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REE CH 10
Terms in this set (20)
Mortgage originators can either hold loans in their portfolios or sell them to investors. When a mortgage originator decides to sell mortgages to another institution, this transaction occurs in what is commonly referred to as the:
secondary mortgage market
Which of the following types of institutions has historically been the largest purchaser of residential mortgages?
Government sponsored enterprises
Considered the most common type of home loan, which of the following refers to any
standard home loan
that is not insured or guaranteed by an agency of the U.S. government?
Conventional home loan
Created by Congress to promote an active secondary market for home mortgages, Fannie Mae and Freddie Mac purchase loans that meet specific underwriting standards such as loan size, documentation, and payment to income ratio. The loans that Fannie Mae and Freddie Mac are eligible to purchase are commonly referred to as:
Conforming conventional loans
Since conforming loans can be much more readily bought and sold in the secondary mortgage market, they carry a(n) _______ interest rate than comparable nonconforming loans.
Mortgage originators often offer many types and forms of available residential loans as part of their mortgage menu. However, the predominant form of prime conventional mortgage remains the:
(fixed-rate) level payment mortgage (LPM)
Suppose a buyer agrees to purchase a tract of land for $40,000. The buyer is only able to obtain a mortgage for $32,000. Rather than let the deal fall through, the seller agrees to accept $4,000 in cash and a note from the buyer for the remaining $4,000. This type of transaction is commonly referred to as a:
purchase money mortgage
A conventional mortgage loan is one that is not insured or guaranteed by an agency of the U.S. government. The lender, however, can still pursue a private mortgage insurance (PMI) policy to provide a guarantee for the fulfillment of the borrower's obligations. Typically PMI is required for all loans that have a loan to value (LTV) ratio greater than:
FHA mortgage insurance covers any lender loss after conveyance of title of the property to the U.S. Department of Housing and Urban Development (HUD). FHA mortgage insurance requires two premiums to be paid: the UFMIP (up-mortgage insurance premium) and the MIP (monthly insurance premium). Currently, the UFMIP is what percentage of the loan for normal loans used to purchase a personal residence?
Private mortgage insurance (PMI) is usually required on _____ loans with loan-to-value ratios greater than _____ percent.
home, 80 percent
The dominant loan type originated and kept by most depository institutions is the:
Adjustable rate mortgage
Which of the following mortgage types has the most default risk, assuming the initial loan-to-value ratio, contract interest rate, and all other loan terms are identical?
A mortgage that is intended to enable older households to "liquify" the equity in their home is the:
Reverse annuity mortgage (RAM)
A jumbo loan is:
A conventional loan that is too large to be purchased by Fannie Mae or Freddie Mac
The maximum loan-to-value ratio for an FHA loan over $50,000 is approximately:
The maximum loan-to-value ratio on a VA guaranteed loan is:
Conforming conventional loans are loans that:
Are eligible for purchase by Fannie Mae and Freddie Mac
Home equity loans typically:
Have tax-deductible interest charges
The best method of determining whether to refinance is to use:
Net benefit analysis
Probably the greatest contribution of FHA to home mortgage lending was to:
Establish the use of the level-payment home mortgage
THIS SET IS OFTEN IN FOLDERS WITH...
REE Ch 23
Ree 3043 Chapter 21
ree 2043 ch 1
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