RE: Secondary Mortgage Market
Freddie Mac
Created in 1970, this purchases loans from thrifts. It also purchases mortgage-backed securities, also this is known as Federal Home Loan Mortgage Corporation (FHLMC). Uses total debt-to-income ratio to qualify borrowers and does not consider the housing debt-to-income ratio.
Farmer Mac (Federal Agricultural Mortgage Corporation)
Directly serves rural lenders, they indirectly serve farmers, ranchers, and anyone in these agricultural and rural communities. Purchasing loans issued by agricultural and rural lenders
participation certificates (PCs)
Freddie Mac calls its MBS products _________.
Conventional
Freddie Mac targets which type of loans to purchase?
Jumbo loans
What are loans above the conforming loan limit, set by the FHFA?
Collection fee
Synergy National Bank issued a conventional loan that is eligible for purchase by Fannie Mae. When Fannie Mae purchases the loan, what will Synergy National Bank receive in return?
Fannie Mae Federal Home Loan Bank Freddie Mac
The FHFA regulates certain secondary market players. Which 3 institutions does the FHFA regulate?
A mortgage-backed security (MBS)
What is an investment vehicle secured by a mortgage or collection of mortgages. The mortgages are sold to a government agency or investment bank, which in turn packages the loans into a security that investors can buy.
They're able to collect timely principal and interest payments.
What is the benefit Ginny Mae investors have over those who invest in other MBSs?
GSE-eligible Qualified Mortgage
What mortgage loan that meets all the requirements and can be purchased, insured, or guaranteed by a GSE, FHA, VA, or USDA?
Small Creditor Qualified Mortgage
What mortgage loan that meets all the requirements and is originated by a lender that makes 500 or fewer mortgages annually and has $2 billion or less in assets?
General Qualified Mortgage
What mortgage loan that meets all the requirements set and has a debt-to-income ratio of 43% or less?
Qualified Mortgage
What rules were put in place to protect borrowers from toxic terms in lending and to tighten up what had become loose lending criteria. Borrower income and debt loads are specified in the rules.
Returns on investments increase.
When interest rates increase, what is the impact on mortgage-backed security investors?
Borrowers
When loan interest rates are falling, who benefits? Loans are cheaper, which translates into lower payments that are passed through to investors.
MBS investors
When loan interest rates are rising, who benefits? Loans are more expensive, which translates into higher payments passed through to investors.
The Consumer Financial Protection Bureau
Which agency sets the guidelines for qualified mortgages?
A conventional fixed-rate mortgage issued by a commercial bank
Which of the following is Fannie Mae most likely to purchase?
A decrease in the amount of credit available to loan originators
If Freddie Mac didn't exist, which of the following would be a likely effect?
Secondary market players
Institutions that purchase loans, package them into mortgage-backed securities, then sell these to investors may commonly be referred to as ______.
Primary market players
What are the types of institutions that issue loans directly to consumers commonly called?
Ginnie Mae (GNMA) Government National Mortgage Association
What association guarantees MBSs with the full faith and credit of the U.S? A wholly government owned corporation.
Lenders might not have funds available to make new loans to the public.
What could be a consequence if there were no secondary mortgage market?
FNMA (Fannie Mae)
This association goal is to help expand consumer access to mortgage credit, and the way it meets that goal has evolved over time. Was created in 1938 to provide a secondary market for mortgage loans
FHFA (Federal Housing Finance Agency)
This was established in 2008 to provide oversight to GSEs (Freddie Mac and Fannie Mae) and to regulate the FHLB System. Sets conforming loan limits and target percentages for low- and moderate-income borrowers.
