Hint Chapter 6 Chapter 6 Chapter 6

Answer
Adjustable-Rate Mortgage (ARM) Adjustment rate cap Convertible Constant Maturity Treasury (CMT) Indexes

Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 6 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8 Chapter 8

Frequency of rate change Graduated-payment mortgage (GPM) Index Initial-period discount/Teaser Rate Interest rate caps Life-of-loan cap London Interbank Offered Rate (LIBOR) Margin Negative Amortization Periodic Adjustment rate cap Reverse Mortgage Moral Hazard Federal Housing Administration (FHA) Mortgage Insurance Private Mortgage Insurance (PMI) Community Development Block Grants (CDBG) HOME Program HOPE Program Securitization Right of Recission Good Faith Estimate Uniform Settlement Statement (HUD-1) Section 8 Housing Mortgage Insurance Premium (MIP) Fair Housing Act (1968)

Chapter 9
Blockbusting

Chapter 9 Chapter 9 Chapter 9 Chapter 9 Chapter 9

Effects Method Intent Approach Practices Approach Home Mortgage Disclosure Act (1975)

Chapter 9 Chapter 9 Chapter 9

Community Reinvestment Act (1978) Redlining FHAing Housing for Older Persons Act (1995)

Chapter 9 Chapter 9 Chapter 9 Chapter 10 Chapter 10 Chapter 10 Chapter 10 Chapter 10 Chapter 10 Chapter 10 Chapter 10 Chapter 10 Chapter 10
Equal Credit Opportunity Act (ECOA) Reasonable Accomodations Secondary Mortgage Market Credit Enhancement Double Taxation Pass-Through Securities Mortgage-Backed Bonds Collateralized Mortgage Obligations (CMOs) Real Estate Mortgage Investment Conduit Security (REMICS) Credit Default Swap (CDS) Counterparty Risk Fannie Mae Ginnie Mae

Chapter 10 Chapter 10 Chapter 10

Freddie Mac Government Sponsored Enterprises (GSEs) Federal Housing Finance Agency

Chapter 10 Chapter 10 Chapter 13 Chapter 13 Chapter 13 Chapter 13

Mortgage-Backed Security Uniform Residential Loan Application Full Doc Stated Income (Verified or Stated Assets) No Doc Uniform Residential Appraisal Report (URAR)

Chapter 13 Chapter 13 Chapter 13 Chapter 14 Chapter 14 Chapter 14

Financial Institution Reform, Recovery, and Enforcement Act of 1989 (FIRREA) Yield Spread Premium (YSP) Mortgage Default Insurance Partial Coverage Full Coverage

Chapter 14 Chapter 14 Chapter 14 Chapter 14 Chapter 14 Chapter 14 Chapter 14 Chapter 14 Chapter 14 Chapter 14

Co-Insurance Certificate of Eligibility (COE) Entitlement Private Mortgage Insurance (PMI) Foreclosure Judicial Foreclosure Power of Sale Equitable Right of Redemption Statutory Right of Redemption Deficiency Judgement

Definition A type of mortgage in which the interest rate adjusts periodically according to a preselected index, such as Treasury Bill rates, and a margin. This adjustment results in the mortgage payment either increasing or A cap (usually one or two percent) on the change in the interest rate on an adjustable rate mortgage. within a given window of time, the ARM can be converted to a fixed-rate mortgage. An adjustment for equivalent maturity, used by the Federal Reserve Board to compute an index based on the average yield of various Treasury securities maturing at different periods. Constant maturity yields on Treasuries are obtained by the U.S. Treasury on a daily basis through interpolation of the Treasury yield curve, which in turn How frequently the lender can adjust the contract rate on the loan. A residential mortgage designed to overcome the tilt effect. The monthly mortgage payments that start at a level below that on a FRM and increase at a predetermined rate with later payments above that on a FRM. They A rate of interest, such as a T-bill rate, used to measure periodic interest rate adjustments for an adjustable rate an initial contract rate on the loan that is less than the index plus the margin at that time. AKA Teaser Rate A provision in an adjustable rate mortgage that limits the increase in the rate of interest at each anniversary date The maximum rate of interest allowed under the terms of an adjustable rate mortgage. An average of daily lending rates from several major London banks, used as a common international interest rate The number of basis points a lender adds to an index to determine the interest rate of an adjustable rate A loan payment schedule in which the outstanding principal balance goes up, rather than down, because the places a limit on how much the contract rate can change at each date of adjustment (anniversary date). Refers to a mortgage with falling equity, rising debt, in which the lender makes payments to the borrower for a The tendency of insured parties to take on more risk than they would if they hadn't been indemnified against losses. A federal agency whose main activity is the insuring of residential mortgage loans made by private lenders. FHA is a division of HUD which sets standards for construction and underwriting and charges a fee, generally 3.8 A policy that protects lenders against losses that result from defaults on home mortagage. Insurance written by a private (nongovernmental) company protecting the mortgage lender against loss caused Grants from the Department of Housing and Urban Development to allow communities to carry out a wide Set up a trust fund to increase the supply of low-income housing Issues grants to rehab public housing The process of creating new securities backed (collateralized) by a package of other securities or assets. The right to rescind (undo) a contract if certain legal requirements are not fulfilled. Right to recind such as in cases of buyers r An approximation of the fees due at closing for a mortgage loan that must be provided by a lender to a borrower within three A standard form required by HUD that stipulates the fees and charges to be paid by the buyer and seller at a loan A HUD subsidy program whereby the department pays a portion of housing costs for low-income families. AKA The charge paid by a mortgagor for mortgage insurance either to FHA or to a private mortgage insurance (PMI) company. On an FHA loan, the payment is 3.8 percent of the loan balance. Up-front payment plus an annual This prohibits discrimination in the sale or rental of residential dwellings (or vacant land intended to be used as such) on the basis of race, color, religion, or national origin. Gender was added as a protected class by the Housing and Community Development Act of 1974. Families (those with children under 18) and the handicapped The illegal practice of inducing panic selling in a neighborhood for financial gain. Lowering the value of house based on a group of people moving in to the surrounding area. The criminal will typically make a statement that certain minority groups are moving into the neighborhood and that property owners should sell quickly at a A form of identifying discrimination. Minority groups are under represented in the class of credit recipients relative to the gen A rule by the Federal Reserve System that attempts to measure potential discrimination in mortgage lending by A form of identifying discrimination. Discriminatory behavior exists when a lender fails to adhere to a set of A federal act passed in 1975 that requires disclosure of an institutions loans by census tract or by zip code. Requires financial institutions of a cretain size to compile a report on the distribution of its loans where it does

An act passed by Congress in 1978 that requires federally insured thrifts to adopt a community reinvestment statement that defines the community in which the institution makes loans and maintains a file of loans for The practice by lenders of refusing to make loans in certain risky or transitional neighborhoods. The practice by lenders of making only FHA loans in certain risky or transition neighborhoods. Lenders suffer no This act eliminated the requirement that the housing had to meet the significant facilities and services designed for the elderly. A HUD rule (April 2, 1999) in the Federal register implements the this act and details those provision of the Fair Housing Act that pertain to senior housing. Relief under the act has been A federal law that requires lenders to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs. Also Accommodations that would be considered reasonable to the typical renter. They are those that are not Market where existing mortgages are bought and sold. The process whereby the issuer of a mortgage-related security adds support to the underlying assets by Refers to the taxation of a C-corporation at the corporate level and then taxation of the dividends and capital Securities issued by the Government National Mortgage Association (Ginnie Mae) which provides for the interest A bond or debt instrument which is backed by a pool (large group) of mortgages and for which the cash flow of Multiple-class, pay-through bonds, first issued by the FHLMC in June 1983. They are secured by a pool of mortgages or a portfolio of pass-through securities. The CMO provides a type of call protection and pays A type of mortgage-backed security that allows for income to be taxed only to the holders of the bond and not to the entity holding the mortgages. Consists of a fixed pool of mortgages broken apart and marketed to An instrument that insures a bondholder against a loss in the value of those bonds. The risk of the swapper not having the money to cover your 'insurance.' A privately owned corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages. Under This HUD agency operates as a participant in the secondary mortgage market. It is involved with special government financing programs for urban renewal projects, elderly housing, and other high-risk mortgages. It also carries out the liquidation and special assistance functions performed by the Federal National Mortgage A private corporation authorized by Congress with an independent board of directors to provide secondary mortgage market support for conventional mortgages. It also sells participation certificates secured by pools of Examples are Freddie Mac, Fannie Mae, and Ginnie Mae. A U.S. government agency created by the Housing and Economic Recovery Act of 2008 that regulates the secondary mortgage market by overseeing the activities of Fannie Mae, Freddie Mac and the 12 federal home loan banks. This new agency was established to act like a bank-regulator in order to strengthen and improve A security purchased by investors that are secured by mortgages. Such securities are also known as pass-through All the information needed to analyze the borrower is contained within this document. the information provided by the borrower is verified from various sources. the borrowers income is stated by the borrower in good faith (may be popular with tip-based and bonusbased income) and assets are verified or the borrowers income and assets are stated by the borrower in good no information is provided relative to the borrowers income and assets and the loan is based primarily on the One of the most common forms used in real estate appraisal which was created to allow for standard reporting and analysis of single-family dwellings or single-family dwellings with an "accessory unit". has been used for nearly all loans, including those intended for sale to Fannie Mae or Freddie Mac and those insured by the FHA or An act passed in 1989 to help bail out the failing savings and loan industries. It established the Resolution Trust Putting on extra value to give the broker extra money to steer the broker to them; for no reason other than to pay the broke Insures the lender against losses that result from foreclosure. Type of mortgage default insurance which covers losses up to a certain percentage of the original loan amount. Refers, usually, to mortgage insurance where the insurer will reimburse the lender for only a portion of the debt. Type of mortgage default insurance in which all lender losses are covered. A mortgage insurance program where

Type of mortgage default insurance which covers losses up to a certain percentage of the original loan amount then splits it between the lender and FHA. A sharing of insurance risk between insurer and owner depending on Veterans eligible for VA loans receive this. Establishes the maximum loan amount for VA loans Insurance written by a private (nongovernmental) company protecting the mortgage lender against loss caused A legal procedure taken by a mortgagee or lender under the terms of a mortgage or deed of trust for the A foreclosure process that involves a court proceeding (as opposed to a power-of-sale foreclosure that avoids a A process of foreclosure that allows the lender to avoid court costs by presenting evidence to a trustee who holds the title to the property and receives title in return. Foreclosure proceeds without a court order; usually The common law right to redeem property during the foreclosure period by paying past due amounts. In some states the mortgagor has a statutory right to redeem property after a foreclosure sale. This is limited to several The right of a borrower after a foreclosure sale to reclaim his property by repaying his defaulted loan. Redeem the property a A judgment levied against the borrower personally (personal assets) for the difference between the mortgage debt (including payments in arrears) and the liquidation value of the property. Court ordered judgement against

against losses.

h as in cases of buyers remorse. a borrower within three days of the lender taking a borrower's loan application. It is required by the Real Estate Settlement Procedures A

ients relative to the general population.

r than to pay the broker.

Redeem the property after the sale.

al Estate Settlement Procedures Act (RESPA). While the form of the it is standardized across the industry to allow borrowers to compare c

to allow borrowers to compare costs between lenders, it is key to note that it is only an estimate, and the true figure can sometimes be d

he true figure can sometimes be different.