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33 Cards in this Set
- Front
- Back
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Real Estate Cycle |
Activity of he real estate market as it facts to the forces of supply and demand |
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4 phases of the business cycle |
Peak Recession Bottom Recovery |
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Peak |
Highest point in a new business cycle and is usually higher than the peak of the previous cycle |
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Recession |
Contraction or slump Peak down to a trough, during which output and employment fall |
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Bottom |
Through Evidenced by a fall in output and employment followed by and increase on business activity |
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Recovery |
Expansion or boom Period when bottom up to a peak when output and employment rise |
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Sellers market |
When demand for a product exceeds the supply the price for the product tends to increase |
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Buyers market |
Demand catches up to supply and cycle begins again |
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Balance |
Economic principle.
Value is created and maintained when opposing economic market forces are in a state of equilibrium |
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Disintermediation |
Loss of saving deposits to higher yielding competing investments |
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Dot com market |
Downturn in market prices made money available at lower rates for real estate loans |
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Demographics |
Refer to the study and description of the population of an area |
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Deficit spending |
Congress Forces the government to barrow money making less money available for construction and home loans |
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Predatory loan practices |
Include usury, deception, and fraud and refer to a variety of abusive lending practices, such as excessive or hidden fees, refinancing loans at no benefit to the borrower, offering a loan knowing the borrower lacks the means to repay it back and using high pressure sale tactics to sell a loan |
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Impact fees |
Charges to all new housing that is developed with the community and are levied to pay for community infrastructure |
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Primary market |
Made up of lenders such as savings banks, commercial banks and mortgage companies who make mortgage loans directly to borrows |
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Secondary market |
Consist of private, quasi-public and government agencies that buy and sell existing mortgages or mortgage backed securities from primary lenders and in so doing provide greater availability of funds for additional mortgage lending and primary lenders |
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Present value |
Total amount of cash today it would take to generate the same amount of income at a 12.5% rate return |
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Degree of risk |
Likelihood of default by the borrower and also to the ability of the lender to recover the loan proceeds by selling the security property |
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Qualify a borrower |
Ensure the borrower has a large enough and stable enough income to minimize the risk of default |
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Qualify a property |
Make sure the property is worth enough to satisfy the loan on the event of default and foreclosures |
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Secondary markets include |
Federal national mortgage association - Fannie Mae
Government national mortgage association - ginnie Mae
The federal home loan mortgage corporation - Freddie Mac |
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Underwriting criteria |
Used to qualify the borrower and the property and include such item as loan to value ratio and income to expense ratios |
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FNMA (federal national mortgage association) FANNIE MAE |
Dominates the secondary mortgage market. Largest investor in residential mortgages. First to be sponsored by the government |
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Desktop underwriter |
Online system permits brokers to submit a borrowers application and loan request called the "limited appraisal form (2055)" |
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Government National Mortgage Association (GINNIE MAE) |
"Special assistance"
Created with the passage of the housing and urban development act 1968(HUD)
Responsible for managing and liquidating the remain of FNMA mortgages
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Bond type securities |
Long term, pay interest annually, and provide repayment at a specified redemption date |
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Pass through securities |
Pay interest and principle on a monthly basis |
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Fully modified pass-through securities |
Pay interest and principle monthly regardless of whether the payments have been collected from the mortgages |
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Federal Home Loan Mortgage Corporation (FHLMC) Freddie Mac |
Created through e emergency home finance act (1970)
Primary function to aid savings and loan associations who were hit particularly hard by the recession of 1969-1970
Helped acquire additional funds for lending in the mortgage market
Emphasizes on conventional mortgage loans and sells mortgage loans from its portfolio |
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Immediate delivery program |
Seller ms have 60 days to deliver the mortgages (FHLMC) has agreed to purchase |
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Forward Commitment Purchase Program |
Commitment made for 6-8 month periods |
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Investment quality loan |
Loan from a borrower whose timely repayment of the debt can be expected, that is secured by a property of sufficient value to recover the lenders investment of a mortgage default occurs |
