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REST 50 > UNIT 10 - REAL ESTATE FINANCE: LENDING INSTITUTIONS > Flashcards

UNIT 10 - REAL ESTATE FINANCE: LENDING INSTITUTIONS Flashcards

1
Q

Board of Governors (BOG)

A

seven member board of the federal reserve system, which is a network of 12 federal reserve banks.

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2
Q

Federal Open Market Committee

A

responsible for developing polices to promote economic growth, full employmet, and stable prices.

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3
Q

reserve requirements

A

all member banks must set aside a certain percentage of their deposits as a reserve. The banks cannot lend this.. The BOG sets the reserve requirements.

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4
Q

discount rate

A

the rate a bank borrows directly from the federal reserve bank.

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5
Q

open market operations

A

the fed buys and sells gov securities (typically existing bonds). When the fed buys, then bank’s cash (money supply) increases which lowers interest.

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6
Q

tight money market

A

when the money supply is tightened up, causing increase interest rates. (done by FOMC)

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7
Q

Glass-Steagall Act

A

prohibits commercial banks from collaborating with full service brokerage firms or participating in investment banking activies.

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8
Q

deregulation

A

a process whereby regulatory restraints are gradually relaxed.

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9
Q

disintermediation

A

reduction in the use of intermediaries between producers and consumers, for example by investing directly in the securities market rather than through a bank.

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10
Q

Depository Institutions Deregulation and Monetary Control Act

A

sweeping changes in 1980s.

  1. raise deposit insurance from 40k to 100k
  2. permits savings and loans (S&L) to offer a much wider range of services. (enter commercial lending, trust services, and non-mortgage consumer lending)
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11
Q

Garn-St. Germain Depository Institutions Act

A

1982 - completed the process of giving expanded powers to federally chartered S&Ls.

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12
Q

Alternative Mortgage Transaction Parity Act

A

1982 - allowed lenders to originate adjustable-rate mortgages and mortgages with balloon payments and negative amortization.

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13
Q

Financial Institutions Reform, Recovery, and Enforcement Act

A

1989 - Officer of Thrift Supervision and Housing Finance Board were authorized to oversee the S&L regulation. Now the FDIC insurces 250k.

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14
Q

Gramm-Leach-Bliley Act

A

1999 - repealed part of the Glass-Steagall Act. Allowed commercial banks, investment banks, insurance companies, and securities firms to consolidate. Create a new “financial holding company” that could engage in insurance and securities underwriting activities.

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15
Q

Housing and Economic Recovery Act

A

2008 - established the federal housing financ agency.

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16
Q

Dodd-Frank Wall Street Reform and Consumer Protection Act

A

Established the Consumer Financial Protection Bureau (CFPB), which regulates consumer finance products and services.

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17
Q

primairy mortgage market

A

market in which lenders make mortgage loans by lending directly to borrowers

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18
Q

financial intermediary (process is called intermediation)

A

The liasison between supplies and users of credit. combines funds from many sources, and adapts them into loans for the consumer.

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19
Q

depository institution

A

accepts deposits in the form of savings accts. makes loans using their depositors’ monies.

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20
Q

institutional lender

A

accepts deposits that are then pooled to be invested.

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21
Q

mortgage yield

A

interest + origination fees + points

22
Q

commercial banks

A

all purpose lenders whose real estate loans represents only a portion of their overall activity

23
Q

compensating balance

A

a borrower deposits funds with the bank in order to induce the lender into making a loan.

24
Q

thirft institution

A

largest single resource for residential mortgage credit. S&Ls, savings banks, and mutual savings banks. can be owned as a mutual organization or as a stock institution. insured by FDIC

25
Q

mutual ownership

A

all depositors share ownership in the savings and loan or bank, which is managed by a board of trustees. the depositors are paid dividends on their share of the earnings.

26
Q

savings banks

A

distinctive type of thrift institution

27
Q

mutual savings banks

A

established to encourage savings by people who did not have a large amt of disposable income

28
Q

credit unions

A

association whose members usually have the same type of occupation. Supervised by the national credit union association board. deposits are insured by the federally insured national credit union share insurance fund.

29
Q

insurance companies

A

supplies money for large commercial loans to developers and builders. usually don’t do residential, but can buy loans from mortgage companies and invest in Ginnie Mae gov insured or guaranteed loans.

30
Q

non-institutional lenders

A

do not take deposits. they are private lenders that invest their own or borrowed funds.

31
Q

private individuals (sellers)

A

most common way to create a junior loan is by sellers carrying back a trust deed on the sale of their own home.

32
Q

mortgage companies (mortgage banker)

A

company whose principal business is the origination, closing, funding, selling, and servicing of loans secured by real property. they lend their own money or borrowed from warehouse lenders.

33
Q

warehouse line

A

revolving line of credit extended to a mortgage company from a warehouse lender to make loans to borrowers

34
Q

mortgage broker

A

(not to be confused with mortgage bankers). a third party originator – not a lender. They coordinate the loan process between the borrower and lender and charge an origination fee.

35
Q

REIT

A

company that owns operates income producing real estate, or engages in financing real estate.

36
Q

non-financial institutions

A

i.e. pension funds, universities, trust departments of banks, title companies

37
Q

secondary mortgage market

A

buying and selling existing mortgages

38
Q

debt instrument (mortgage backed security)

A

collat by the mortgages that have been bought in the secondary mortgage market

39
Q

government sponsored enterprise

A

financial services corp created by congress

40
Q

housing GSE

A

fannie mae, freddie mac, federal home loan banks

41
Q

federal housing finance agency

A

established 2007, sets limit of the size of the conforming loan

42
Q

ginnie mae

A

gov corp within HUD, created in 1968 when the federal national mortgage association was split into fannie mae and ginnie mae. It supports FHA, VA, and other loans. doesnt issue MBS, instead guarantees investors timley payments

43
Q

Consumer Credit Protection Act

A

1968 - launched truth in lending disclosures.

44
Q

Real Estate Procedures Act

A

protects consumers by mandating a series of disclosures that prevent unethical practices by mortgage lenders

45
Q

Home Mortgage Disclosure Act

A

requires mortgage lenders gather data from borrowers to determine whether lenders are serving their communities.

46
Q

redlining

A

illegal lending policy of denying real estate loans on properties in older changing urban areas, usually with large minority populations, bc of alleged higher lending risks without due consideration being given to the individual loan applicant

prohibited by Housing Financial Discrimination Act of 1977

47
Q

Holden Act

A

increase lending in neighborhoods where in the past financing has been unavailable.

48
Q

Mortgage Loan Disclosure Statement

A

must be disclosed if a real estate broker negotiates the loans on behalf of the borrowers or lenders

49
Q

arranger of credit

A

required by cali for seller financing to find a person not a party to the transaction to arrange the credit.

50
Q

finance charge

A

the dollar amt the credit will cost.

REST 50 (13 decks)

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