thomson/south-western©2008 chapter 12 sources of financing _______________________________________
TRANSCRIPT
Thomson/South-Western©2008
Chapter 12
Sources of Financing
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Thomson/South-Western©2008
Financing
• Primary Market – where lenders originate loans.
• Secondary Market – provides a way for lenders to sell a loan.
Thomson/South-Western©2008
Primary Loan Sources
• Savings and loan Associations• Commercial Banks• Life Insurance Companies• Mortgage Companies• Mortgage Brokers• Computerized Loan Origination• Municipal Bonds• Other Lenders
Thomson/South-Western©2008
Texas Loan Programs
• Texas Veterans Land Fund• Veterans’ Housing Assistance Program (VHAP)
• Texas Department of Housing and Community Affairs
• Housing Finance Corporation
• Fannie Mae Realtor® Programs
• Texas State Affordable Housing Corporation
Thomson/South-Western©2008
Secondary MarketPrimary Market
Mortgage Lenders
Borrowers
FinancialIntermediaries
MortgageInvestors
The Secondary Mortgage Market
Thomson/South-Western©2008
Mortgage Loan Delivery Systems
Thomson/South-Western©2008
Secondary Loan Sources
• FNMA - Fannie Mae
• GNMA - Ginnie Mae
• FHLMC - Freddie Mac
• FAMC - Farmer Mac
Thomson/South-Western©2008
Automated Underwriting Systems
• The computer age has introduced a whole new system in underwriting procedures as they apply to the relationship between the loan originator and the investor.
Thomson/South-Western©2008
Usury
• State legislation that imposes an interest rate ceiling on loans.
• U.S. Congress passed legislation that exempts from state usury limits most first lien home loans made by institutional lenders.
Thomson/South-Western©2008
Price to the Borrower
• The rate of interest the borrower must pay to obtain a loan is dependent on the cost of money to the lender,
Thomson/South-Western©2008
Other Financing Conditions
• Due-on-Sale – call clause.
• Prepayment- penalty for the right to repay a loan early.
Thomson/South-Western©2008
Key Terms• Alienation clause• Automated underwriting
system• Computerized loan
origination• Disintermediation• Fannie Mac• Federal National
Mortgage Association
• Freddie Mac• Mortgage broker• Mortgage company• Participation certificates• Primary market• Secondary mortgage
market• Usury