Unit 13: Government Involvement in Real Estate Financing Flashcards
By law, FHA loans cannot charge __________ _________.
prepayment penalties.
The Federal Reserve System (Fed) consists of 12 _______ _______ ________ _____.
federal reserve district banks
The Fed regulates the ____ of _____ and ________ _____.
flow of money and interest rates
The primary mortgage market consists of lenders that ________ mortgage loans
Originate
In the secondary mortgage market, loans are ______ and ____ after being ______.
bought and sold, funded
Fannie Mae has shareholders but is under the conservatorship of the _______ _______ _______ ______ (FHFA)
Federal Housing Finance Agency
FHFA creates mortgage-backed securities using pool of mortgages as ____________, ___, and __ loans.
conventional, FHA, and VA loans
Freddie Mac has shareholders and is under the conservatorship of ____.
FHFA
Freddie Mac has authority to ________ mortgages, ____ them, and use them as ________ for _____.
purchase, pool, security for bonds.
Ginnie Mae (Government National Mortgage Association) is entirely a ________ ________, a division of ___.
government agency, HUD
GNMA is organized as a ________ but without ________ ________.
corporation, corporate stock
GNMA administers ________-________ programs, and guarantees ________-________ securities using ___ and ___ loans as collateral.
special-assistance, mortgage-backed, FHA and VA
___________ loans are the most secure loans
Conventional
The _____-__-______ (___) is often lowest for conventional loans—traditionally ___%—but the LTV may be as high as ___%.
loan-to-value ratio (LTV), 80%, 100%.
Conventional loans meet all the requirements of the secondary market, set by Fannie Mae and Freddie Mac, for ________ loans.
conforming
__________ loans (jumbo loans) must be retained in the lender’s investment portfolio.
Nonconforming
________ ________ ________ (____) may be required for LTVs higher than 80%,that is, down payments of less than 20%.
Private mortgage insurance (PMI)
Federal law requires PMI to automatically terminate if the borrower has accumulated ___ ______ in the home (based on ________ ______ or original ________ ______, whichever is less) and is current on ________ ________.
22% equity, purchase price, appraised value, mortgage payments.
Fannie Mae and Freddie Mac have extended the ________ ________ option to all loans that are in good standing and have had no ________ ________ added to the ________ ______.
automatic termination, additional financing, original loan
FHA is part of ____
HUD
FHA does not _____ loans but ______ loans made by an ___-________ lending institution.
make, insures, FHA-approved
The FHA mortgage insurance premium (MIP) has an __-_____ fee along with ______ installments.
up-front, monthly
__-________ loans are backed by the U.S. Department of Veterans Affairs and are available to eligible _______ and _______.
VA-Guaranteed, veterans and spouses.
The Farm Service Agency (FSA), formerly ______ ____ _________ (____), is part of the Department of Agriculture
Farmers Home Administration (FmHA)
The Farm Service Agency (FSA) has programs to help families purchase or operate ______ _____, including the ______ ______ and _______ _________ Service (RHCDS) and the ______ ______ System.
family farms, Rural Housing and Community Development, Farm Credit
A _______ loan includes all personal property and appliances as well as real estate.
package
A _______ loan covers more than one parcel or lot
blanket
A ______ ______ clause allows a borrower to pay off part of a loan to remove the liens from one parcel or lot at a time.
partial release
An _____-____ loan secures the ______ loan to the borrower and ______ _________ made by the lender to the borrower.
open-end, current, future advances
_________ loans are used to finance construction of property improvements.
Construction
A sale-and-leaseback arrangement can be used to finance _____ ________ or _________ properties.
large commercial or industrial
A home equity loan (home equity line of credit or HELOC) is ______ to the original lien.
junior
The _____ __ ________ ___ (____) is implemented by Regulation Z and enforced by the _________ _________ ________ _________.
Truth in Lending Act (TILA), Consumer Financial Protection Bureau
TILA requires that, when a loan is secured by a residence, the lender must inform the borrower of the _____ _____ of obtaining credit and the borrower has a three-business-day _____ of _________.
true cost, right of rescission
Pursuant to TILA, ________ is strictly regulated, using ________ terms to mandate what must be disclosed, and there are _____ and ________ penalties for violations.
advertising, triggering, civil and criminal
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in granting or arranging credit on the basis of ____, _____, ________, ________ ______, ___, _______ ______, ___ (as long as the applicant is not a minor), or receipt of public assistance.
race, color, religion, national origin, sex, marital status, age
The Fair Credit Reporting Act (FCRA) requires that reasons for a loan application rejection be provided to the applicant within __ ____ and that the applicant be given the right to a free copy of any ______ ______ that was considered in the ____ ___________ process.
30 days, credit report, loan application
The ________ ____________ ___ (___) requires financial institutions to help meet the need for affordable housing in their communities.
Community Reinvestment Act (CRA)
The ____ ______ __________ __________ ___ (RESPA) covers costs related to the closing of a residential transaction.
Real Estate Settlement Procedures Act (RESPA)
_________ ____________ (loan processing) programs provide loan approvals quickly and include Fannie Mae’s _______ ___________ and Freddie Mac’s ____ __________. A ______ _____ may be used as part of a loan application evaluation process.
Automated underwriting, Desktop Underwriter,Loan Prospector, credit score
What is an example of a buydown arrangement?
A builder brings down a purchaser’s interest rate for two years by paying the lender advance interest.
The document that sets forth the maximum loan guarantee to which a veteran is entitled is the ___________ of ___________. The veteran must still _______ for the loan.
certificate of eligibility, qualify
