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16 Cards in this Set
- Front
- Back
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APR is...
The actual APR number shown in any advertising is... |
the total annual cost of credit (including interest, loan discount, and finance charges for obtaining the loan) for the borrower.
--- ...usually higher than the stated interest rate. |
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Define a Security Agreement.
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- also known as a Chattel Mortgage; An instrument which gives a lender a security interest in personal property pledged as collateral for a loan.
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Explain and define Regulation Z.
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Regulation Z • Chapter 14 • Adopted by the Federal Reserve to implement the Truth-in-Lending Law. The regulations provided lenders and those who help arrange credit for borrowers specific guidelines to follow in disclosing to borrowers their exact cost of credit. Administrated and enforced by the Federal Trade Commission (FTC)
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How can you ensure a transaction (like a $45,000 loan) will be covered by the provisions of Regulation Z?
---- If an ad states the monthly mortgage payments on a loan are "only $995", what must also be included in the ad under Regulation Z. |
If the reason for the loan is for residential property financing.
---- APR |
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What does the Discount Rate indicate?
Define this term. |
- indicates the cost of credit for member banks.
--- Discount Rate • Chapter 14 • The rate of interest the Federal Reserve System charges member banks to borrow money. By controlling the discount rate, the Federal Reserve controls the money available for credit. |
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The Secondary Mortgage Market provides what?
Define this term. |
- provides liquidity for mortgage holders
---- Secondary Mortgage Market • Chapter 14 • The market where loans are bought from local lenders in order to provide them with a constant supply of cash to originate more loans to homebuyers. |
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Why are private investors important?
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Private investors are one of the primary direct sources of money for mortgage loans for borrowers on residential property.
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What does RESPA stand for?
What does RESPA require? - This includes? (3) |
Real Estate Settlement Procedures Act (RESPA) • Chapter 14 • A federal law which requires lenders to inform potential homebuyers about various costs involved in arranging mortgage financing and which attempts to standardize settlement practices.
---- 1. distribution of a disclosure booklet / 2. reasonable impounds / 3. a good faith estimate of closing costs |
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What does PMI stand for?
Who does it protect? What's it for? |
Private Mortgage Insurance
Lenders --- Private Mortgage Insurance (PMI) • Chapter 14 • Protect lenders who make [conventional loans of more than eighty percent of value]. In the event of default the insurance covers the lender’s losses up to the amount of the insurance. |
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What is a Security Deed?
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Security Deed • Chapter 14 • A security instrument which conveys title to the lender until the debt is satisfied. At which time the instrument is cancelled.
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What is an Alienation Clause (aka)?
This clause will usually... |
Alienation Clause (aka "due-on-sale" clause) • Chapter 14 • Mortgage loan provision which allows the lender to demand the entire loan balance due if the property is sold, or the lender can allow the loan to be assumed by a credit worthy buyer and with an interest rate increase.
---- Restricts the mortgagor's ability to transfer the property |
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What is a Subordination Clause?
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Subordination Clause • Chapter 10 • A lease provision which makes the lease inferior in priority to a future mortgage placed against the leased premises.
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What is a Budget Mortgage?
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Budget Mortgage • Chapter 14 • Mortgage loan in which monthly payments include not only principal and interest but also one-twelfth (1/12) of the annual cost for taxes and insurance.
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How are Conventional Loans different from both VA and FHA loans?
How are they similar? |
Conventional loans are usually made on a lower LTV (loan-to-value) ratio than VA and FHA loans.
--- All are made with government funds. |
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List three (3) characteristics of a VA Loan.
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1) VA regulations determine the mount of the guarantee that is based on the loan.
2) A Lender will typically make a loan 4x the amount of the guarantee without a down payment 3) There is no maximum loan limit for a VA loan. |
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What organization deals primarily in mortgages for low-income housing?
Describe the role of this organization. |
Ginnie Mae • Chapter 14 • Government National Mortgage Association (GNMA) was established in order to buy special assistance mortgages carrying below market interest rates. GNMA is a government agency under HUD and deals only in VA and FHA mortgages.
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