(Ginnie Mae) Governmental National Mortgage Association
~ Federal Agency a division of HUD. Deals primarily with financing subsidized
housing for low income citizens, and high risk loans that are not marketable to other
agencies.
Freddie Mac
~ an independent agency that favors conventional...
✓~ Controls all nationally-chartered banks in the country as well as all of the state
chartered banks that choose to protect their depositor's funds through the FDIC. Can
raise or lower discount rate. Can raise or lower reserve requirements. Can buy or sell
U.S. treasury securities.
Discount Rates
✓~ Indicates the cost of credit for member banks.
Increased rates result in
Less credit extended, Interest rates increase and Economy slows
Decreased rates result in
More credit extended, Interest rates decrease and Economy stimulated
Federal Reserve Requirements
, ✓~ Increased requirements result in
Less credit extended, Interest rates increase & Economy slows
Decreased requirements result in
More credit available, Interest rates decrease & Economy stimulated
U.S. Treasury Securities
✓~ Buying treasury securities
Adds money to the economy = Rates decrease = Economy stimulated
Selling treasury securities
Subtracts money from the economy = Rates decrease = Inflationary trends slow
Annual Percentage Rate (APR)
✓~ The relative cost of credit to the borrower expressed as a percentage of
interest. Numbers shown in advertising are usually higher than the stated interest
rate.
pledged
, ✓~ the basis for the mortgage lending business is the real property that is
collateral security for a loan.
Equitable Right of Redemption
✓~ Permits a borrower to reclaim property even after seizure at any time prior to
foreclosure by paying the debt.
hypothecation
✓~ the borrower is allowed to retain possession and control of the property when
the loan is made.
equitable title
✓~ a right enabling the borrower to obtain absolute ownership in the future.
satisfaction
✓~ when a loan has been repaid, the lean is removed by recording a satisfaction.
jointly and severally liable
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