Types of Mortgages and Sources of Financing

Question 1

Primary Market

Answer 1

A market where securities or goods are actually created.

Question 2

Secondary Mortgage Market

Answer 2

An investor market that buys and sells existing mortages.

Question 3

Intermediation

Answer 3

A process practices by financial thrift institution that serves as finical, middlemen between depositors and borrowers.

Question 4

Disintermediation

Answer 4

Occurs when funds are withdrawn from intermediary financial institutions, such as banks and savings associations, and are invested in instruments yielding a higher return.

Question 5

What are the three secondary mortgage markets?

Answer 5

Fannie Mae, Freddie Mac & Ginnie Mae

Question 6

How do secondary mortgages replenish funds back in financial system?

Answer 6

Bank gives customer mortgage at 6% and sells back for 5% and make a point back quickly.

Question 7

Truth-in-lending Act

Answer 7

informs customers of exact credit costs before they make a purchase so they may compare various credit terms and costs.

Question 8

Federal Reserve Regulation Z

Answer 8

implements “truth-in-lending Act”, Law requires lenders to disclose the annual percentage rate of interest and finance charges imposed on consumers within three business days of (Loan Application)