Ch 14

What is the current basic entitlement for a VA loan?

$104,250 where the loan limit is $417,000

Requirements for an FHA loan

1. One time insurance premium, paid at closing by either party in transaction. 2. The lender can charge points

Impounds

A fund of the buyer's money that the lender sets aside for the future needs of a property. (Think payments that are meant to go specifically to pay for taxes, etc.)

Estoppel Certificate

A person is prevented from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct, or silence.

Qualifying the title

Abstract and opinion; chain of title; Title insurance and Other terms

Who oversees the FHA?

Department of Housing and Urban Development. (HUD)

List of Secondary Mortgage Market players

Fed. Nat. Mortgage Assc. (Fannie Mae FNMA), Gov. Nat. Mort. Assc. (Ginnie Mae GNMA), Fed Home Loan Mort. Corp. (Freddie Mac FHLMC)

Non-recourse clause

If the lender forecloses, the borrower will not be held personally liable beyond the collateral pledge for the loan.

Disintermediation

Investing funds directly instead of placing money in savings institutions.

Participation financing

Lender receives a portion of the property's net income.

Exculpatory clause

Lender waives the right to a deficiency judgement

Rural Economic and Community Development (RECD)

Makes loans for home purchases or construction in rural areas

Qualifying the Buyer

Measure the ability to repay the loan. Mortgage to income ratio; Assets; Liabilities; Debt Coverage ratio; Attitude (Past credit behavior).

Do VA loans allow prepayment penalties?

No prepayment penalties for this loan type.

Does the FHA make loans?

No, they insure loans made by approved local lenders

Default

Non-performance of a duty or obligation.

Does the VA make direct loans?

Only if there are no lenders in the area where the veteran wants to buy a property.

Insurance company loans

Prefer large commercial projects, can make residential.

Secondary Mortgage Market purpose

Provide funds for the primary market lenders.

Mortgage Broker

Provides own funds for loans or negotiates loans for compensation.

Federal Reserve System methods of bank regulation

Reserves of cash, the discount rate (% charge banks to borrow money), and deciding to buy or sell bonds.

Savings and Loans Banks

Savings and Loans are banks that specialize in accepting savings deposits and making mortgage loans. They do not offer loans to commercial businesses.

Banks' loans

Short term loans mostly for commercial purposes.

California Veterans Farm

State funded loan similar to the VA loan. Funded by bonds, so higher interest rates.

Underwriting

The analysis of the extent of risk assumed in connection with a loan.

Qualifying the property:

Type of the property, location, Zoning state, value range, neighborhood, remaining economic life, condition, special clearances, marketability.

Conditional approval (conditional or qualified commitment)

Written pledge by a lender to lend a certain amount of money for a specified time undre specified terms.

Non-recourse loan

the borrower is not held personally liable for the note.