Il Real Estate Ch#16

Front 1

Define Adjustable-rate mortgage:

Back 1

(ARM) a loan characterized by a fluctuating interest rate, usually one tied to a bank or savings & loan association cost-of-funds index

Front 2

Define Amortized loans:

Back 2

a loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan

Front 3

Define Balloon payment:

Back 3

a final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized

Front 4

Define Blanket loan:

Back 4

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

Front 5

Define Buydown:

Back 5

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 seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time

Front 6

Define Certificate of eligibility:

Back 6

the certificate given for VA loans that sets forth the maximum guarantee to which the veteran is entitled; does not mean the veteran automatically receives a mortgage

Front 7

Define Computerized loan origination system:

Back 7

an electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers

Front 8

Define Construction loan:

Back 8

a short-term loan usually made during the construction phase of a building project

Front 9

Define Equal Credit Opportunity Act:

Back 9

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

Front 10

Define Fannie Mae:

Back 10

a quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders

Front 11

Define Freddie Mac:

Back 11

a corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market

Front 12

Define Corporation:

Back 12

Federal Deposit Insurance an independent federal agency that insures the deposits in commercial banks

Front 13

Define FHA loan:

Back 13

a loan insured by the federal housing Administration and made by an approved lender in accordance with the FHA’s regulations

Front 14

Define Ginnie Mae:

Back 14

a government agency that plays an important role in the secondary market; it sells mortgage-backed securities that are backed by pools of FHA and VA loans

Front 15

Define Growing-equity mortgage:

Back 15

a loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorthen the overall term of the loan

Front 16

Define Home equity loan:

Back 16

a loan under which a property owner uses his/her residence as collateral and can then draw funds up to a prearranged amount against the property

Front 17

Define Loan-to-value ratios:

Back 17

the relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral

Front 18

Define Office of Thrift Supervision:

Back 18

monitors and regulates the savings and loan industry

Front 19

Define Open-end loan:

Back 19

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

Front 20

Define Package loan:

Back 20

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

Front 21

Define Primary mortgage market:

Back 21

the mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings and loan associations, and mutual saving banks

Front 22

Define Private mortgage insurance:

Back 22

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

Front 23

Define Purchase-money mortgage:

Back 23

a note secured by a mortgage or deed of trust given by a buyer, as a borrower, to a seller, as a lender, as a part of the purchase price of the real estate

Front 24

Define Real Estate Settlement Procedures Act:

Back 24

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

Front 25

Define Regulation Z:

Back 25

implements the Truth-in-Lending Act requiring the credit institutions inform borrows of the true cost of obtaining credit

Front 26

Define Reverse-annunity mortgage:

Back 26

a loan under which a homeowner receives monthly payments based on his/her accumulated equity rather than a lump sum

Front 27

Define Sale-leaseback:

Back 27

a transaction in which an owner sells his/her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises

Front 28

Define Sale-leaseback:

Back 28

Secotndary mortgage market— a market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages

Front 29

Define Community Reinvestment Act:

Back 29

the federal law that financial institutions are expected to meet the deposit and credit needs of thier communities; participate and invest in local community develepment and rehabilitation projects; and participate in loan programs for housing, small business, and small farms

Front 30

Define Entitlement:

Back 30

the maximun guarantee to which a veteran is entitled for a VA loan

Front 31

Define Farm Service Agency:

Back 31

a federal agency of the Department of Agriculture that offers programs to help families purchase or operate family farms

Front 32

What is the Homeowers' Protection Act of 1998?

Back 32

the federal act that states private mortgage insurance(PMI) coverage can be termined on request when 20% equity in a home is reached,provided the loan is 12 months old and there have been no late payments; PMI must terminate automatically when the borrow reaches 22% equity position based on the original value of the property

Front 33

What is the Truth-in Lending Act?

Back 33

the federal act that requires that credit institutions inform borrows of the true cost of obtaining credit

Front 34

Name 3 secondary mortgage martkets:

Back 34

1)Fannie Mae
2)Ginnie Mae
3)Freddie Mac

Front 35

Name 11 primary mortgage markets:

Back 35

1)Thrifts
2)saving associations
3)commercial banks
4)insurance companies
5)credit unions
6)pension funds
7)endowment funds
8)investment group financing
9)mortgage banking companies
10)mortgage brokers
11)mutual savings bank

Front 36

Name 7 types of financing techniques:

Back 36

1)straight loans
2)ammortized loans
3)adjusted-rate mortgages(ARM)
4)balloon payment loans
5)growing-equity mortgage(GEM)
6)non-recourse loan
7)reverse annunity

Front 37

Name 3 loan programs:

Back 37

1)conventional
2)FHA
3)VA

Front 38

FHA loans are __________.

Back 38

insured

Front 39

VA loans are _____________.

Back 39

guaranteed

Front 40

Match the loan: A)FHA B)VA
1)up to $240,000 with no money down
2)certificate of eligibilty
3)loan is guaranteed
4)203b
5)certicate of reasonable value
6)funding fee
7)mortgage insurance premium
8)no prepayment penalty

Back 40

1)B
2)B
3)B
4)A
5)B
6)B
7)A
8)A & B

Front 41

Name 9 other financing techniques:

Back 41

1)package loan
2)blanket loan
3)wraparound loan
4)open-end loan
5)constuction loan
6)purchase-money
7)sale-leaseback
8)buydown
9)home equity loan