RE Finance Unit 4: Non-Institutional Lenders

Question 1

Balanced Trust

Answer 1

A trust that participated in real estate investments as both financier and investor

Question 2

Balloon Payment

Answer 2

The final payment of a partially amortized loan that is considerably larger than the required periodic payments.

Question 3

Blue-Sky Provision

Answer 3

Requiring full disclosure of all risks in a limited partnership solicitation under the Uniform Partnership Act.

Question 4

Combination Trust

Answer 4

A trust that participates in real estate investments as both financier and investor

Question 5

Correspondent

Answer 5

A mortgage banker.

Question 6

Cosigners

Answer 6

Additional signers to a financial agreement adding their guarantees to that of the borrowers.

Question 7

Debenture

Answer 7

Bonds issued without any specific collateral pledge but secured by the general assets of the issuer.

Question 8

Equity Trust

Answer 8

An investment trust dealing in ownerships rather than in financing.

Question 9

General Obligation Bond

Answer 9

Public improvement bond to be paid from property taxes.

Question 10

General Partner

Answer 10

In a limited partnership, the individual or company acquiring, organizing, and managing the investment.

Question 11

Industrial Revenue Bonds

Answer 11

Bonds issued for developing an industrial park or for constructing a building for lease to commercial tenants.

Question 12

Investment Conduit

Answer 12

Set up to invest in real estate, that must have at least 100 investors; management, control, and title to the property are in the hands of trustees.

Question 13

Limited Liability Company

Answer 13

A form of business organization with limited liability. It avoids the restrictions of limited partnerships and is taxed like a partnership.

Question 14

Limited Partner

Answer 14

In a syndicate or regular partnership, the owners other than the general partners. Liability is limited to the amount of their investment.

Question 15

Line of Credit

Answer 15

An amount stipulated by a commercial bank to an active customer on an annual basis. Must be brought to zero on an agreed upon regular date.

Question 16

Mortgage Banker

Answer 16

Financial intermediary who originates new mortgage loans, collects payments, inspects the collateral, and forecloses, if necessary.

Question 17

Mortgage Broker

Answer 17

Agent who joins borrower and lender for a real estate loan, thereby earning a placement fee.

Question 18

Mortgage Companies

Answer 18

Businesses designed to lend money on real or personal property.

Question 19

Mortgage Revenue Bond

Answer 19

A type of industrial development bond that is offered by state and local governments through their housing financing agencies and is tax-exempt.

Question 20

Municipal Bonds

Answer 20

Bonds issued for purposes of financing public improvements, such as schools, parks, and renewal projects.

Question 21

Non-Institutional Lenders

Answer 21

A financing company that is not a federally regulated banking or financial institution.

Question 22

Real Estate Investment Trust (REIT)

Answer 22

An unincorporated trust, set up to invest in real estate, that must have at least 100 investors; management, control, and title to the property are in the hands of trustees.

Question 23

Real Estate Mortgage Trust (REMT)

Answer 23

Similar to a REIT, but investment is made in mortgage securities rather than in real estate.

Question 24

Syndicate

Answer 24

An organization of investors who pool their capital to make a real estate investment.

Question 25

Truth in Lending, RESPA, Integrated Disclosures (TRID)

Answer 25

As of October 3, 2015, TRID combines the former separate Good Faith Estimate and HUD-1 Settlement statement into one disclosure called the Loan Estimate. (The Closing Disclosure replaces the HUD-1.)

Question 26

Warehousing

Answer 26

Guaranteeing for a specified time and fee, that funds will be available under certain terms and conditions; assembling into one package a number of mortgage loans, which the correspondent has originated, in anticipation of sale in the secondary market.

Question 27

Zero Coupon Bond

Answer 27

A single-payment bond that grows to face value over a prescribed time period at a specified interest rate. All interim compound interest is tax-deferred until the bond is cashed.