UNIT 13 GOVERNMENT INVOLVEMENT IN REAL ESTATE FINANCING

Question 1

BLANKET LOAN

Answer 1

A mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien upon repayment of a definite portion of the debt.

Question 2

BUYDOWN

Answer 2

A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or the seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.

Question 3

CERTIFICATE OF REASONABLE VALUE (CRV)

Answer 3

A form indicating the appraised value of a property being financed with a VA loan.

Question 4

COMMUNITY REINVESTMENT ACT OF 1977 (CRA)

Answer 4

Under the act, which was revised in 2008, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms.

Question 5

CONSTRUCTION LOAN

Answer 5

interim loan or temporary loan made to finance the construction of improvements on real estate such as homes, apartments, and office buildings.

Question 6

CONVENTIONAL LOAN

Answer 6

A loan that requires no federally sponsored insurance or guarantee.

Question 7

EQUAL CREDIT OPPORTUNITY ACT (ECOA)

Answer 7

The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, marital status, or receipt of public assistance.

Question 8

FANNIE MAE

Answer 8

A government supervised enterprise established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.

Question 9

FARMER MAC

Answer 9

The Federal Agricultural Mortgage Corporation - privately owned and publicly traded company created by Congress to create a secondary market for agricultural and rural developments backed by USDA.

Question 10

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)

Answer 10

An independent federal agency established by Congress to examine and supervise financial institutions, manage receiverships, and insure deposits (currently up to $250,000 per depositor per financial institution.)

Question 11

FEDERAL RESERVE SYSTEM (Fed)

Answer 11

The country’s central banking system, which established monetary policy by regulating supply of money and interest rates.

Question 12

FHA INSURED LOAN

Answer 12

A loan insured by the Federal Housing Administration and made by an approved lender in accordance with FHA regualations.

Question 13

FREDDIC MAC

Answer 13

A government supervised enterprise established to purchase primarily conventional mortgage loans in the secondary mortgage market.

Question 14

GINNIE MAE

Answer 14

created in 1968 and has always been a government agency. it is a division of HUD and administers special assistance programs and guarantees investment securities issued by private offerors.

Question 15

GOVERNMENT SPONSORED ENTERPRISES (GSEs)

Answer 15

Organizations created by the federal governement to help increase loan opportunities for homebuyers. Ex. Freddie Mac, Ginnie Mae, etc.

Question 16

HOME EQUITY LOAN

Answer 16

A loan under which a property owner uses the property as collateral and can then draw funds up to a prearranged amount against the property. Aka a home equity line of credit (HELOC)

Question 17

MORTGAGE INSURANCE PREMIUM (MIP)

Answer 17

The FHA insurance that is a percentage of the loan amount that the borrower is charged as a premium.

Question 18

OFFICE OF THE CONTROLLER OF THE CURRENCY (OCC)

Answer 18

Government agency which sets standards and regulations for fiduciary lenders.

Question 19

OPEN END LOAN

Answer 19

A mortgage loan that is expandable by increments up to a maximum dollar amount, with the full loan being secured by the same original mortgage.

Question 20

PACKAGE LOAN

Answer 20

A real estate loan used to finance the purchase of both real and personal property.

Question 21

PRIMARY MORTGAGE MARKET

Answer 21

The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings associations, and mutual savings banks.

Question 22

PRIVATE MORTGAGE INSURANCE (PMI)

Answer 22

Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.

Question 23

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)

Answer 23

The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

Question 24

REGULATION Z

Answer 24

Implements the Truth in Lending Act (TILA) requiring credit institutions to inform borrowers of the true cost of obtaining credit.

Question 25

SALE AND LEASEBACK

Answer 25

A transaction in which the owner sells improved property and, as part of the same transaction, signs a long term lease to remain in possession of the premises.

Question 26

SECONDARY MORTGAGE MARKET

Answer 26

A market designed for the purchase and sale of existing mortgages to provide greater liquidity for mortgages.

Question 27

TRIGGERING TERMS

Answer 27

Specific credit terms, such as down payment, monthly payment, and amount of finance charge or term of loan.

Question 28

TRUTH IN LENDING ACT (TILA)

Answer 28

Federal government regulates the lending practices of mortgage lenders through this act.

Question 29

VA GUARANTEED LOAN

Answer 29

A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the US Department of Veteran Affairs in order to limit the lenders possible loss.