Unit 13 Government Involvement in Real Estate Financing: Practice Flashcards
What role does the Federal Reserve System have on Real Estate finance?
Sets monetary policy. Consists of 12 banks, and regulates the flow of money and interest rates.
What is the primary mortgage market?
The retail mortgage industry. Lenders that orientate mortgage loans.
What is the secondary mortgage market?
The wholesale mortgage industry, sold in pools. Buys the loans from retail lenders, which frees them to originate more loans.
What are the three components of Real Estate finance?
1-Government influences, the FED
2-The Primary Market (retail)
3-The Secondary Market (wholesale)
Who is Fannie Mae?
Federal National Mortgage Association. Buys conventional, FHA, and VA loans. Semi-Private corporation. Buys mortgage backed securities.
Who is Freddie Mac?
Federal Home Loan Mortgage Corporation, buys primarily conventional loans.
Who is Ginnie Mae?
Government National Mortgage Association, owned by the government part of HUD. Administers special assistance programs and guarantees investment securities issued by private off errors.
What are conventional loans?
Nongovernment loans, usually 80% LTV.
What is PMI?
Private Mortgage Insurance, a buyer purchases to insure the lender that in the event of default the lender will recover its money on the top portion.
What is an FHA loan?
A government insured loan that requires 3.5% down payment.
What is MIP?
Mortgage Insurance Premium, an up front charge made at closing, it can be financed, there is another annual charge billed monthly.
What is a VA loan?
A loan guaranteed by department of veterans affairs.
Zero Points for
1-Vet receiving disability related to service
2-a Vet who is entitled to disability from service if hasn’t received retirement or active duty pay
3-surviving spouse of Vet who died in service from service connected disability.
What is a purchase money mortgage?
Owner financing. The execution of a note and mortgage at the time of purchase. Seller records the mortgage, typically a junior loan.
What is package loan?
Loan that includes real and personal property.
What is a blanket loan?
A loan that covers more than one parcel or lot. Can be used to consolidate loans, or subdivisions. Uses a partial release clause when individual lots are sold.
What is a wraparound loan?
Allows a borrower with an existing mortgage, to obtain additional financing, without paying off the first.
What is an open-ended loan?
It secures a note, and protects the lender on future advances. Usually a fixed limit. Interest on first draw fixed then depends on market.
What is a construction loan?
Used to finance a construction of improvements. (Short-term)
What is a sale and leaseback?
The seller sells the property then leases the property for a period of time as tenant.
What is a buydown?
A way to temporarily or permanently lower interest rates on a mortgage or deed of trust. Upfront fee at the time of closing.
What is regulation Z?
The Truth in Lending Act, used when debt is secured by a residence. Must have full disclosure on all fees and charges for a loan. And provide the APR.
What is a triggering terms?
Terms that directly relate to other financial terms which require disclosure.
What is the 3-day right of recession?
The right for a consumer to rescind the loan by notifying the lender. Does not apply to owner occupied residential purchase money or first mortgage.
What is Farmer Mac?
Federal Agricultural Mortgage Corporation privately owned and traded secondary market for agricultural and utilities loans. Portion guaranteed by USDA.
What is a CRV?
Certificate of Reasonable Value based on VA Appraisal and establishes ceiling for VA-gauranteed loan.
What is a creditor?
Anyone who lends more 25x a year or more than 5x a year if it includes a house.
What is the ECOA?
Equal Credit Opportunity Act in gaining credit can’t discriminate Race, Color, Religion, National Origin, Sex, Marital Status, Age, and People who receive public assistance.
What is RESPA?
Real estate settlement procedures act. Full disclosure to buyer and seller to all costs related to transaction.
What is the CRA?
Community Reinvestment Act requires financial institutions to help meet need for affordable housing.
