Chapter 15

VA qualification

90 days of active service for service people currently on activity duty and veterans of at least 90 days of active service during world war @, the korean war, and vietnam conflicts, and the gulf war. a minimum of 181 days of active service durinf interconflict periods between july 26, 1947 and september 6, 1980. 2 full yrs of service furing any peacetime period since 1980 or the full period for which the veteran was called or ordered to active duty. 6 or more yrs of continious duty as a reservist in the army, navy, air force, marine corps, or coast guard, or as a member of the army or air national guard.

buydown

a financing technique used to reduce the monthly payments for the first few years of a loan. funds in the form of discount points are given to the lender by the builder or the seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for s debt time

certificate of reasonable value (CRV)

a form indicating the appraised value of a property being financed with a VA loan.

ginnie mae

a government agency that plays an important role in the secondary mortgage market. it guarantees mortgage- backed securities using fha- insured and va-guranteed loans as collateral

secondary mortgage market

a market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages. mortgages are first originated in the primary mortgage market

wraparound loan

a method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sims are advanced by the lender. in essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the exisiting first mortgage amount without disturbing the existence of the first mortgage.

blanket loan

a mortgage covering more than one parcel of real estate, providing for each parcels partial release from the mortgage lein upon repayment of a definite portion of the debt.

open-end loan

a mortgage loan that is expandable by increments up to a maximum dollar amount, with the full loan being secured by the same orginal mortgage.

credit unions

cooperative organizations whose members place money in savings accounts

truth in lending act (TILA)

federal government regulates the lending practices of mortgage lenders through this act

regulation z

implements the truth in lending act, requiring credit institutions to inform borrowers of the true cost of obtaining credit.

private mortgage insurance (PMI)

insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.

mortgage broker

not lenders,they locate potential borrowers, process preliminary loan applications and submit applications to lenders for final approval.

government- sponsored enterprises ( GSEs)

organizations created by the federal government (fannie mae, freddie mac, farmer mac, ginnie mae) to help increase loan opportunites for homebuyers.

mortgage banking companies

orginate mortgage loans with money belonging to insurance companies, pension funds, and individuals as well as funds of their own.

equal credit opportunity act (ECOA)

prohibits discrimination in granting credit based on race, color, religion, national orgin, sex, marital status, age and receipt of public assistance.

endowment funds

provides a good source of financing for low risk commericial and industrial properties

triggering terms

specific credit terms, such as down payment, monthly payment, and amount of finance charge or term of loan

farmer mac

the federal agricultural mortgage corporation- a privately owed and publicly traded company established by congress to create a secondary market for agricultural and rural development loans guaranteed by the u.s department of agriculture (usda)

real estate settlement procedures act (RESPA)

the federal law that requires certain disclosures to consumers about mortgage loan settlements. the law also prohibits the payment or reciept of kickbacks and certain kinds of referral fees.

mortgage insurance premium (MIP)

the fha insurance that is a percentage of the loan amount that the borrower is charged as a premium

primary mortgage market

the mortgage market in which loans are originated, consisting of lenders such as commercial banks, saving associations, and mutual savings banks

community reinvestment act of 1977 (CRA)

under the act, which was revised most recently in 2008, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilatiton projects; and participate in loan programs for housing, small businesses, and small farms.

pension funds

usually have large amounts of money available for investment.

fannie mae

a government supervised enterprise established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders

freddie mac

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

FHA- insured loan

a loan insured by the federal housing administration and made by an approved lender in accordance with fha regulations

conventional loans

a loan that requires no federally sponsored insurance or gurantee

home equity loan

a loan under which a property owner uses the property as collateral and can then draw funds up to a prearranged amount against the property. aka a home equity line of credit, or HELOC

VA- guaranteed loan

a mortgage loan on approved property made to a qualified veteran by an authorized lender and guranteed by the U.S department of veterans affair in order to limit the lenders possible loss.

package loan

a real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings, and major appliances.

sale and leaseback

a transaction in which the owner sells improved property and as part of the same transaction, signs a long term lease to remain in possession of the premises.

insurance companies

accumulate large sums of money from the premiums paid by their policyholders.

construction loan

aka interim loan. a short term loan usually made during the construction phase of a building project.

savings associations and commercial banks

aka thrifts. institutions are known as fiduciary lenders because of their fiduciary obligations to protect and preserve their depositors funds. mortgage loans are preceived as secure investments for generating income and enable these institutions to pay interest to their depositors.

federal reserve system

the countrys central banking systems, which establishes the nations monetary policy by regulating the supply of money and interest rates.