Principles - Chapter 11 Lending Institutions Flashcards
Federal Home Loan Mortgage Corp
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
Federal National Mortgage Assoc (FNMA)
Fannie Mae
stockholder owned
largest source of conventional mortgages
Government National Mortgage (GNMA)
Ginnie Mae
owned by government
FHA, VA and FMHA HUD approved
Dept of Housing and Urban Development (HUD)
Lenders who supply funds to borrowers
Primary market
hold and service loan
Existing loans bought and sold
Secondary market
Institutional Lenders -
savings and loans associations
commercial banks
credit unions
insurance companies
Non institutional Lenders
mortgage companies real estate investment trusts private individuals pension funds syndications endowed universities trust departments of banks
Intermediation
The focus to transfer capital from those who invest funds to those wishing to borrow
Savings and Loan associations
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
State and Federally Chartered are both
members of Federal Home Loan Bank System and insured by FDIC
Federal Deposit Ins Corporation (FDIC)
up to 100k for each depositor
Resolution Trust Corp and Office of Thrift Supervision
regulates lending activities
Real Property loans must have under Federal Savings and Loan Associations
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
Commercial Banks
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
National Banks
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
MGIC (Mortgage Guaranty Insurance Corp)
Maggie Mae - Mortgage Marketing Corp
private secondary market
MICs - private mortgage insurance companies
Insurance for over 90% loan to value
investors security of loan
REITS-Real Estate Investment Trusts
unicorporated trusts
either invest in real property or make real property loans on behanlf of its beneficiaries
Equity REIT-purchase for investment
Equity REIT-purchase for investment
Mortgage REIT - limit for real property loans
limit for real property loan
Private Individual are largest source of junior mortgage loans
ex: carryback trust deed
Syndications
groups of people band together to finance, develop or purchase piece of property
Federal Housing Administration (FHA)
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
VA-Veteran Affairs
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
CalVet Home Loans
California Veterans assistance at lower financing cost
served 90 days not including training
rates are typically below FHA and VA loans
Conventianal Loans
not insured or guaranteed by govt
higher interest rate
