Unit 13 - Gov't Involvement In RE Financing Flashcards
Conventional Loan
No gov involvement
Can be federally chattered loan
Federal reserve system
Fed funds rate: Creates favorable economic climate. Maintains sound credit
12 fed banks
Limits money banks can use to make loans
Primary mortgage market
Lender that originate mortgage loan
Make money available direct to
Borrowers
Major lenders
Saving, checking ,loan ect
Secondary mortgage market
Buys loans already made
They buy debt
Buys funded loans
MBB- Mortgage backed securities
GSE- gov sponsored enterprises
Fannie Mae - only one that is privately owned
Jennie Mae
Freddie Mac
MBB- Mortgage backed securities
Most superior credit document to invest in
Loan to value
Debt to value
Conforming loans
High quality loans for Sal nothing higher than 80% LTV
PMI
Private mortgage insurance
Protect the top 20-30% of the loan against borrower default
Will let you purchase up 95% of purchase price
Homeowner protection act
22% or more in equity, PMI IS DROPED
FHA LOANS
don’t make loans- they insure them
US department of housing and urban development
Regulate ARM caps
Specifies closing costs
Limits fees
Reg rate increases
Prepayment penalties-no
Vary by state and county
MIP mortgage insurance premium
Up front cost FHA loans
If seller pays more than %6 usually paid by the buyer
The lender will recalculate the loan
Assumption rules
New person must qualify
HUD homes
Defaulted FHA loan/ foreclosure
Next door program
50% off HUD home price
Law enforcement
Firefighters
Teachers
Emergency medical technician
VA LOANS
VA insures the loan /guarantee
90 days active service via a war
2 years of service during peace time
181 days active duty
6 years in the reserve continuous
Have a certificate of reasonable value- CRV- credit limit
Must live on property
No money down
Only 1 VA loan at a time
Can only use VA Loan twice
Lender- loan origination fee
VA- funding fee 1.25-2.15%
Cannot pay: Termite report Any commissions Brokerage fees Buyer broker fee
Seller pays up 4% - no discount points
After March 1989- assumption can be approved
Original veteran is liable if you default upon assumption unless release of liability is issued
Agriculture loan programs
Farm service agency- buy interest payment down to help low income
Package loans
Personal and real property loan packaged together
Blanket loan
Covers more than one property
Wraparound loan
Debt consolidation. Lender absorbs many loan and borrower makes one payment
Open end loan
Revolving debt
HELOC
Construction loan
Short term loan
Take out loan commitment - long term - replaces construction loan
Short term
Interim financing
Sale and leaseback
Money you make on a sale that you can invest
Buydowns
Lower financing for a period a time
Home equity loan
Tax deductible
Truth in lending act & Reg Z
TILA
Residential
3 day right of rescission
Reg Z/ refinancing /home equity loan
Advertising trigger terms- truth and lending
Specific credit terms Can’t say Down paymentment Monthly payment Dollar amount finance charge Term of loan
O
Twice amount of finance charge
$100-$1000 to person harmed
500k or 1% of creditor worth
5k fine and 1 year in jail
ECOA- Equal Credit opportunity Act
Covers age marital status and dependence on public assistance
Community reinvestment act- CRA
Require lenders who took deposits to consult with minority leaders to see how they can help
Real estate settlement procedure act - RESPA
Consumer gets info on closing costs
Computerized loan origination
Get approved in seconds
If brokers or sales person use the system on behalf of a client the buyer pays
