Real Estate Finance (Study Guide for
the Real Estate Finance Exam for the
Texas Real Estate License)
Fannie Mae Correct Ans - Creates a secondary market for FHA & VA
mortgages. Also sells mortgage loan products.
Administered Price System Correct Ans - Fannie Mae's method for
purchasing mortgages according to daily economic indicators.
MBS Correct Ans - Mortgage backed securities.
Subprime Market Correct Ans - Mortgages granted using liberal
qualifying standards.
Hypothecation Correct Ans - Borrower pledges collateral for a loan,
while retaining ownership of the assets and enjoying the benefits therefrom.
Equitable Interest Correct Ans - A right in equity that, if violated
(suffers a harm), is subject to satisfaction by an equitable remedy.
Reserve Requirements Correct Ans - Member banks are required to
keep a specific percentage of deposits in reserve with the Federal District
Bank to protect depositors.
Commercial Paper Correct Ans - Loans issued by commercial banks.
The Fed resells this paper in secondary market, thus helping banks gain cash
flow.
Discount Rate Correct Ans - Interest charged by member banks on
funds borrowed from the Fed.
Prime Rate Correct Ans - Fed discount rate that banks use to
determine the interest rate given to their prime customers.
, Federal Funds Rate Correct Ans - Interest rate the Fed charges
member banks for short-term (sometimes over night) loans that don't require
collateral.
Open-Market Operations Correct Ans - Used by Fed to balance
economy. Purchase or sale of government securities by lots.
FHA Correct Ans - Federal Housing Administration
TILA Correct Ans - Truth in Lending Act - Reg Z. Requires lenders to
reveal total cost of loan and APR.
APR Correct Ans - Annual Percentage Rate = Total loan cost.
Right of Rescission Correct Ans - Borrower has 3 days to resend on
loans secured by primary residence (excluding home loans).
US Treasury Correct Ans - The Nation's fiscal manager.
Treasury Bonds, Notes & Bills Correct Ans - US long-term debt
instruments, 30 year, 10 year and short term.
FDIC Correct Ans - Federal Deposit Insurance Corporation - Insures
member accounts up to $250,000.
FHLB Correct Ans - Federal Home Loan Bank - 12 U.S. sponsored
banks offering low-cost funding to banks for home mortgage loan and other
purposes.
HUD Correct Ans - Housing & Urban Affairs - Supervises the FHA,
directs Ginnie Mae, enforces Fair Housing & RESPA
RESPA Correct Ans - Real Estate Settlement Procedures Act - Protects
consumers by providing closing cost
NSP Correct Ans - Neighborhood Stabilization Program - Help stabilize
homes in areas with many foreclosures. Grants provided to states for
purchase.
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