Chapter 6

  1. Lending Institutions
    Institutional and Non-Institutional
  2. Insurance Companies (Institutional)
    • 1. largest supplier of real estate loan.
    • 2. Specialize in large loan (3million +)
    • 3. work through mortgage company (Loan correspondent)
  3. Commercial Bank (Institutional)
    • Specialty (Construction Loan)
    • -Interim, short term, 3 month~ 3 years
    • -Long term; take-out loan

    Compensating balance
  4. Federal Credit Union:
    • 1. Greatest share of mortgages (home loan) market
    • 2. Most fund in home loan/mortgage
    • 3. Having greatest percentage of assets in R.E. mortgage
  5. Mortgage companies (Non-Institutional)
    deal in mortgage readily saleable in secondary market
  6. Private lenders
    largest source of junior mortgage loans (second mortgages funds)
  7. Portfolio risk management includes:

    A) Reserves
    B) Diversification
    C) Liquidation
    D) All of the above
    all of the above
  8. Secondary mortgage market (Federal Reserve system)
    Resale market place for existing loan

    Liquidity & market ability of loan
  9. Federal Home Loan Mortgage Corporation (Freddie Mac)
    nationwide secondary market for residential conventional loans
  10. Federal national mortgage association
    secondary market for FHA and VA guaranteed loans
  11. Government national mortgage association (GNMA - Ginnie Mae)
    administer mortgage support programs which could not be carried out in the private market.
  12. Federal Reserve System
    tighten available loan funds (Discount points)

    Decrease loan activities
  13. "Tight Money" market:
    more second trust deed (Inflationary period)
  14. Loan to Value ration
    Loan Amount / Appraise Value

    • 1. the lower the ratio, the higher the equity.
    • 2. Conventional loan offer a lower LTV.
  15. Loan Commitment (lender's)
    1. Credit history (Fair & Isaac company - FICO score)

    2. Borrower's present income

    3. Appraisal (property)

    4. All of the Above
  16. Construction loan
    Interim Loan - short term loan

    Take-out loan : Long-term
  17. Debt-Income Ratio
    a loan-qualifying tool used by lender
  18. Lenders first line of defense against borrower
Card Set
Chapter 6
chapter 6