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.
