finance 2

deed of trust parties

Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party)

Voluntary lien vs. involuntary lien

Owners agree to have a security placed on themselves or their property vs. creditor places lien without owners' consent via legal means

municipal bond

a bond issued by a state or local government -schools

Which of the following loan types can be packaged into a mortgage-backed security eligible for guarantee by Ginnie Mae?

loans insured or guaranteed by US government agencies

What are advances?

loans the federal home loan bank makes to member banks

A 2/1 Buydown

reduces the interest rate by 2% the first year and 1% the second year, until it reaches its original principal interest for example 1st year=4.5% 2nd =5.5% 3rd= 6.5% 4th= 6.5% and so on

What is the benefit Ginny Mae investors have over those who invest in other MBSs?

they are able to collect timely principal and interest payments

Cross-default clause

triggers a debt default if the issuer defaults on any of its other debt obligations

Mutual savings banks were created to serve ______ during the mid-19th century.

workers

Lifting clause

A clause in a junior mortgage allowing a borrower to replace an existing first mortgage without disturbing the status of the junior mortgage.

exculpatory clause

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault. protects the borrowers assets that are not part of the lien

deed of trust

A deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party holds naked title for the benefit of the lender. Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party)

farm credit system

A federal agency of the Department of Agricultural that offers programs to help families purchase or operate family farms. government-sponsored enterprise

freddie mac

A government supervised enterprise established to purchase primarily conventional mortgage loans in the secondary mortgage market.

specific lien

A lien affecting or attaching only to a certain, specific parcel of land or piece of property.

alienation clause

A provision in a mortgage requiring full payment of the debt upon the transfer of title to the property, due on sale. Prevents loan assumptions.

corporate bonds

Bonds issued by corporations to fund operating expenses -new production line

separation clause

a misleading dismissal of the abortion issue

general lien

A lien that attaches to all property owned by an individual. Real and personal.

defeasance clause

A necessary mortgage clause in title theory states. When the debt is satisfied, this clause causes title to pass automatically back to the borrower. Satisfaction of mortgage; release from records.

Alienation Clause

A provision in a mortgage requiring full payment of the debt upon the transfer of title to the property, due on sale. Prevents loan assumptions.

carryback loan

The extension of credit from the seller to the buyer to finance the purchase of the property, accepting a deed of trust or mortgage instead of cash. Sometimes called a purchase money loan.

3-2-1 Buydown

The interest rate starts low but increases by 1% each year for three years until it reaches the rate stated in the note.

participation certificate

a certificate representing an undivided interest in a Freddie Mac pool

power of sale clause

a clause authorizing a private foreclosure sale that does not require court action

judgement lien

a lien placed on property to settle a judgement from a lawsuit

non-recourse loan

a loan that carries neither a penalty nor further obligation to repay if not paid back

junior loan

a loan that creates a lien against property that already has been pledged as collateral

What's a participation certificate?

a mortgage backed security issued by freddie mac

Carryback Financing

a note is accepted by a seller instead of cash

The ______ clause is also known as a due-on-sale clause.

alienation

subordination cause

allows a junior lien to rake priority over a senior lien

Regional State Bank is a member bank of the Federal Home Loan Bank. In exchange for mortgage collateral, Regional State Bank received a loan from the FHLB so it can make additional loans to consumers. What is the loan called that Regional State Bank received?

an advance

in a deed of trust, who is the trustor

borrower

subordinate agreement

changes the priority of the liens to be paid under certain conditions

When Fannie Mae purchases a loan, they pay the loan originator a(n) ______ fee.

collection fee

Farmer mac

create a secondary market for agricultural mortgage and rural utilities loans.

The ______ clause protects the borrower's assets that aren't part of the voluntary lien from a deficiency judgment in case of foreclosure.

exculpatory

Conventional loans from large commercial banks are the primary target for which secondary market player?

fannie mae

Which entity provides disclosures and public information about the financial condition of FCS?

federal farm credit banks funding corporation

Which of the following is Fannie Mae most likely to purchase?

a conventional fixed rate mortgage issued by a commercial bank

Which of the following entities buys loans primarily through thrifts?

freddie mac

Morris still owes his lender for the financing obtained in purchasing his home. Several years later, Morris took out a home equity line of credit. This means that ______.

if morris is foreclosed on, the home equity will not be paid until the first loan is paid off

A lender benefits from selling loans to Fannie Mae by ______.

increasing capital to offer loans with larger sale prices

industrial revenue bond

issued by municipalities but are supported by a lease agreement with a corporation

Which of the following clauses is included in Fannie Mae's multi-state note?

late charge

Housing and Economic Recovery Act of 2008

legislation aimed primarily at addressing the effects of the subprime mortgage crisis

in a deed of trust, who is the beneficiary

lender

Statutory Right of Redemption

The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.

reconveyance

The transfer of the title of land from one person to the immediate preceding owner. This instrument of transfer is commonly used to transfer the legal title from the trustee to the trustor (borrower) after a trust deed debt has been paid in full.