Ch 16 Second Mortgage Market
the minimum pool size for Ginnie Mae I MBS is $_____, but may be $_____ if issued in connection with a local financing program
1 million, 25,000
Ginnie Mae II MBS has minimum pool size of $______ for single family pools and $_____ for manufactured home pools and $_______ for all other
1 million, 350,000, 500,000
the potential income loan originator receives from fee range from _____ to ____ of a percent of loan amount
1/4, 3/8
Fannie Mae was established in _____ by ______ for secondary market access to ____ mortgages, but included ______ after WWII.
1938, federal government, FHA mortgages, VA loans
Fennie Mae became a fully private company after _______, subject to _______, but is exempt from _______
1968 Charter Act, federal corporate income tax, state income taxes
Fannie Mae second mortgage loan limits as of Jan 2008 was $_____, except the $______ limits in Alaska, Guam, Virgin Islands
208,500, 312,750
Conventional loans typically require ______ income ratio but FHA guidelines requires less than _____
28%, 29%
under regulation Z, borrower has the right to rescind within _____ for ______, but not for _____ and _____
3 days notice, residential first mortgage, refinancing, home equity
conventional loans usually require debt ratio of less than _____, but FHA guidelines require less than ____
36%, 41%
As of January 2008, first mortgage loan limits are as follows; - single family; $_____ - two family; $_______ - three family; $________ - four family; $_______
417,000, 533,850, 645,300, 801,950
For Fannie Mae conforming loans, seller down payment is limited to ____% for buyer down payment of ___%
6, 10
according to Fannie Mae guidelines, loans with above _____ loan-to-value ratio must carry PMI
80%
the credit rating are categorized into ____ to _____, and any borrowers below ___ are referred to as _____
A, D, A, sub-prime
1-4 family mortgage limits in _____, _____, ____ and ______ are ____% higher in Fannie Mae loan limits
Alasaka, Hawaii, Guam, Virgin Islands, 50
Fannie Mae lost its government funding/backing due to _______(law) and became ____, which allowed for _____
Charter Act of 1954, private, open market transactions
________ gave Fannie Mae the authority to deal in ______ with adherence to _____ and/or______ to ease credit concern, and required the _____ to provide _____ of conventional mortgage purchase
Emergency Home Finance Act of 1970, conventional mortgages, eligibility restrictions, risk sharing requirements, HUD Secretary, prior approval
three major credit reporting agencies
Equifax, Experian, TransUnion
Freddie Mac stands for
Federal Home Loan Mortgage
Fannie Mae stands for ______
Federal National Mortgage Association
___ is first to introduce CONVENTIONAL loans backed securities
Freddie Mac
two types of Ginnie Mae's MBS programs
Ginnie Mae I MBS, Ginnie Mae II MBS
important players in secondary mortgage market
Ginnie Mae, Fannie Mae, Freddie Mac
______ is a division within the HUD, established in 1968 and created first _____. creates and operates mortgage-backed security program for _____, ____
Ginnie Mae, MBS, FHA, VA
ginnie mae stands for
Government National Mortgage Association
Fannie Mae loan limits are adjusted on ______(time) based on ______ provided by _______
January each year, average single-family conventional mortgage price, Federal Housing Finance Board's October single-family price survey
Fannie Mae is on _____ and _______ operating under a _______(law).
NYSE, SP 500 Composite Stock Price Index, congressional charter
puts considerable restrictions on high-cost sub-prime loans that are either first or second mortgage
New York Anti-predatory Lending Law
in analysis of income ratio, housing cost may include _____, and ______ for _____ and _____
PITI, monthly assessments, mortgage insurance, utilities
a form used by underwriter to allow the underwriter to contact collect employment information
Request for Verification of Employment
_____ modified HUD's regulatory power over Fannie Mae to require HUD's response within _____ to any request for new program approval and authorized purchase and deal in ______
Secondary Mortgage Market Enhancement Act 1984, 45 days, subordinate lien mortgages
ToF; Ginnie Mae doesn't purchase mortgages
T
ToF; mortgages backing Fannie Mae MBS are not Fannie Mae's assets
T
______, ______, implemented by _____ requires lenders to disclose to buyers the _____, so that borrowers can compare various lenders
Truth in Lending Act, Title I of Consumer Credit Protection Act, Regulation Z, true credit cost
lender may choose to collect _____ forms and pay ____ from the applicant and then verify the information with the employer
W-2, stubs
New York Anti-predatory Lending Law; Secondary (one or more) criteria are...
above 8% APR first mortgage, above 9% APR second mortgage, above 5% fees and points on above $50,000 conventional loan, above 6% points and fees on above $50,000 FHA/VA loan, above 6% or $1,500 points and fees on less than $50,000 loan
predatory lending involve...
accepting unaffordable loan, loan flipping, fraud or deception of obligations
if the court finds violation of anti-predatory lending law, the borrower receives
actual damages, attorney's fees, statutory damages, declaratory and injunctive relief, rescission
A borrower can bring an ____ against a lender or mortgage broker within _____ from the date of the ______.
affirmative action, 6 yrs, origination
credit report usually has ____, ____, ____/____ status, ____, _____, and _____ of the borrower
age, address, tenant, owner, occupation length, employment history, credit profile
other forms of income considered stable
bonuses, commission, part-time wage
prior to assessing property's investment quality, lenders assess ______
borrower's investment quality
underwriting will determine whether the _____ and the _____ meet the minimum underwriting requirements
borrower, property
Even though Fannie Mae sets loan limits, purchaser may pay any price and make up the difference in ____
cash
predatory practices that define loan flipping are
charging high origination fees based on entire loan rather than incremental loan, prepayment penalties
loan that falls within Fannie Mae's guidelines and loan limits
conforming loan
Income is considered stable if it comes from a _____, ______ and ______ source
consistent, reliable, permanent
provisions of Regulation Z covers _____, _____, _____, and ____
cost disclosure, right to rescind, advertising offers, noncompliance penalties
predatory loan practices with debt consolidation and home equity loans
debt consolidation that risk home equity from not paying off minor credit, convincing home equity loan that can never be repaid
calculated based on all of the monthly obligations including payments for other debts
debt ratio
principal risks lender undertakes
default, loss of value
insurance policy that borrower may be required to buy to protect the lender from potential losses in case of default
defaults insurance
Fannie Mae and Freddie Mac guidelines allow for gift funds to be part of ____
down payment
items that must be disclosed on ads subject to regulation Z
down payment amount, terms of repayment, APR and increase, total finance charge, total payment and due date numbers
6 items that render an advertisement be subject to regulation Z
down payment, installment payment, specific finance charge, number of installments, repayment period, "no charge for credit"
lender's criteria for granting a loan
economy, property investment quality, repayment ability
methods of verifying other income (self-employment, bonus, commission, part-time)
federal income tax returns, audited financial statements, copies of court orders for alimony or child support, copies of landlord ledgers
cost disclosure under regulation Z must disclose ______, consisting of _____, ____, ____ and _____, and _____ (but not the _____ over the loan life)
finance charges, fees, interest, service charges, points, APR, total interest payable
applicant has a permanent employment if he has been employed ________
for two or more years in the same field
The borrower can raise violations of the anti-predatory lending law at any time as a _____.
foreclosure defense
Being a government agency, Ginnie Mae's guarantee is backed by the _______ of US Government
full faith and credit
The security holder receives payment of both principal and interest, whether or not is has been collected
fully modified pass-through
Fannie Mae is authorized to exceed _____, purchase mortgages at ____, and issue _____.
government loan limits, premium, MBS
predatory lending practices with sub prime loans
higher rates and closing costs, above 5% fee tucked into loan, requiring unnecessary insurance, redlining, above 5% prepayment penalty
establishes the borrower's capacity to pay by limiting the percent of gross income for housing costs
income ratio
specific borrower qualification standards for loan
income, debt, cash, net worth, sufficient creditworthiness
important consideration for lenders regarding property type of investment is _____/_____
income-producing, owner occupied
an important factor in the economy affecting real estate market is ____, which is caused by _____ or ____, and increases both the ____ and _____
inflation, property supply shortage, money supply excess, home prices, interest rates
_____ exceed the conforming loan limits, and usually have _____
jumbo loans, higher interest rate
mortgages included in the Ginnie Mae I MBS are - single family _____, _____, _____, and _____ mortgages - ______ - ______ - ______
level payment, buydown, GPM, growing equity, manufactured home loans, project construction loans, project permanent loans
sales of Fannie Mae mortgages usually peak when there are _____
limited alternative investment opportunity
a higher LTV means a larger _____ and a smaller _____, and thus more _____
loan amount, down payment, risk
refers to repeated refinancing of a mortgage within a short period of time with little or no benefit to the borrower
loan flipping
Fannie Mae and Freddie Mac guidelines on mortgage purchases
loan limits, 28% DTI ratio, PMI, Gifts, seller down payment
Depending on the _____ and the _____, the lender will base the loan amount on either the ______ or the _____, whichever is less.
loan type, current LTV ratio, appraisal value, sales price
lender's qualifying standards against borrowers
loan underwriting standards
Fannie Mae targets ____, ____, and ______ income Americans, and receives no ______.
low, moderate, middle, government funding
in Ginnie Mae II MBS, loans with different rates may be included in the same pool except in ______ program
manufactured home loan
lenders must carefully determine _____ to assess investment quality of property by __________
market value, inspecting and appraising each piece of property
Ginnie Mae I MBS have underlying mortgage that have same or similar ______ and ______. its payments are made on _____ of each _____.
maturities, interest rate, 15th, month
New York Anti-predatory lending law; primary criteria of covered loans
max principal of $300,000, personal or family purpose home, 1-4 family residence collateral
The security holder receives the interest portion of the payment, whether or not it has been collected, and the principal payment when it is collected.
modified pass-through
Ginnie Mae II MBS are ______ MBS with the option of the custom _____ pool or the _____ pool, which combines loans with ______
modified pass-through, single-issuer, multi-issuer, similar characteristics
obtaining loans for self-employed applicant is difficult unless he/she has _____ experience in the same field and show ______
more than 2 yrs, positive market research
package of primary market mortgage assembled by holding warehouse for resale to investors
mortgage pools
project construction and project permanent loans include properties such as ______, _____, ____, _____, and _____
multifamily residential, hospital, nursing home, group practice facility
determined by subtracting applicants' debt from assets, and indicates the ability to keep up the payments in case of job loss
net worth
while change in job with _____ is viewed as employment problems, change in job with _____ is seen as reliable
no change in status, advances in the field
participation mortgage fund shift refers to _____
one institution selling a part interest to loans to another
channels of mortgage fund shift
one lender to another, participation, MBS
whereas Fannie Mae purchased new loans at _____ before Charter Act of 1954, it could now purchase at ____ that give a ______, and _______ in accepting mortgage purchases
par, discounted price, reasonable return, make its own criteria
security issued for MBS is also known as ____ or _____
participating certificate, guaranteed mortgage certificate
the ______ is the most important part of credit report and indicates any _____ or _____.
payment history, delinquency, outstanding balances
examples of permanent income are income from ______, ______, or _____
permanent employment, government benefits, investment interest
act of preying on the customer who may fall into the B, C, or D credit category
predatory lending
credit report compiles information from _____ to discover any _____, ____, ____, ____, ____ or _____ pending against the applicant
public records, lawsuits, judgments, bankruptcies, foreclosures, wage garnishments, defaults
New York Anti-predatory Lending Law restrictions on loans that meet its criteria
qualified borrowers only, less than 3% points and fees, no loan flipping, no kickbacks, no points and fees on refinancing, no balloon payments, no acceleration without default, no negative amortization interest-only loan, no rate increase after default, no more than two periodic payments in advance from loan proceeds, no fee to modify/renew/extend/amend loan, no oppressive mandatory arbitration clause, no single premium insurance, no refinancing on special mortgage without HUD counseling, disclosure of written notice and approved counseling service list prior to closing, proof of anti-predatory lending law compliance in initiating foreclosure
Freddie Mac also strives to make _____ more affordable through ____, ____,. and ____ for multifamily housing
rental housing, program plus, standard lease up, premier lease up
Generally, _____ such as _____ property is considered more risk by lender than _____, and requires larger ________
rental unit, 1-4 unit, owner occupied, down payment
predatory lending practices with balloon loans
requiring higher interest rate for extension of balloon payments
Regulation Z applies to _____, but not _____ or _____
residential loans, commercial loans, agricultural loans over $25,000
Fannie Mae purchase mortgages from originators through _______ document, which allows originator to collect ____
servicing agreement, fee
mortgages types included in any one pool of Ginnie Mae II MBS
single family level payment, single family GPM, single family growing equity, single family ARM, manufactured home loans,
Ginnie Mae I MBS are based on ______ and are most ______ MBS product.
single family pools, heavily traded
underwriter considers _____ with the same guidelines as self-employment
sole proprietorship
Freddie Mac's mission is to provide ____, ____ and _____ to the housing market, and is dedicated to ____
stability, affordability, opportunity, minority population,
in income analysis, underwriter considers whether the applicant's income is ____ and _____ for the monthly payment
stable, enough
The security holder receives the actual principal and interest payments as they are received from the mortgages in the pool.
straight pass-through
three types of mortgage backed securities created by Ginnie Mae
straight, modified, fully modified
evaluation of credit report is ______, and may change due to lender's ____
subjective interpretation, monetary position
Fannie Mae MBS guarantee ______
timely principal and interest payment
why would lenders sell their mortgage to the secondary market
to balance primary market mortgage demand and money supply
mortgages backing Fannie Mae MBS are held in ____, and certified investors receive _____ of mortgage payments
trust, pro rata share
penalty for regulation Z violation are _____ (minimum of $____ and max $_____), _____, _____, and _____. IF willful, the violation is _____ with fine up to $_____ or ______ or both
twice the finance charge, 100, 1000, court costs, attorney fees, actual damages, misdemeanor, 5,000, 1yr prison
certified Fannie Mae MBS holder may also receive ______
unscheduled principal payment
if the court finds INTENTIONAL violation of anti-predatory lending law, the loan may be _____ and the borrower may recover all ______
void, payments
underwriter asks to employer of an applicant the _____, _____, _____, and _____
wages, employment length, job attitude, prospect of continued employment and promotions