Section 1 - Chapter 1 Industry Participants

Question 1

Primary Mortgage Market

Answer 1

Market where loans are originated, where borrowers go to apply.

Question 2

Types of lenders in the Primary Mortgage Market

Answer 2

Depositary Institution- Lenders that make a profit by taking deposits from customers
Ex- Banks, Savings and Loan Association, savings banks, credit unions, and the like.

Mortgage Bankers- The company makes a profit via stocks or securities then makes mortgage loans. (May act as a mortgage broker)

Mortgage Broker- Takes loan application from borrowers then places the loan with another lender while collecting fees. (Act as the middleman, and does not loan its own money).

Retail Lenders- Company that loans money directly to borrowers.
Ex: (Savings and loan association, and depository institution)

Wholesale Lenders- Lenders that work through brokers or bankers. They do not deal directly with the borrowers.

Correspondent Lenders- Their smaller depository or retail lenders that will make loans directly with the borrower, but have an agreement to sell their loan to a larger lender usually a wholesaler.

Mortgage Loan Originators- Individuals who take loan applications and negotiate loan terms with the borrower. An employee (independent contractor) of a retail lender, mortgage banker or broker.

Question 3

Secondary Market

Answer 3

Market where existing loans are bought and sold, sometimes sold directly to investors but most often sold to agencies.

Question 4

Benefits of the Secondary Mortgage Market

Answer 4

Benefit is to the lender where it gets the money back and can make new loans. This way money for lending is expanded, since lender doesn’t have to wait 30 year for the return.

Question 5

Mortgage Lenders make their profits from…..

Answer 5

Fees to originate and separate fees to service the loan.

Question 6

Servicing the Loan means

Answer 6

Collecting payments from borrowers and sending it to whoever bought the loan.

Question 7

Portfolio Lender

Answer 7

Lenders keep their loans and not sell them in the secondary market.

Question 8

When mortgage loans are sold they usually sold to or guaranteed by one of three GSE

Answer 8

Government Sponsored Enterprise

• The Federal National Mortgage Association
• The Federal Home Loan Mortgage Corporation
• The Government National Mortgage Association

Question 9

Fannie Mae

Answer 9

Federal National Mortgage Association