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Related Flashcards
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Cards In This Set
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Primarty mortgage market
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The loan origination market in which borrowers and lenders come together
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Secondary mortgage market
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Market where mortgage originators can divest their holdings and exissting mortgages are resold.
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Fannie Mae (Fed. Nat'l Mortgage Association)
Freddie Mae
Ginnie Mae
Farmer Mac are all examples of what?
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Government sponsored enterprises
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Conventional mortgage loan
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Refers to any standard home loan that is not insured or guaranteed by an agency of the U.S. government. This includes all standard home loans except FHA and VA loans.
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Conforming conventonal mortgage loan
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Conventional loan that meets the standards required for purchase in the secondary market by Fannie Mae or Freddie Mac.
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In order to conform to the underwriting standards of GSEs, what must happen?
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1. Use GSE documentation (i.e., application form, mortgage, note, and appraisal form).
2. It must nnot exceed a certain percentage of the property's value.
3. Monthly payment must not exceed a certain percentage of the borrower's income.
4. Loan must not exceed $417,000 on single family homes.
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Nonconforming conventional loans
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Loans that fail to meet one or more of these underwriting standards
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Private mortgage insurance (PMI) is usually required on _______ loans with loan-to-value ratios greater than _______ percent.
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D.) Income property, 80 percent
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What is the most common type of loan originated and kept by most depository institutions?
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B.) Adjustable rate mortgage
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Which of the following mortgage types has the most default risk, assuming the initial loan-to-value ratio, contract interest rate, and all other loan terms are identical?
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A.) Interest only loans
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Maturity imbalance problem
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Situation faced by banks, thrifts, and other financial institutions in which long-term assets are funded with short-term liabilities.
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Private mortgage insurance (PMI)
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Insurance offered by private companies that reimburses the lender for capital losses in the event of default by the borrower.
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What does PMI do?
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1. Protects lender against losses due to default on the loan
2. Lenders require PMI for conventional loans over 80 percent of value of income property.
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FHA mortage insurance
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Covers any lender loss after conveyancce of title of the property due to US Dep't of Housing and Development. (HUD)
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FHA mortage insurance covers how much of the loan?
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100 percent!
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