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69 Cards in this Set

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Board of Governors(BOG)
The Federal Reserve System consists of this seven member board. Their primary responsibility is to formulate monetary policy.
Monetary Policy
Refers to the actions taken by the Fed to influence the availability and cost of money and credit as a means of promoting national economic goals.
Federal Reserve Bank(FRB)
Often called the banker's bank, they store money and process checks/e-payments. They also supervise state-chartered commercial banks.
The Federal Open Market Committee(FOMC)
The most important monetary policy-making body of the Fed Reserve System. Responsible for developing policies to promote economic growth, employment, and stable prices.
Reserve Requirements
The amount of money banks must reserve, which they cannot lend, set by the Fed.
Discount Rate
The rate at which banks can borrow money from the Fed. A decrease allows more banks to borrow which increases money available for lending. A raise produces less money for lending.
Open Market Operations
To stimulate or expand the economy, the Fed buys government securities from the public. This increases the bank's cash, which increases the money supply and lowers interest. When the Fed sells these securities, it slows the economy.
Tight Money Market
When the Fed sells government securities to the public, which reduces bank's cash, tightens up the money supply, increases interest rates, and creates this.
Glass-Steagall Act
This act passed during the Great Depression. It prohibited commercial banks from collaborating with full service brokerage firms or participating in investment banking activities.
Deregulation
A process whereby regulatory restraints are gradually relaxed.
Disintermediation
When savers take their money out of savings and loan associations and put it into investments that pay a higher rate of interest. Happens due to uncontrolled inflation causing dramatic interest rate increase.
The Depository Institutions Deregulation and Monetary Control Act(DIDMCA)
An act in 1980 that raised deposit insurance from $40k to $100k. Also permitted savings and loans to offer wider range of services than before. S&L's entered the business of commercial lending, trust services, and non mortgage consumer lending.
Garn-St. Germain Depository Institutions Act
Act in 1982 that completed the process of giving expanded powers to federally chartered S&Ls and enabled them to diversify their activities.
The Financial Institutions Reform, Recovery, and Enforcement(FIRREA)
(1989)Inevitable legislative blacklash to the behavior of the S&L industry during the 1980s. S&Ls became regulated and overseen by the government.
Gramm-Leach Bliley Act of 1999(GLBA)
This act repealed part of the Glass-Steagall Act prohibiting banks from affiliating with securities firms. Allowed commercial banks, investment banks, insurance companies and securities firms to consolidate.
The Housing and Economic Recovery Act(HERA) 2008
An act passed to stimulate the housing market after the crash in 2006.
Dodd-Frank Act (2010)
Federal act enacted into law as a response to the financial turbulence and recession in the late 2000s, makes financial regulations.
The Primary Mortgage Market
The market in which lenders make mortgage loans by lending directly to borrowers.
Financial Intermediary
They combine funds from many sources(individual savers, short term or long term investors) and adapts them into loans for the consumer. All mortgage lenders are this.
Intermediation
The process by which financial intermediaries combine funds and adapt them into loans.
Depository Institution
An institution that accepts deposits in the form of savings accounts and makes loans using their depositors' monies.
Institutional Lender
Lenders who transfer money from the people who invest money to those who want to borrow it. They make money by lending at a higher rate than what they pay their depositors to pay to borrow from the Fed.
Mortgage Yield
The amount received or returned from an investment expressed as a percentage.
Commercial Banks
All-purpose lenders whose real estate loans represent only a portion of their overall activity. Make the widest range of loans.
Compensating Balance
When dealing with commercial loans, a borrower deposits funds with the bank in order to induce the lender into making a loan.
Thrifts
The largest single resource for residential mortgage credit. Includes S&Ls, savings banks, and mutual savings banks.
Mutual Ownership
Means that all the depositors share ownership in the savings and loan or bank, which is managed by a board of trustees.
Savings Banks
A distinct type of thrift institution, behaving sometimes like commercial banks and sometimes like S&Ls. Mostly specialize in consumer and commercial loans.
Mutual Savings Banks
Established to encourage savings by people who did not have a large amount of disposable income left after their living expenses, but who did want to invest in their future.
Credit Unions
An association whose members usually have the same type of occupation. members save money in their own bank and receive better interest rates.
Insurance Companies
Major suppliers of money for large commercial loans to developers and builders. Supply loans with low interest rates.
Non-Institutional Lenders
Non-institutional lenders are non-depository institutions and do not take deposits. They are private lenders that invest their own funds or borrowed funds. Includes private individuals, mortgage companies, and investment companies.
A Mortgage Company(or Mortgage Banker)
A company whose principal business is the origination, closing, funding, selling, and servicing of loans secured by real property.
Warehouse Line
A revolving line of credit extended to a mortgage company from a warehouse lender to make loans to borrowers.
Mortgage Brokers
A third party originator(TPO) - not a lender. Coordinate the loan process between the borrower and the lender and charge an origination fee to provide the service to the borrower.
Real Estate Investment Trust(REIT)
Company that owns and operates income-producing real estate or engages in financing real estate.
Secondary Mortgage Market
The market for buying and selling existing mortgages from the primary mortgage market or from each other.
Mortgage-Backed Securities
Debt instruments collateralized by the mortgages that have been bought in the secondary market.
Government-Sponsored Enterprises(GSEs)
Financial services corporations, such as Fannie Mae and Freddie Mac, created by the United States Congress. Their purpose is to increase the availability and reduce the cost of credit to the residential finance, agriculture, and education sectors of the economy.
The Federal Housing Financing Agency(FHFA)
An independent agency that was established by the Federal Housing Finance Reform Act of 2007 to regulate the GSEs.
Federal National Mortgage Association(Fannie Mae)
The nation's largest source of financing for home mortgages. It expands opportunities for homeownership by buying loans from lenders who conform to their guidelines and, by doing so, put mortgage money back into the system so lenders can make more loans.
Federal Home Loan Mortgage Corporation(Freddie Mac)
Stabilizes the mortgage markets and support homeownership and affordable rental housing by providing secondary mortgage support for conventional mortgages originating from thrift institutions. One out of every six homes in America is financed this way.
Government National Mortgage Association(Ginnie Mac)
Its purpose is to serve low-to moderate income homebuyers by guaranteeing investors the timely payment of principal and interest on MBS backed by federally insured or guaranteed loans, mainly loans insured by FHA or guaranteed by the VA.
Mortgage Backed Securities(MBS) or Pass Through Securities
Pools of mortgages used as collateral for the issuance of securities in the secondary market.
Underwriting
The process of evaluating a borrower's risk factors before the lender will make a loan.
Loan-to-value
The percentage of appraised value to the loan.
The Consumer Credit Protection Act(1968)
An act requiring creditors to state the cost of borrowing in a common language so the consumer could figure out what the charges are, compare the costs of loans, and shop around.
Truth In Lending Act(TILA) or Regulation Z
An act aimed at promoting the informed use of consumer credit by requiring disclosures about its terms and costs.
Finance Charge
The finance charge is the dollar amount the credit will cost you and, as a condition to obtaining credit, is composed of any direct or indirect charges.
Annual Percentage Rate(APR)
The relative cost of credit expressed as a yearly rate. The relationship of the total finance charge to the total amount financed, expressed as a percentage.
Right To Rescind
The right to cancel a real estate loan. Applies to most consumer credit loans(hard money loans) or refinance loans.
Real Estate Settlement Procedures Act(RESPA)
An act protecting consumers by mandating a series of disclosures that prevent unethical practices by mortgage lenders. Applies to all federally related 1-4 unit residential mortgage loans.
Special Information Booklet
A booklet containing consumer information on various real estate settlement services.
The Good Faith Estimate of Settlement Costs
Lists the charges the buyer is likely to pay at settlement and states whether or not the lender requires the buyer to use a particular settlement service.
Mortgage Servicing Disclosure Statement
Disclosure statement stating whether the lender intends to sell the real estate loan servicing immediately or in the future.
Equal Credit Opportunity Act(ECOA)
Act ensuring that all consumers are given an equal chance to obtain credit.
Home Mortgage Disclosure Act of 1975(HMDA)
An act requiring most mortgage lenders to gather data from borrowers who apply for loans. Used to determine whether lenders are serving their communities or discriminating.
The Fair Credit Reporting Act(FCRA)
An act protecting consumer identity and credit information collected and maintained by credit reporting agencies.
Fair and Accurate Credit Transactions Act(FACTA) of 2003
An act giving borrowers the right to see what is in their credit file and to have any errors corrected.
FTC Red Flags Rules
Rules stating that financial institutions and creditors must develop a written "Identity Theft Prevention Program" to detect, prevent, and mitigate identity theft in covered accounts.
Covered Account
Any personal account, such as checking and savings accounts, credit card accounts, mortgage loans, automobile loans, margin accounts and ell phone or utility accounts.
Red Flags
Suspicious patterns or practices or specific activities that indicate the possibility of identity theft.
Redlining
An illegal lending policy of denying real estate loans on properties in older, changing urban areas, usually with larger minority populations because of alleged higher risks without due consideration of creditworthiness of the individual.
Holden Act
Encourages increased lending in neighborhoods where, in the past, financing has been unavailable.
Real Property Loan Law
A law enacted to curb a variety of lending abuses perpetrated by real estate brokers who engaged in loan transactions.
Sheltered Loan
A first trust deed of LESSS THAN $30,000 or a junior loan of LESS THAN $20,000.
Mortgage Loan Disclosure Statement(MLDS)
A real estate broker who negotiates loans on behalf of borrowers or lenders, to be secured by liens on real property, must deliver this disclosure statement to the borrower.
Arranger of Credit
A person who is not a party to the transaction, but will be compensated for arranging the credit, negotiating the credit terms, completing the credit documents, and facilitating the transaction.
Seller Financing Disclosure Statement
The arranger of credit must deliver this as soon as possible before the execution of any note or security document.