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40 Cards in this Set

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  • Back

Mortgage Reform - Dodd Frank

Signed by Obama in 2010, this lengthy piece of legislation contains provisions to restore accountability and responsibility to the financial system

Real Estate Cycles

Supply and Demand

Population Characteristics

Who is Buying What

Social Attitudes

Tax Issues

Property Value Fluctuations


Pledging Real Property to back up a promise to repay a loan


Borrower is legal owner, retains right to possession and control while lender holds an equitable title in property

Equitable Title

Lender's interest in real property. Ends when the loan is paid in full


When more funds are withdrawn from financial institutions than can be deposited. Net loss in deposits, cutback on lending and slow-down in economy


Use of proportionally small amount of money to secure large loan for a property

Primary Markets and Secondary Markets

Primary Markets are where loans are originated (commercial banks), Secondary Markets are where mortgages are traded (Freddie Mac, Fannie Mae)

Money Supply

M1 - Money is easily obtainable

M2 - All of M1 + market funds, deposits less than $100,000

M3 - All of M2 + deposits over $100,000, money held abroad

Costs of Money

Higher the cost, lower the borrowing activity and slower the economic activity

Prime Rates

Interest rate a lender charges most creditworthy customers

Reserve Requirements

Fed requires its members to keep a certain percentage of the bank's total funds on deposit with its federal bank

Discount Rates

Rate of interest charged by the Federal Reserve to its member banks to borrow money

Open Market

Fed's activities in buying and selling securities to control the money supply

Federal Fund Rates

Recommended rate by Federal National Reserve for member banks to charge each other on short-term loans

The Federal Reserve Bank

The nation's money manager. Central banking system of US

Truth in Lending Act (Regulation Z)

Title I of Consumer Protection Act. Regulation Z requires lenders to reveal total loan costs through the use of a standard measurement of interest rates called an APR

U.S. Treasury’s Role

The Treasury prints and mints all paper currency and coins in circulation through the United States Mint. The Department also collects all federal taxes through the Internal Revenue Service

Right of Recession

A 3-day recession period in which loan borrower can rescind the transaction


Insures all accounts in member depository institutions, both banks and savings associations

HUD Responsibilities & Activites

Enforces fair housing laws, helps create a decent home and living environment for all US citizens.

Fair Housing

Prohibits discrimination in housing transactions

Real Estate Settlement Procedures Act

Law that requires certain disclosures to consumers about mortgage loan settlements.

Equal Credit Opportunity Act

Federal law prohibiting discrimination of lending due to race, religion, sex, age, marital status or source of income

Different HUD Housing Programs

Supervises FHA, Ginnie Mae, Fair Housing

Community Reinvestment Act

Financial institutions expected to meet the deposit and credit needs of their community


FHA stands for Federal Housing Administration, which is a program that helps stimulate the housing market by making home loans accessible and affordable

Housing Choice Vouchers

Rental assistance to eligible consumers, funds can be used towards mortgage

USDA Program

Funds projects to bring housing, community facilities, utilities and other services to rural areas

OHFA and Homebuyer Programs

As the state's affordable housing leader, the Ohio Housing Finance Agency (OHFA) provides opportunities for Ohioans to locate affordable housing. The Agency offers a variety of programs to help first-time homebuyers, renters, senior citizens and others find quality affordable housing that meets their needs.

Fannie Mae

Fannie Mae mostly buys mortgage loans from commercial banks

Freddie Mac

Freddie Mac mostly buys mortgages from smaller banks that are often called "thrift" banks

Ginnie Mae

Ginnie Mae performs the same function as Freddie and Fannie, except they only deal with government-insured mortgages, such as those backed by the Federal Housing Administration (FHA)

Farmer Mac

Deals in Agricultural mortgages

Underwriting Guidelines for Fannie & Freddie

Selling guidelines. Desktop Underwriter, Desktop Originator can be accessed online

Freddie Mac only looks at total debt-to-income ratio with no set percentage for housing expense

Government-Sponsored Enterprises (GSE)

Fannie Mae, Freddie Mac, independent entities receiving favorable tax benefits with Treasury, under supervision of Federal Housing Finance Agency

Fannie Mae's Loan Limits

$424,100 for single family homes in the continental US

Conforming Loans

A mortgage loan that conforms to GSE (Fannie Mae and Freddie Mac) guidelines. The most well-known guideline is the size of the loan.

Non-Conforming Loan

A non-conforming loan is a loan that fails to meet bank criteria for funding. Reasons include the loan amount is higher than the conforming loan limit (for mortgage loans), lack of sufficient credit, the unorthodox nature of the use of funds, or the collateral backing it.

Credit Scoring

Objective method of assessing credit risk based on statistical probability of repayment of the debt. Based on Experian, Equifax, TransUnion. Numerical score is FICO.