Exam (elaborations)
RIBO Practice Test 5a Auto (1).
RIBO Practice Test 5a Auto (1).
[Show more]
Seller
Follow
Content preview
MBA Mortgage Banking PrimerMortgage banking risk - ANS-why a secondary market is necessary, investors can sell
mortgages to offload risk
Loan production - ANS-originates the loan in the primary market: take loan app, process
documentation, underwrite file, prepare closing package, wire funds
4 functional areas - ANS-loan production, funding/warehousing/shipping, secondary
marketing, loan administration
funding/warehousing/shipping - ANS-Funds loan usually using a warehouse line of
credit, shipping performs QC check on loan and sends loan file to investor buying it
Secondary Marketing - ANS-where company interest rates are determined, manages
market risks, negotiates with investors
Loan Administration - ANS-servicing, managing admin duties until loan is paid,
answering questions of borrowers, managing escrows, payoffs, foreclosures
Investors - ANS-Fannie Mae, Freddie Mac, Federal Home Loan Bank, buy loans and
securitize them for sale on Wall Street as MBS
Main Street - ANS-Primary market
Fundamental risk to lender - ANS-borrower does not repay/default
First step lender takes to minimize default risk - ANS-taking security in property
Early 20th century mortgage industry characteristics - ANS-Lending was done by local
banks and savings and loan associations or by building loan associations
Mortgage servicing started because capital-rich east didn't want to deal directly with
Western borrowers
Typical loan term was 3-7yrs with balloon payment at end
Federal Housing Administration - ANS-Was created by Congress in 1934 and reduced
investment risk for lenders, housing starts rapidly increased
,What revolutionized mortgage industry? - ANS-FHA and 30 year mortgage term,
contributed to growth of home ownership
Why was FNMA created? - ANS-to bolster secondary market
When was first MBS issued - ANS-1968 by Ginne Mae, provided enhanced liquidity
Disintermediation - ANS-withdrawal of funds from a financial institution in order to invest
them directly
When did subprime lending start? - ANS-late 1990s
Financial disaster of 2008 - ANS-subprime mortgages defaulting and investor
withdrawal from the secondary market caused capital for mortgage lending to dissapear
Why was CFPB created? - ANS-to protect consumers and create transparency in
process, stricter lending made it hard for people with worst credit to get loans
Loan Production components - ANS-origination, processing, underwriting, closing
(origination and manufacturing of mortgage loans)
Funding - ANS-simple act of funding mortgage loan to borrower
Warehouse line - ANS-credit facility that utilizes the mortgage loan as collateral so
mortgage bankers can fund loan with line of credit rather than cash
Shipping - ANS-delivering mortgage loan to investor for purchase
Delivery - ANS-when full loan file is received by investor purchasing loan
Loan Administration components - ANS-loan servicing, servicing loan until it pays off,
collecting payments, managing escrow accounts, answering borrower questions
Federal Laws characteristics - ANS--honest timely concise info ab loan costs
-fair treatment of all consumers and protect their info
-regulate debt collection practices
State laws control - ANS--recordation of mortgage lien interests
-licensing of mortgage bankers
-enforcement of PPP
, -eviction process
Loan/municipal laws - ANS--register vacant properties, report vacancies
-protect abandoned homes
-clear code violations
Loan production regulations - ANS--protect and inform applicants during financing
process
-prohibit discrimination
-inform borrowers of terms and conditions of credit arrangement
Loan administration regulations - ANS--prohibit abusive actions in collection of
mortgage pmts
-provide statutory requirements for completing foreclosures
-properly administer escrow accounts
Secondary market regulations - ANS--make mtg credit available for low-moderate
income families
-ensure federally sponsored or regulated financial and housing institutions are
capitalized and operate in financially safe manner
-prohibit discriminatory practices in extension of credit
Regulatory agencies - ANS-US Dept of Treasury, Federal Reserve Board, SEC, HUD,
FTC, CFPB, NCUA
Dodd Frank Act of 2010 - ANS-provided many changes to industry, most notably the
CFPB-to make consumer financial products and services work for Americans through
safeguards, education, or regulation
RESPA - ANS-passed in 1978 and originally enforced by HUD, now CFPB
Provides clarity to borrower regarding settlement costs
TILA - ANS-originally enforced by Fed Reserve Board and now CFPB- provide
transparency in cost of credit and terms of loan
Loan estimate replaced - ANS-GFE and TIL (within 3 days of loan app)
Closing Disclosure replaced - ANS-HUD1 and final TIL
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller modockochieng06. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £6.40. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79650 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now