Principles - Chapter 11 Lending Institutions

Question 1

Federal Home Loan Mortgage Corp

Answer 1

Freddie Mac
purchases single family, multifamily and home improv conventional mortgage loans
sells mortgage backed securities (PCs)
Collaterlized Mortgage Obligations (CMOs) are debt obligations secured by conventional mortgages

Question 2

Federal National Mortgage Assoc (FNMA)

Answer 2

Fannie Mae
stockholder owned
largest source of conventional mortgages

Question 3

Government National Mortgage (GNMA)

Answer 3

Ginnie Mae
owned by government
FHA, VA and FMHA HUD approved
Dept of Housing and Urban Development (HUD)

Question 4

Lenders who supply funds to borrowers

Answer 4

Primary market

hold and service loan

Question 5

Existing loans bought and sold

Answer 5

Secondary market

Question 6

Institutional Lenders -

Answer 6

savings and loans associations
commercial banks
credit unions
insurance companies

Question 7

Non institutional Lenders

Answer 7

mortgage companies
real estate investment trusts
private individuals
pension funds
syndications
endowed universities
trust departments of banks

Question 8

Intermediation

Answer 8

The focus to transfer capital from those who invest funds to those wishing to borrow

Question 9

Savings and Loan associations

Answer 9

greatest share for home loan market
offers highest loan to value - up to 90-95%
usually higher interest rates
mostly 1-4 family dwellings, mobile homes, apartment loans and interim construction loans
30 year loan limit
governed by Home Loan Act of 1933
Supervised by Federal Home Loan Bank Board (FHLBB)

State chartered: supervised by Savings and Loan Commission of CA. Owned by stock companies/owned by stockholders

Federally chartered: governed by Federal Home Loan Bank Board. Owned by depositors

Question 10

State and Federally Chartered are both

Answer 10

members of Federal Home Loan Bank System and insured by FDIC

Question 11

Federal Deposit Ins Corporation (FDIC)

Answer 11

up to 100k for each depositor

Question 12

Resolution Trust Corp and Office of Thrift Supervision

Answer 12

regulates lending activities

Question 13

Real Property loans must have under Federal Savings and Loan Associations

Answer 13

appraisal
repay to begin within 60 days
adjustable rate and term subject to law
may be fully, partially or nonamortized subject to limitations
loan to value may not exceed 100%
home loans over 80% loan to value must have private mortgage insurance (pmi)
all other loan types over 90% must have board approval

Question 14

Commercial Banks

Answer 14

2nd greatest number of residential mortgage loans
All insured by FDIC
primary source of short term construction financing, business and commercial properties
up to 90% loan to value
30 years
better interest rates than savngs and loans

Question 15

National Banks

Answer 15

controlled by Comptroller of the Currency which is a division of Dept. of Treasury
Subject to National Banking Act and Federal Reserve
FDIC insured
interpretive rulings: further define operational parameters

Question 16

MGIC (Mortgage Guaranty Insurance Corp)

Answer 16

Maggie Mae - Mortgage Marketing Corp

private secondary market

Question 17

MICs - private mortgage insurance companies

Answer 17

Insurance for over 90% loan to value

investors security of loan

Question 18

REITS-Real Estate Investment Trusts

Answer 18

unicorporated trusts

either invest in real property or make real property loans on behanlf of its beneficiaries

Question 19

Equity REIT-purchase for investment

Answer 19

Equity REIT-purchase for investment

Question 20

Mortgage REIT - limit for real property loans

Answer 20

limit for real property loan

Question 21

Private Individual are largest source of junior mortgage loans

Answer 21

ex: carryback trust deed

Question 22

Syndications

Answer 22

groups of people band together to finance, develop or purchase piece of property

Question 23

Federal Housing Administration (FHA)

Answer 23

doesn’t lend $
insures the repayment of mortages based on earning capacity
MIP-Mortgage Insurance Premium 1/2 of 1% of loan amount
Must meet MPRs-min property requirements

Question 24

VA-Veteran Affairs

Answer 24

The servicemen readjustment act 1944
GI Bill of rights
US govt guarantee
Eligible-based on service in military 90 days or more during war or 181 days in peace
loan value is based on CRV-Certificate of Reasonable value

Question 25

CalVet Home Loans

Answer 25

California Veterans assistance at lower financing cost
served 90 days not including training
rates are typically below FHA and VA loans

Question 26

Conventianal Loans

Answer 26

not insured or guaranteed by govt

higher interest rate