Banking Chap 18 Consumer Loans, Credit Cards, And Real Estate Lending

Front 1

residential mortgage loans

Back 1

credit to finance the purchase of homes or fund improvements on private residences

Front 2

installment loans

Back 2

Credits that are repayable in two or more consecutive payments, usually on a monthly or quarterly basis

Front 3

debit cards

Back 3

Plastic cards allowing their holder to make payments for purchases of goods and services by swiping the cards through an electronic reader

Front 4

credit bureaus

Back 4

A business firm that keeps data files on people who have borrowed money, indicating their previous record of loan repayments

Front 5

cosigner

Back 5

A person obligated to support the repayment of a loan by a borrower who either has no credit record or has such a poor track record of repaying loans that he or she cannot get a loan without the support of the cosigner

Front 6

right of offset

Back 6

The legal authority of a lender that has extended a loan to one of its customers to seize any checking or savings deposits the customer may hold with the lender in order to recover the lender's funds

Front 7

credit scoring

Back 7

The use of a discriminant equation to classify loan applicants according to the probability of their repaying their loans, based on customer characteristics, such as their credit rating or length of employment

Front 8

disclosure rules

Back 8

Laws and regulations that mandate telling the customer about financing costs and other essential terms of a loan or lease agreement, deposit contract, or other financial service

Front 9

antidiscrimination laws

Back 9

Laws that prevent the grouping of loan customers into categories according to their age, sex, race, national origin, location of residence, religious affiliation, or receipt of public assistance and that prohibit the denial of a loan to anyone solely because of membership in one or more of these groups

Front 10

Truth-In-Lending Act

Back 10

Law passed by the U.S. Congress in 1968 that promotes the informed use of credit among consumers by requiring full disclosure of credit terms and costs

Front 11

Equal Credit Opportunity Act (ECOA)

Back 11

Legislation passed by the U.S. congress in 1974 that prohibits lenders from asking certain questions of a borrowing household customer, such as his or her age, race, or religion, and from denying a loan based solely upon a credit applicant's age, race, religion, ethnic origins, receipt of public assistance, or similar characteristics.

Front 12

Community Reinvestment Act

Back 12

Federal law passed in 1977 requiring covered depository institutions to make "an affirmative effort" to serve all segments of their trade territory without discrimination

Front 13

predatory lending

Back 13

Granting loans to weaker borrowers and charging them excessive fees and interest rates, increasing the risk of their defaulting on those loans

Front 14

subprime loans

Back 14

Credit granted to borrowers whose credit rating is considered to be weak or below average, often due to a prior record of delinquent payments, bankruptcy, or other adverse developments

Front 15

construction loans

Back 15

Short-term loans designed to fund the building of new structures and then be paid off and replaced with a longer-term mortgage loan once the construction phase of the project has ended

Front 16

home equity loans

Back 16

Credit extended to an individual or family on the basis of the spread or gap between the estimated market value of a home and the amount of mortgage loans outstanding against the property

Front 17

option ARM

Back 17

Home mortgage loan that allows the borrower to pay a reduced amount the first few years (such as paying interest only) and then requires larger payments (including principal) in the later years

Front 18

annual percentage rate (APR)

Back 18

Interest rate on a loan that the U.S. Truth-In-Lending Act requires to be quoted to a household consumer seeking a loan

Front 19

simple interest method

Back 19

A method for calculating the interest rate on a loan that adjusts for the declining balance on a loan and uses a formula, principal times interest times time, to determine the amount of interest owed

Front 20

fixed-rate mortgages (FRMs)

Back 20

Loans against real property whose rate of interest does not change during the life of the loan

Front 21

adjustable-rate mortgages

Back 21

Loans against real property whose interest rate periodically adjusts to changes in market interest rates

Front 22

points

Back 22

An up-front fee often charged a borrower taking on a home mortgage, which is determined by multiplying the loan amount by the umber of percentage points assessed the borrower