Unit 9: Government Loan Programs and Fair Housing Flashcards
Federal Housing Administration
- Provides it’s own mortgage default insurance.
- mortgage insurance premium (MIP) =insures entire loan balance and paid by borrower. May be paid monthly.
- finances 1-4 family residences
- interest rates set by lenders
- must be owner occupied
- no prepayment penalty
- loans are always assumable (w/ lender approval)
Private Mortgage Insurance (PMI)
Covers lenders risk when loaning above 80%
Veterans Administration (VA) guaranteed loan program
- guarantees lenders against losses on loans to eligible veterans
- no pre payment penalty
- veteran must occupy home
- can finance 100%- will lend 4x entitlement
- property must meet minimum construction standards
- loans are assumable
2 certificates that VA loans require
Certificate of eligibility
Certificate of reasonable value (CRV) - appraisal
Federal reserve
Regulates supply of money and interest rates in US
Mortgage Markets
Primary: where Loans are originated
Secondary: where loans are bought and sold
FNMA (Fannie Mae)
Federal National Mortgage Assoc
Gov owned
Buys all types of mortgages
GNMA (Governmental National Mortgage Association)- Ginnie Mae
Agency within HUD
FHA and VA mortgages pass thru the secondary marker
FHLMC (federal home loan mortgage corporation) -Freddie Mac
Government owned
Mainly buys conventional mortgages from savings and loan associations and commercial banks , but can purchase all types
Conforming loan
Meets standards of Fannie Mae and Ginnie Mae and can be readily fold on secondary market
Non Conforming Loan
Jumbo loan, larger then Fannie Mae standards. More difficult to sell on secondary market
Subprime Loans
Higher rate charged bc borrower is a higher risk
- flexible rate loans
- higher fees charged by mortgage brokers
Predatory lending
Unfair or illegal lending
Targeted elderly, minorities, less educated.
Truth in Lending Act
Primate informed use of consumer credit by requiring advanced disclosure of loan terms and conditions
Requires 3 day right of rescission
Four primary disclosures of lenders
1) APR
2) Finance charges
3) Total number and amount of all payments
4) Total amount financed
APR
Aldo known as effective rate
Expresses relationship of total finance charge and interest to amount financed
Advertising requirements
Asking price and APR are the only specific finance terms allowed in an advertisement w/o triggering full disclosure requirement
General statements (low down payment, property taxes, or HOA dues) ok
RESPA vs a Truth in Lending
RESPA =All costs
Truth in Lending= Lender costs
Fair Credit Reporting Act
Sets standards on how credit bureaus handle consumer credit inf
Civil rights act of 1866
Prohibits discrimination in sales or rental of all property
Federal Fair Housing Act/Civil Rights Act of 1968
Protected classifications in the sale and rental of residential property
F -familial status R -race E -(equal) S -sex H -Handicap
C -color
O -(opportunity)
R -religion
N -national origin
Steering
Channeling potential buyers to or away from particular areas as a means of discrimination
Blockbusting
Also called panic peddling. Suggesting owners should sell bc a particular ethnic background has moved in
Redlining
Refusing to offer or limiting loan ps in certain areas bc of crime rate or ethnic backgrounds of residents
Disability (per FHA and ADA)
An impairment that substantially limits one or more of a person’s major life activities
Landlords must allow disabled tenants to make changes to units at tenants own cost
Stigmatized Property
Deemed undesirable bc of activities that I cured there (suicide, murder, gang activity,HIV) etc
NC does not require disclosure of
1) death or crimes
2) haunted house
3) sexual offender in neighborhood
4) mold
5) AIDS
Megan’s Law
Requires registration of sex offenders
Equal Credit Opportunity Act (ECOA)
Makes consumer credit available w/ fairness and impartiality
Protected Classes:
Race, color, religion, national origin, sex, marital status, age
Americans with Disabilities Act
Intended to ensure equal a fess to public accommodations for disabled persons
Requires 3 day right of rescission for buyer
Home improvement loan
Home equity loan
