RP UNIT13 Flashcards
What is the purpose of the Federal Reserve System?
To help maintain sound credit conditions, counteract inflationary and deflationary trends, and create a favorable economic climate.
How many Federal Reserve districts are there?
12
What are finance charges?
Loan origination fees and discount points.
What is the primary mortgage market?
Lenders that originate mortgage loans.
What generates recurring income for lenders?
Interest collected during the term of the loan.
What is the role of servicing loans for lenders?
Provides income through collecting payments, accounting, bookkeeping, and processing payments of taxes and insurance.
Name two major lenders of home mortgage and commercial property loans.
- Savings associations (thrifts)
- Commercial banks
What is the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act)?
Requires states to license mortgage loan originators and mandates participation in the Nationwide Mortgage Licensing System and Registry (NMLS).
What do government-sponsored enterprises (GSEs) do?
Purchase real estate loans and assemble them into securities for sale to investors.
What is Fannie Mae known for?
Dealing in all real estate loans, including FHA, VA, and conventional.
What type of loans does Ginnie Mae guarantee?
Mortgage-backed securities issued by private offerors backed by pools of FHA and VA loans.
What is a loan-to-value ratio?
A ratio that measures the amount of a loan against the appraised value or sale price of the property.
What does private mortgage insurance (PMI) provide?
Additional security for the lender when the down payment is less than 20% of the purchase price.
What is an FHA-insured loan?
A loan insured by the Federal Housing Administration, covering fixed-rate loans for one-to-four-family residences.
What is the Department of Veterans Affairs (VA) responsible for?
Guaranteeing home loans for eligible veterans and their spouses.
What is a certificate of eligibility in VA loans?
A document veterans apply for to qualify for a VA loan.
What does the Farm Service Agency (FSA) provide?
Loans to help purchase or improve properties in rural areas, primarily farms and single-family residences.
What is a package loan?
One loan that covers both real and personal property.
What is a blanket loan?
One loan secured by multiple parcels of property as collateral.
What is a construction loan?
Short-term financing that provides periodic payments to contractors for completed construction work.
What does the Truth-in-Lending Act require?
Lenders to disclose the true cost of obtaining credit to borrowers.
What is the annual percentage rate (APR)?
The true cost of financing that lenders must compute and disclose.
What does the Equal Credit Opportunity Act (ECOA) prohibit?
Discrimination by lenders based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.
What must lenders do if they deny a credit application?
Inform the rejected applicants in writing within 30 days about the reason for denial.
What is the Community Reinvestment Act of 1977 (CRA)?
A law requiring financial institutions to meet the deposit and credit needs of their communities.
What is automated underwriting?
Procedures that shorten loan approval times and reduce costs.
What is a home equity loan?
A loan secured by the equity in a borrower’s home, which can be a line of credit or a fixed amount.
What is a buydown?
An arrangement where future interest is paid in advance to the lender, often used as an incentive for buyers.
