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42 Cards in this Set
- Front
- Back
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Who was Fair Isaac?
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The guy who created the credit score formula
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What is equity?
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Personal money
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What is debt?
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Borrowed money (OPM- other people's money)
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What is leverage?
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The amount of debt
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What is high leverage and low leverage?
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High leverage: little equity
Low leverage: high equity |
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What is the loan to value ratio (LVR)?
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Loan/Market Value =
$80,000/$100,000 = 80% LVR |
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What is interest rate?
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Rent or charge paid for use of money
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What is loan principal?
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Base amount that's owed on a loan - NOT including interest
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What are some other words for the "term" of a loan?
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Duration, maturity, length
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What is amortization?
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Periodic repayment of loan
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What is debt service?
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The periodic payment of interest and principal
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What are "points?"
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Loan fee equal to 1% of loan (will not have to calculate this on exam)
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What is "default?"
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The failure of the borrower to meet the terms of the loan contract
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What is "assignment?"
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The right to sell or transfer rights in mortgage
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Who does assignment deal with?
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The landlord
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Who does subletting deal with?
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The tenant
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What is "assumption?"
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The new owner can take over or "assume" the loan (Due on Sale Clause)
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What is recourse?
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Personal liability (such as in a home loan)
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What is non-recourse?
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No personal liability (such as in a commercial loan)
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What is the satisfaction of mortgage?
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Proof that loan terms and conditions were satisfied. Wisconsin law requires a mortgage holder to execute and record within 30 days of full performance.
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What is a mortgage?
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A loan secured by real property through the use of a mortgage note, which evidences the existence of the loan
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What is a lien?
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A pledge of property as security for debt
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What is the origin of the word "mortgage" and what does it mean?
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It is a French word. According to Jeff....
Mort = frozen Gage = security deposit |
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Under the key clause for legal mortgages, what is Acceleration?
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Loan is due if default occurs
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Under the key clause for legal mortgages, what is Prepayment?
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There is a penalty for early payment
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What does the Truth-In-Lending act (Regulation Z) say?
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Lenders must inform the borrowers of the true cost of credit
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What is APR?
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True Annual Interest Rate
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What are the four types of finance charges we talked about?
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1. loan fees
2. finder's fees 3. service charges 4. points |
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What are the 11 types of loans that we need to know?
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1. Construction
2. Conventional 3. Government Insured Loan 4. Privately Insure Loan 5. Second (Junior) Mortgage 6. Package Loan 7. Open End Loan 8. Balloon (Bullet) Loan 9 . Wrap-Around Mortgage 10. Shared Appreciation Mortgage 11. Adjustable Rate (ARM) |
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What does a Privately Insured Loan do, and what company is an example who provides this service?
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They insure the top % of the loan, MGIC is an example.
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What does a Second (Junior) Mortgage do?
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2nd-3rd priority; interest rates tend to be higher as you go up
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What does a Blanket Loan do?
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Covers more than one property. Example: if you have 3 good properties and 1 bad property, you can put them all on one mortgage. Lender gets a better deal, you can get more amortization.
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What is a Package Loan?
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Real estate and personal property. Example: new homes--this happens a lot in business
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What is an Open End Loan?
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Ability to borrow more money
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What is a Balloon (Bullet) Loan?
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Usually commercial loans, you still owe money after the term. They are short term. Example: 30 ry amt, 10 yr call
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What is a Wrap-Around Mortgage?
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Keep existing debt, but add new money around the old money (2 mortgages)
Don't lose advantage of old loan Old $500,000 at 7% New $1,000,000 at 10% =$1,500,000 at 9% |
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What is Shared Appreciation Mortgage?
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Lender shares in appreciation upon a sale, lowest interest rate
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What is Adjustable Rate (ARM)?
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Rate fluctuates with market rates
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What are some sources of mortgage funds?
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Pension funds (GOOD SOURCE)
Family (not recommended) Commercial banks S&L's Mortgage firms Life insurance companies (generally don't do loans under $20mil) Gov't agencies (don't do commercial) Partnerships and REITS |
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What is the association that provides a link between the capital markets (the lenders) and the federal housing markets?
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GNMA (Ginnie Mae--Government National Mortgage Association)
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What happened in the Fleet Factors case of 1990?
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It was among the first in a series of cases in the US that removed the bank's exemption from Superfund liability. Courts decided a secured lender could be considered liable for the environmental damage on a borrower's property if the lender as much as held the capacity to influence the buyer's waste management decisions, even if it actually did not do so.
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What is the Love Canal?
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It is a neighborhood in Niagara Falls, NY that became famous after the discovery of 21,000 tons of toxic waste buried beneath the neighborhood
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