Mortgage Markets and Their History
Primary vs. Secondary Market, GO!
Primary Market: Where loans are originated and Funded
Secondary Market: Where loans are purchased as investments
What is the late fee for Conventional Loans?
5% of the Monthly P&I (Principal and Interest Payment)
What is the DTI ratio for VA loans?
41% (Back End ONLY)
What are the two types of Refinances?
Cash Out Refinances
Streamline Refinancing
A Qualified Mortgage creates a _________ ___ _________ that the lender has complied with the ATR standards (AKA a Safe Harbor)
Presumption of compliance
Why was the Federal Housing Administration created?
To foster homeownership opportunities by allowing down payments for home purchases
What is the minimum down payment for a First Time Homebuyer?
3% Minimum Down Payment
What is the alternative name to the VA Appraisal?
Certificate of Reasonable Value
What are the three types of reverse mortgages?
Single Purpose
Home Equity Conversion Mortgage (HECM)
Proprietary
!DAILY DOUBLE!
Name Heather's three favorite things
Being an over-achiever
Calling Zoltan Voltan
Kenny Chesney
What is a Mortgage-Back Security (MBS)?
Interest in a pool of loans with similar credit risks and loan terms and other comparable
Conforming Conventional Loans meet loan limits set by Fannie and Freddie and has lower interest rates and costs
Conforming Conventional Loans DO NOT meet loan limits set by Fannie and Freddie (Jumbo, Alt-A, etc.)
What's the difference between the Two types of USDA Loans?
RHS Direct Loans – Loans funded directly by the US Government
RHS Guaranteed Loans – Funded by private lenders but guaranteed by the RHS in case of the event of foreclosure / default
What are the four requirements of a reverse mortgage?
Only available to a borrower who is 62 years or older
Must have low/no mortgage on their home
Must be the principle residence
Must live in home
Prepayment Penalties Only apply to Fixed Rate Qualified Mortgage (QM) loans and limited to ___ for the first 2 years and _____ if the prepayment is made within the third year after the consummation of the loan...
2% of the outstanding loan balance
1% of the outstanding loan balance
What are the main purposes of Fannie Mae's creation pertaining to the U.S housing market?
Provided liquidity (money), stability and affordability to the U.S. housing and mortgage markets
What are the Seller Concessions for Conventional Loans (Yes, all of them)?
3% for less than 10% down payment
6% for 10% - 24.9% down payment
9% for 25% or more down payment
Down Payment Requirements for FHA Loans?
> 580 credit score = 3.5% Down
500 – 580 credit score = 10% Down
< 500 credit score = Not eligible for FHA
What are the two main types of ARMs and how do they work?
Hybrid ARMS: Fixed for a certain time and then rate changes periodically (3/1, 5/1, etc.)
Option ARMS: Offers flexible payment options (Interest-Only ARMs, Payment-Option ARMs)
Qualified Mortgage Requirements?
43% Max DTI
3% Points and Fees
30 Year Term
NO Balloon Payment
NO Interest Only
NO Negative Amortization
How does Ginnie Mae work, relating to Fannie and Freddie?
Ginnie Mae guarantees securities backed by the VHA, VA and RHS that Fannie and Freddie sell on the Secondary Market
How does a Loan Level Price Adjustments (LLPA’s) work?
The lender may offset the risk of a non-conforming lender by “marking up” the interest rate with a to meet GSE (Fannie / Freddie) guidelines
What are all of the funding fees for VA Purchases?
2.30% for first time users NOT making a down payment
3.6% for subsequent users making no down payment
1.65% for first time users of entitlement who make a down payment between 5% – 10%
1.40% for subsequent users making a down payment of 10% or greater
What are the four main indices used to provide an index for ARMs?
Constant Maturity Treasury Rate (CMT) OR US Treasury Bills
LIBOR = London Inter Bank Offered Rates
COFI = Cost of Funds Index
Federal Home Loan Bank of San Francisco
COSI = Cost of Savings Index
Ability To Repay (ATR) is applicable of all loans except (there's six of them)...
Open End HELOCS
Home Equity Line of Credit (HELOC)
Reverse mortgages
Bridge loans with terms of 12 months
Construction loans
Loans made by a finance agency