Chp 15 Real Estate Financing Practise

  1. A loan characterized by a fluctuating interest
    rate, usually one tied to a bank or savings and loan association cost of funds
    Adjustable-rate mortgage (ARM)
  2. A loan in which the principal as well as the
    interest is payable in monthly or other periodic installments over the term of
    the loan.
    Amortized loan
  3. A final payment of a mortgage loan that is
    considerably larger than the required periodic payments because the loan amount
    was not fully amortized.
    Balloon payment
  4. A mortgage covering more than one parcel of real
    estate, providing for each parcel’s partial release from the mortgage lien upon
    repayment of a denite portion of the debt.
    Blanket loan
  5. A financing technique used to reduce the monthly
    payments for the first few years of a loan. Funds in the form of discount
    points are given to the lender by the builder or seller to buy down or lower
    the effective interest rate paid by the buyer, thus reducing the monthly
    payments for a set time.
  6. A form indicating the appraised value of a
    property being financed with a VA loan.
    Certificate of Reasonable Value (CRV)
  7. Under the act, financial institutions are expected
    to meet the deposit and credit needs of their communities; participate and
    invest in local community development and rehabilitation projects; and
    participate in loan programs for housing, small businesses, and small farms.
    Community Reinvestment Act of 1977 (CRA)
  8. An electronic network for handling loan
    applications through remote computer terminals linked to various lenders’
    Computerized Loan Origination (CLO)
  9. See interim financing.
    Construction loan
  10. A loan that requires no insurance or guarantee.
    Conventional loan
  11. The federal law that prohibits discrimination in
    the extension of credit because of race, color, religion, national origin, sex,
    age, or marital status
    Equal Credit Opportunity Act (ECOA)
  12. A government-sponsored enterprise established to
    purchase any kind of mortgage loans in the secondary mortgage market from the
    primary lenders.
    Fannie Mae
  13. An
    independent federal agency that insures the deposits in commercial banks.
    Federal Deposit Insurance Corporation (FDIC)
  14. The country’s central banking system, which is
    responsible for the nation’s monetary policy by regulating the sup-ply of money
    and interest rates.
    Federal Reserve System (Fed)
  15. A loan insured by the Federal Housing Administration
    and made by an approved lender in accordance with the FHA’s regulations.
    FHA loan
  16. A government-sponsored enterprise established to
    purchase primarily conventional mortgage loans in the secondary mortgage
    Freddie Mac
  17. A government
    agency that plays an important role in the secondary mortgage market. It
    guarantees mortgage-backed securities using FHA and VA loans as collateral.
    Ginnie Mac
  18. A loan in which the monthly payments increase
    annually, with the increased amount being used to reduce directly the principal
    balance outstanding and thus shorten the overall term of the loan.
    Growing equity mortgage
  19. A loan (sometimes called a line of credit) under
    which a property owner uses his or her residences as collateral and can then
    draw funds up to a prearranged amount against the property.
    Home equity loan
  20. An objective economic indicator to which the
    interest rate for an adjustable-rate mortgage is tied.
  21. A mortgage that only requires the payment of
    interest for a stated period of time with the principal due at the end of the
    Interest-only mortgage
  22. The relationship between the amount of the
    mortgage loan and the value of the real estate being pledged as collateral.
    Loan To Value (LTV) ratio
  23. A premium added to the index rate representing
    the lender’s cost of doing business.
  24. The FHA insurance that the borrower is charged
    with a percentage of the loan as a premium.
    Mortgage Insurance Premium (MIP)
  25. A mortgage loan that is expandable by increments
    up to a maximum dollar amount, the full loan being secured by the same original
    Open-end loan
  26. A real estate loan used to finance the purchase
    of both real property and personal property, such as in the purchase of a new
    home that includes carpeting, window coverings, and major appliances.
    Package loan
  27. The mortgage market in which loans are
    originated and consisting of lenders such as commercial banks, savings
    association, and mutual savings banks.
    Primary mortgage market
  28. Insurance provided by private carrier that
    protects a lender against a loss in the event of a foreclosure and deficiency.
    Private mortgage insurance (PMI)
  29. A note secured by a mortgage or deed of trust
    given by a buyer, as borrower, to a seller, as lender, as part of the purchase
    price of the real estate.
    Purchase-money mortgage (PMM)
  30. The federal law that requires certain
    disclosures to consumers about mortgage loan settlements. The law also
    prohibits the payment or receipt of kickbacks and certain kinds of referral
    Real Estate Settlement Procedures Act (RESPA)
  31. Implements the Truth in Lending Act requiring
    credit institutions to inform borrower of the true cost of obtaining credit.
    Regulation Z
  32. A loan under which the homeowner receives
    monthly payments  based on his or her
    accumulated equity rather than a lump sum. The loan must be repaid at a
    prearranged date, upon the death of the owner, or upon the sale of the property
    Reverse mortgage
  33. A
    transaction in which an owner sells his or her improved property and, as part
    of the same transaction, signs a long-term lease to remain in possession of the
    Sale and lease back
  34. A marker for the purchase and sale of existing
    mortgage, designed to provide greater liquidity for mortgages; also called the
    secondary money market. Mortgages are first originated in the primary mortgage
    Secondary mortgage market
  35. A loan in which only interest is paid during the
    term of the loan, with the entire principal amount due with the final interest
    Straight loan
  36. Specific credit terms, such as down payment,
    monthly payment, and amount of finance charge or terms of loan.
    Trigger terms
  37. Federal government regulates the lending  practices of mortgage lenders through this
    Truth in Lending Act (TIL)
  38. A mortgage loan on approved property made to a
    qualified veteran by an authorized lender and guaranteed by the Department of
    Veterans Affairs in order to limit the lender’s possible loss.
    VA loan
  39. A method of refinancing in which the new
    mortgage is placed in a secondary, or subordinate, position; the new mortgage
    includes both the unpaid principal balance of the first mortgage and whatever
    additional sums are advanced by the lender. In essence, it is an additional
    mortgage in which another lender refinances a borrower by lending an amount
    over the existing first mortgage amount without disturbing the existence of the
    first mortgage.
    Wraparound loan
Card Set
Chp 15 Real Estate Financing Practise
Real Estate