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41 Cards in this Set

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Define Adjustable-rate mortgage:
(ARM) a loan characterized by a fluctuating interest rate, usually one tied to a bank or savings & loan association cost-of-funds index
Define Amortized loans:
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
Define Balloon payment:
a final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized
Define Blanket loan:
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
Define Buydown:
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
Define Certificate of eligibility:
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
Define Computerized loan origination system:
an electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers
Define Construction loan:
a short-term loan usually made during the construction phase of a building project
Define Equal Credit Opportunity Act:
the federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, or marital status
Define Fannie Mae:
a quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders
Define Freddie Mac:
a corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market
Define Corporation:
Federal Deposit Insurance an independent federal agency that insures the deposits in commercial banks
Define FHA loan:
a loan insured by the federal housing Administration and made by an approved lender in accordance with the FHA’s regulations
Define Ginnie Mae:
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
Define Growing-equity mortgage:
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
Define Home equity loan:
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
Define Loan-to-value ratios:
the relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral
Define Office of Thrift Supervision:
monitors and regulates the savings and loan industry
Define Open-end loan:
a mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage
Define Package loan:
a real estate loan used to finance the purchase of both real and personal property
Define Primary mortgage market:
the mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings and loan associations, and mutual saving banks
Define Private mortgage insurance:
insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency
Define Purchase-money mortgage:
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
Define Real Estate Settlement Procedures Act:
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
Define Regulation Z:
implements the Truth-in-Lending Act requiring the credit institutions inform borrows of the true cost of obtaining credit
Define Reverse-annunity mortgage:
a loan under which a homeowner receives monthly payments based on his/her accumulated equity rather than a lump sum
Define Sale-leaseback:
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
Define Sale-leaseback:
Secotndary mortgage market— a market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages
Define Community Reinvestment Act:
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
Define Entitlement:
the maximun guarantee to which a veteran is entitled for a VA loan
Define Farm Service Agency:
a federal agency of the Department of Agriculture that offers programs to help families purchase or operate family farms
What is the Homeowers' Protection Act of 1998?
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
What is the Truth-in Lending Act?
the federal act that requires that credit institutions inform borrows of the true cost of obtaining credit
Name 3 secondary mortgage martkets:
1)Fannie Mae
2)Ginnie Mae
3)Freddie Mac
Name 11 primary mortgage markets:
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
Name 7 types of financing techniques:
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
Name 3 loan programs:
1)conventional
2)FHA
3)VA
FHA loans are __________.
insured
VA loans are _____________.
guaranteed
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
1)B
2)B
3)B
4)A
5)B
6)B
7)A
8)A & B
Name 9 other financing techniques:
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