Ch 16 Second Mortgage Market

the minimum pool size for Ginnie Mae I MBS is $_____, but may be $_____ if issued in connection with a local financing program

1 million, 25,000

Ginnie Mae II MBS has minimum pool size of $______ for single family pools and $_____ for manufactured home pools and $_______ for all other

1 million, 350,000, 500,000

the potential income loan originator receives from fee range from _____ to ____ of a percent of loan amount

1/4, 3/8

Fannie Mae was established in _____ by ______ for secondary market access to ____ mortgages, but included ______ after WWII.

1938, federal government, FHA mortgages, VA loans

Fennie Mae became a fully private company after _______, subject to _______, but is exempt from _______

1968 Charter Act, federal corporate income tax, state income taxes

Fannie Mae second mortgage loan limits as of Jan 2008 was $_____, except the $______ limits in Alaska, Guam, Virgin Islands

208,500, 312,750

Conventional loans typically require ______ income ratio but FHA guidelines requires less than _____

28%, 29%

under regulation Z, borrower has the right to rescind within _____ for ______, but not for _____ and _____

3 days notice, residential first mortgage, refinancing, home equity

conventional loans usually require debt ratio of less than _____, but FHA guidelines require less than ____

36%, 41%

As of January 2008, first mortgage loan limits are as follows; - single family; $_____ - two family; $_______ - three family; $________ - four family; $_______

417,000, 533,850, 645,300, 801,950

For Fannie Mae conforming loans, seller down payment is limited to ____% for buyer down payment of ___%

6, 10

according to Fannie Mae guidelines, loans with above _____ loan-to-value ratio must carry PMI

80%

the credit rating are categorized into ____ to _____, and any borrowers below ___ are referred to as _____

A, D, A, sub-prime

1-4 family mortgage limits in _____, _____, ____ and ______ are ____% higher in Fannie Mae loan limits

Alasaka, Hawaii, Guam, Virgin Islands, 50

Fannie Mae lost its government funding/backing due to _______(law) and became ____, which allowed for _____

Charter Act of 1954, private, open market transactions

________ gave Fannie Mae the authority to deal in ______ with adherence to _____ and/or______ to ease credit concern, and required the _____ to provide _____ of conventional mortgage purchase

Emergency Home Finance Act of 1970, conventional mortgages, eligibility restrictions, risk sharing requirements, HUD Secretary, prior approval

three major credit reporting agencies

Equifax, Experian, TransUnion

Freddie Mac stands for

Federal Home Loan Mortgage

Fannie Mae stands for ______

Federal National Mortgage Association

___ is first to introduce CONVENTIONAL loans backed securities

Freddie Mac

two types of Ginnie Mae's MBS programs

Ginnie Mae I MBS, Ginnie Mae II MBS

important players in secondary mortgage market

Ginnie Mae, Fannie Mae, Freddie Mac

______ is a division within the HUD, established in 1968 and created first _____. creates and operates mortgage-backed security program for _____, ____

Ginnie Mae, MBS, FHA, VA

ginnie mae stands for

Government National Mortgage Association

Fannie Mae loan limits are adjusted on ______(time) based on ______ provided by _______

January each year, average single-family conventional mortgage price, Federal Housing Finance Board's October single-family price survey

Fannie Mae is on _____ and _______ operating under a _______(law).

NYSE, SP 500 Composite Stock Price Index, congressional charter

puts considerable restrictions on high-cost sub-prime loans that are either first or second mortgage

New York Anti-predatory Lending Law

in analysis of income ratio, housing cost may include _____, and ______ for _____ and _____

PITI, monthly assessments, mortgage insurance, utilities

a form used by underwriter to allow the underwriter to contact collect employment information

Request for Verification of Employment

_____ modified HUD's regulatory power over Fannie Mae to require HUD's response within _____ to any request for new program approval and authorized purchase and deal in ______

Secondary Mortgage Market Enhancement Act 1984, 45 days, subordinate lien mortgages

ToF; Ginnie Mae doesn't purchase mortgages

T

ToF; mortgages backing Fannie Mae MBS are not Fannie Mae's assets

T

______, ______, implemented by _____ requires lenders to disclose to buyers the _____, so that borrowers can compare various lenders

Truth in Lending Act, Title I of Consumer Credit Protection Act, Regulation Z, true credit cost

lender may choose to collect _____ forms and pay ____ from the applicant and then verify the information with the employer

W-2, stubs

New York Anti-predatory Lending Law; Secondary (one or more) criteria are...

above 8% APR first mortgage, above 9% APR second mortgage, above 5% fees and points on above $50,000 conventional loan, above 6% points and fees on above $50,000 FHA/VA loan, above 6% or $1,500 points and fees on less than $50,000 loan

predatory lending involve...

accepting unaffordable loan, loan flipping, fraud or deception of obligations

if the court finds violation of anti-predatory lending law, the borrower receives

actual damages, attorney's fees, statutory damages, declaratory and injunctive relief, rescission

A borrower can bring an ____ against a lender or mortgage broker within _____ from the date of the ______.

affirmative action, 6 yrs, origination

credit report usually has ____, ____, ____/____ status, ____, _____, and _____ of the borrower

age, address, tenant, owner, occupation length, employment history, credit profile

other forms of income considered stable

bonuses, commission, part-time wage

prior to assessing property's investment quality, lenders assess ______

borrower's investment quality

underwriting will determine whether the _____ and the _____ meet the minimum underwriting requirements

borrower, property

Even though Fannie Mae sets loan limits, purchaser may pay any price and make up the difference in ____

cash

predatory practices that define loan flipping are

charging high origination fees based on entire loan rather than incremental loan, prepayment penalties

loan that falls within Fannie Mae's guidelines and loan limits

conforming loan

Income is considered stable if it comes from a _____, ______ and ______ source

consistent, reliable, permanent

provisions of Regulation Z covers _____, _____, _____, and ____

cost disclosure, right to rescind, advertising offers, noncompliance penalties

predatory loan practices with debt consolidation and home equity loans

debt consolidation that risk home equity from not paying off minor credit, convincing home equity loan that can never be repaid

calculated based on all of the monthly obligations including payments for other debts

debt ratio

principal risks lender undertakes

default, loss of value

insurance policy that borrower may be required to buy to protect the lender from potential losses in case of default

defaults insurance

Fannie Mae and Freddie Mac guidelines allow for gift funds to be part of ____

down payment

items that must be disclosed on ads subject to regulation Z

down payment amount, terms of repayment, APR and increase, total finance charge, total payment and due date numbers

6 items that render an advertisement be subject to regulation Z

down payment, installment payment, specific finance charge, number of installments, repayment period, "no charge for credit"

lender's criteria for granting a loan

economy, property investment quality, repayment ability

methods of verifying other income (self-employment, bonus, commission, part-time)

federal income tax returns, audited financial statements, copies of court orders for alimony or child support, copies of landlord ledgers

cost disclosure under regulation Z must disclose ______, consisting of _____, ____, ____ and _____, and _____ (but not the _____ over the loan life)

finance charges, fees, interest, service charges, points, APR, total interest payable

applicant has a permanent employment if he has been employed ________

for two or more years in the same field

The borrower can raise violations of the anti-predatory lending law at any time as a _____.

foreclosure defense

Being a government agency, Ginnie Mae's guarantee is backed by the _______ of US Government

full faith and credit

The security holder receives payment of both principal and interest, whether or not is has been collected

fully modified pass-through

Fannie Mae is authorized to exceed _____, purchase mortgages at ____, and issue _____.

government loan limits, premium, MBS

predatory lending practices with sub prime loans

higher rates and closing costs, above 5% fee tucked into loan, requiring unnecessary insurance, redlining, above 5% prepayment penalty

establishes the borrower's capacity to pay by limiting the percent of gross income for housing costs

income ratio

specific borrower qualification standards for loan

income, debt, cash, net worth, sufficient creditworthiness

important consideration for lenders regarding property type of investment is _____/_____

income-producing, owner occupied

an important factor in the economy affecting real estate market is ____, which is caused by _____ or ____, and increases both the ____ and _____

inflation, property supply shortage, money supply excess, home prices, interest rates

_____ exceed the conforming loan limits, and usually have _____

jumbo loans, higher interest rate

mortgages included in the Ginnie Mae I MBS are - single family _____, _____, _____, and _____ mortgages - ______ - ______ - ______

level payment, buydown, GPM, growing equity, manufactured home loans, project construction loans, project permanent loans

sales of Fannie Mae mortgages usually peak when there are _____

limited alternative investment opportunity

a higher LTV means a larger _____ and a smaller _____, and thus more _____

loan amount, down payment, risk

refers to repeated refinancing of a mortgage within a short period of time with little or no benefit to the borrower

loan flipping

Fannie Mae and Freddie Mac guidelines on mortgage purchases

loan limits, 28% DTI ratio, PMI, Gifts, seller down payment

Depending on the _____ and the _____, the lender will base the loan amount on either the ______ or the _____, whichever is less.

loan type, current LTV ratio, appraisal value, sales price

lender's qualifying standards against borrowers

loan underwriting standards

Fannie Mae targets ____, ____, and ______ income Americans, and receives no ______.

low, moderate, middle, government funding

in Ginnie Mae II MBS, loans with different rates may be included in the same pool except in ______ program

manufactured home loan

lenders must carefully determine _____ to assess investment quality of property by __________

market value, inspecting and appraising each piece of property

Ginnie Mae I MBS have underlying mortgage that have same or similar ______ and ______. its payments are made on _____ of each _____.

maturities, interest rate, 15th, month

New York Anti-predatory lending law; primary criteria of covered loans

max principal of $300,000, personal or family purpose home, 1-4 family residence collateral

The security holder receives the interest portion of the payment, whether or not it has been collected, and the principal payment when it is collected.

modified pass-through

Ginnie Mae II MBS are ______ MBS with the option of the custom _____ pool or the _____ pool, which combines loans with ______

modified pass-through, single-issuer, multi-issuer, similar characteristics

obtaining loans for self-employed applicant is difficult unless he/she has _____ experience in the same field and show ______

more than 2 yrs, positive market research

package of primary market mortgage assembled by holding warehouse for resale to investors

mortgage pools

project construction and project permanent loans include properties such as ______, _____, ____, _____, and _____

multifamily residential, hospital, nursing home, group practice facility

determined by subtracting applicants' debt from assets, and indicates the ability to keep up the payments in case of job loss

net worth

while change in job with _____ is viewed as employment problems, change in job with _____ is seen as reliable

no change in status, advances in the field

participation mortgage fund shift refers to _____

one institution selling a part interest to loans to another

channels of mortgage fund shift

one lender to another, participation, MBS

whereas Fannie Mae purchased new loans at _____ before Charter Act of 1954, it could now purchase at ____ that give a ______, and _______ in accepting mortgage purchases

par, discounted price, reasonable return, make its own criteria

security issued for MBS is also known as ____ or _____

participating certificate, guaranteed mortgage certificate

the ______ is the most important part of credit report and indicates any _____ or _____.

payment history, delinquency, outstanding balances

examples of permanent income are income from ______, ______, or _____

permanent employment, government benefits, investment interest

act of preying on the customer who may fall into the B, C, or D credit category

predatory lending

credit report compiles information from _____ to discover any _____, ____, ____, ____, ____ or _____ pending against the applicant

public records, lawsuits, judgments, bankruptcies, foreclosures, wage garnishments, defaults

New York Anti-predatory Lending Law restrictions on loans that meet its criteria

qualified borrowers only, less than 3% points and fees, no loan flipping, no kickbacks, no points and fees on refinancing, no balloon payments, no acceleration without default, no negative amortization interest-only loan, no rate increase after default, no more than two periodic payments in advance from loan proceeds, no fee to modify/renew/extend/amend loan, no oppressive mandatory arbitration clause, no single premium insurance, no refinancing on special mortgage without HUD counseling, disclosure of written notice and approved counseling service list prior to closing, proof of anti-predatory lending law compliance in initiating foreclosure

Freddie Mac also strives to make _____ more affordable through ____, ____,. and ____ for multifamily housing

rental housing, program plus, standard lease up, premier lease up

Generally, _____ such as _____ property is considered more risk by lender than _____, and requires larger ________

rental unit, 1-4 unit, owner occupied, down payment

predatory lending practices with balloon loans

requiring higher interest rate for extension of balloon payments

Regulation Z applies to _____, but not _____ or _____

residential loans, commercial loans, agricultural loans over $25,000

Fannie Mae purchase mortgages from originators through _______ document, which allows originator to collect ____

servicing agreement, fee

mortgages types included in any one pool of Ginnie Mae II MBS

single family level payment, single family GPM, single family growing equity, single family ARM, manufactured home loans,

Ginnie Mae I MBS are based on ______ and are most ______ MBS product.

single family pools, heavily traded

underwriter considers _____ with the same guidelines as self-employment

sole proprietorship

Freddie Mac's mission is to provide ____, ____ and _____ to the housing market, and is dedicated to ____

stability, affordability, opportunity, minority population,

in income analysis, underwriter considers whether the applicant's income is ____ and _____ for the monthly payment

stable, enough

The security holder receives the actual principal and interest payments as they are received from the mortgages in the pool.

straight pass-through

three types of mortgage backed securities created by Ginnie Mae

straight, modified, fully modified

evaluation of credit report is ______, and may change due to lender's ____

subjective interpretation, monetary position

Fannie Mae MBS guarantee ______

timely principal and interest payment

why would lenders sell their mortgage to the secondary market

to balance primary market mortgage demand and money supply

mortgages backing Fannie Mae MBS are held in ____, and certified investors receive _____ of mortgage payments

trust, pro rata share

penalty for regulation Z violation are _____ (minimum of $____ and max $_____), _____, _____, and _____. IF willful, the violation is _____ with fine up to $_____ or ______ or both

twice the finance charge, 100, 1000, court costs, attorney fees, actual damages, misdemeanor, 5,000, 1yr prison

certified Fannie Mae MBS holder may also receive ______

unscheduled principal payment

if the court finds INTENTIONAL violation of anti-predatory lending law, the loan may be _____ and the borrower may recover all ______

void, payments

underwriter asks to employer of an applicant the _____, _____, _____, and _____

wages, employment length, job attitude, prospect of continued employment and promotions