Transcript Chapter 13 Sources of Financing
Sources of Financing
Financing • Primary Market – where lenders originate loans.
• Secondary Market – provides a way for lenders to sell a loan.
Primary Loan Sources • Savings and Loan Associations • Commercial Banks • Life Insurance Companies • Mortgage Companies • Mortgage Brokers • Computerized Loan Origination (CLO) • Municipal Bonds
Secondary Loan Sources • FNMA • GNMA • FHLMC • Farmer Mac
The Secondary Mortgage Market
Primary Market Mortgage Lenders Secondary Market Financial Intermediaries Borrowers Mortgage Investors
Mortgage Loan Delivery Systems
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.
Other Financing Conditions • Due-on-Sale – call clause.
• Prepayment - penalty for the right to repay a loan early.