
when do TRID rules not apply?
1. HELOCS 2. mortgages for mobile homes 3. reverse mortgages 4. cash transactions 5. loans ofr commercial purposes
47
three-day right of rescission
borrower has three business days to rescind the transaction for any reason