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12 Cards in this Set

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  • Back

Alienation clause

A clause in a loan that requires full payment of the balance of the loan at the lender's discretion if the property is sold or the title to the property changes to another person.

Nearly all mortgages have an alienation clause

Automated underwriting systems

A computer-generated loan underwriting decision vs a 'manual'. (underwriting means the process of determining if a person is credit worthy).

Using completed loan application information, an automated underwriting systems retrieves relevant data, such as a borrower's credit history, and arrives at a logic-based loan decision.

Computerized loan origination


a streamlined loan process in which the borrower applies for the loan via a networked computer at a location remote from the lender's office.


The situation that exists when you withdraw your money from a bank and invest the money directly in the marketplace (you buy stocks, bonds) usually because you feel you can obtain a higher rate of return.

Fannie Mae

The Federal National Mortgage Association (FNMA), usually known as Fannie Mae, is a private company and government-sponsored entity that buys loans from banks, and then combines them together with other loans and sells them to outside investors.

this is done to make sure banks get thier money back to loan to another person.

Freddie Mac

A privately-owned but government-sponsored business that buys loans from banks so the banks can continue to loan money for housing of middle income American. Freddie Mac purchases and then resales the loans providing guarantees these loans to investors that are willing to buy these. The Freddie Mac guarantee is very good for investors.

Mortgage broker

A person (company) that brings borrowers and banks (lenders) together. essentitally, they introduce each group to each other.

they do not lend money.

they get paid a fee for the introduction and followup on the transaction.

Mortgage Company

A company that loans money and requires repayment on real estate (homes, or commercial property).

(a "mortgage" is a loan)

Participation certificates

a loan that is supported by a bunch of smaller loans and sold by Freddie Mac. this is done to finance the purchase of mortgages in the secondary market ( a place where investors buy and sell loans to each other).

The payment of principal and interest is guarantied by Freddie Mac.

Primary market

The term given to the initial 'loan of money' between a borrower and lender. the first time a loan takes place

the 'secondary market' is where the Freddie Mac and Fannie Mae comanies combine a large number of initial loans and then sell them 'again' or for the 'second time'.

secondary mortgage market

the 'secondary market' is where the Freddie Mac and Fannie Mae type comanies combine a large number of initial loans and then sell them 'again' or for the 'second time'.


The act of lending money at an interest rate that is considered "unreasonably high" or that is higher than the rate permitted by law.

there are now laws that do not permit a lender from charging excessily high interest.