Transcript Document
Real Estate Principles Ninth Edition Real Estate: An Introduction to the Profession Ninth Edition By Charles J. Jacobus South-Western Publishing©2002 South-Western Publishing©2002 Chapter 13 _______________________________________ Sources of Financing South-Western Publishing©2002 Financing • Primary Market – where lenders originate loans. • Secondary Market – provides a way for lenders to sell a loan. South-Western Publishing©2002 Primary Loan Sources • • • • • • Savings and loan Associations Commercial Banks Life Insurance Companies Mortgage Companies Mortgage Brokers Municipal Bonds South-Western Publishing©2002 Secondary Loan Sources • • • • FNMA GNMA FHLMC Farmer Mac South-Western Publishing©2002 The Secondary Mortgage Market Primary Market Secondary Market Mortgage Lenders Financial Intermediaries Borrowers Mortgage Investors South-Western Publishing©2002 Mortgage Loan Delivery Systems South-Western Publishing©2002 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. South-Western Publishing©2002 Other Financing Conditions • Due-on-Sale – call clause. • Prepayment- penalty for the right to repay a loan early. South-Western Publishing©2002 Key Terms • Alienation clause • Automated underwriting system • Computerized loan origination • Disintermediation • Fannie Mac • • • • • • Mortgage broker Mortgage company Participation certificates Primary market Secondary market Usury South-Western Publishing©2002