Ch3: Institutional Lenders

Nonamortized Loan

An amortized loan is a type of loan with scheduled , periodic payments that are applied to both the loan's principal amount and the interest accrued

Which type of property has the highest total of mortgage loans outstanding against it? a) 1-4 family b) multifamily c) commercial d) farm

a) 1-4 family has the highest total of mortgage loans outstanding

State-chartered savings and loan associations regulated by the California Department of Savings and Loans are authorized to lend up to what percent of the appraised value of the collateral for a real estate mortgage loan? a) 100% b) 80% c) 90% d) 70%

a) 100% thrifts can make conventional mortgage loans of up to 100%. More commonly its 80%

Which institutional lender has the most flexibility in mortgage lending activities? a) commercial banks. b) life insurance companies. c) credit unions. d) thrifts.

a) commercial banks of all the financial institutions, thrifts have the most flexibility in mortgage-lending activities. With the ability to make loans of up to 100% appraised property value

The department in a commercial bank that manages relatively large quantities of money and property for their beneficiaries is the a) trust department. b) escrow department. c) treasury department. d) mortgage-lending department

a) trust department

What is an institutional lender?

association that has savings

The pension funds tend to invest in which of the following types of real estate investments? a) Home loans b) Mortgage-backed securities c) Farm loans d) Personal property loans

b) Mortgage-backed securities With little going on in real estate financing, pension fund managers have participated in the secondary mortgage market by buying blocks of mortgage-backed securities

Cali state chartered savings banks are permitted all of the following activities EXCEPT a) making loans of up to 100% appraised value b) investing in speculative real estate c) making non-residential loans of up to 40% of their total assets d) issuing checking accounts

b) investing in speculative real estate

Life insurance companies become partners with project developers through the use of commercial loans called a) home equity loans. b) participation loans. c) home purchase loans. d) bridge loans.

b) participation loans. -serves to expand the life insurance companies' investment by requiring a partnership arrangement with the project developer

MOST commercial banks create long term, fixed rate real estate loans for: a) their own portfolio b) sale in the secondary mortgage market c) the FHA d) the DVA

b) sale in the secondary mortgage market

Which of the following institutional lenders is the leading lender on 1-4 family loans? a) commercial banks b) thrift institutions c) life insurance companies d) pension funds

b) thrift institutions

Savings institutions, major providers of home mortgage loans, are also referred to as a) credit unions. b) thrifts. c) co-ops. d) trusts.

b) thrifts

Which of the following statements is true regarding life insurance companies? a) Their lending policies are subject to federal control. b) Their costs of funds are higher than other fiduciaries. c) They are more concerned with safety than with liquidity. d) They prefer small loans for diversity.

c) They are more concerned with safety than with liquidity.

Commercial banks tend to make loans for a) mobile homes. b) subdivision improvements. c) construction activities. d) the purchase of land.

c) construction activities. handled by their mortgage loan dep. loans include construction, home improvements, and on manufactured homes

Commercial Bank 'trust departments' act as all of the following EXCEPT a) executors b) conservators c) lenders d) guardians

c) lenders Key word: 'trust departments'

Of the following categories, which is the MOST active in the Multi-family loan market? a) saving associations b) commercial banks c) life insurance companies d) federally supported agencies

c) life insurance companies -Key word: multifamily loan

When making nonamortized real estate loans, state-chartered banks in Cali are limited to which maximum % of the property's appraised value? a) 60% b) 75% c) 80% d) 100%

d) 100%

Which of the following institutional lenders is increasing its participation in real estate finance? a) Life insurance companies b) Thrifts c) Commercial banks d) Credit unions

d) Credit Unions will continue to expand their participation in real estate financing because they offer high competitive interest rates and low placement fees

Life insurance companies a) make loans on large real estate projects b) are concerned with safety and long term stability c) make participation loans d) all of the above

d) all of the above

Commercial banks participate in real estate finance through all of the following EXCEPT a) trust departments b) interim financing (construction loan) c) secondary markets d) mutual companies

d) mutual companies

All of the following sources of funds for real estate finance are considered financial intermediaries except a) savings institutions. b) life insurance companies. c) commercial banks. d) sellers as lenders.

d) sellers as lenders

speculative

not based on fact or investigation