chapter 13
what is an annual mortgage insurance premium (AMIP)?
.85% of the annual outstanding loan balance, divided into 12 monthly payments, for the life of the FHA loan
according to Regulation Z, how long does a borrower have to rescind a refinance of a principal residence?
3 business days
what is the most likely effect of an increase in the discount rate?
a member's bank cost of doing business is increased, and it must charge higher interest rates to borrowers
what is a blanket mortgage?
a mortgage that pledges multiple properties as security for a loan
what is the difference between a package mortgage and a chattel mortgage?
a package mortgage uses real & personal property as security for a loan; a chattel mortgage uses only personal property as security for a loan
what type of loan has payment adjustments at set intervals and an interest rate that can fluctuate over the term of the loan?
adjustable rate mortgage
what is usury?
charging an interest rate in excess of those established by statute
what type of loan has payments that are sufficient to repay the loan amount and the interest owed over the life of the loan?
fully amortizing
what is private mortgage insurance (PMI)?
insurance that a borrower pays for to protect the lender from the risks associated with possible default by the borrower
what is the largest source of funds for financing of apartment projects and commercial properties?
life insurance companies
what are FHA mortgage insurance premiums?
premiums on mortgage insurance that is required on all FHA insured mortgage loans
payments on a fixed rate amortized loan consist of what two components?
principal and interest
when the Federal Reserve increases the reserve requirements of member banks, what is the impact on the economy?
the amount of money for lending is decreased, which may cause interest rates to increase
what is disintermediation?
the flow of money into investments other than lending institutions
what is intermediation?
the flow of money into lending institutions
what is the effect of increased intermediation?
the mortgage money supply is increased, and interest rates are reduced
what is the effect of increased disintermediation?
the mortgage money supply is reduced, and the interest rates are increased
what does the FHA Section 203(b) mortgage insurance cover?
the purchase or refinance of an owner-occupied one- to four-family property
what determines the interest rate that a borrower must pay on an adjustable rate mortgage loan?
the rate of a specific, published index as of a specific date, plus a fixed margin
what is the discount rate?
the rate of interest that a member bank pays to borrow money from a Federal Reserve bank
under what circumstances is a kickback or rebate allowed?
the recipient has provided a service for which he or she is licensed, and all parties to the transaction are advised of the payment
what is the purpose of the Truth-in-Lending Act?
to ensure that consumers receive meaningful information about the true cost of credit
what is the purpose of the VA mortgage loan program?
to guarantee mortgage loans for eligible military veterans for owner-occupied residences that meet VA standards
what is the purpose of the secondary mortgage market?
to provide a constant source of funds in real estate loans
what was the original purpose of the Federal National Mortgage Association (FNMA)?
to purchase FHA loans and provide liquidity for lenders of FHA Loans
