Deck 13: Sources of Financing

Question 1

What is the most significant difference between a mortgage broker and a mortgage banker?

Answer 1

A mortgage banker and a mortgage broker can both help you get a home loan. A mortgage banker works for a bank or similar lending institution which actually provides you the money for the loan. A mortgage broker doesn't represent one institution, but works with many to shop for a loan for a specific individual. The banker is a direct lender. The broker is a "middleman" between you and the lender. The jobs are similar and both are known as "loan officers" with similar functions.

Question 2

In the secondary mortgage market, who provides the loan money?

Answer 2

The "Secondary Market, also called "After Market", is the financial market in which previously issued financial instruments such as stock, bonds, options, futures and now mortgages are bought and sold.
The Secondary Mortgage Market is for selling mortgages to investors. The loans are sold by a mortgage bank to investors such as the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, or through the stock market and sold as mortgage backed securities.

Question 3

What is meant by the term loan servicing?

Answer 3

Loan Servicing is the administration of a loan from the time the proceeds are dispersed at closing until the loan is paid off. The servicing includes providing monthly payment statements to and collecting monthly payments from the borrower, maintaining records of payments and balances for the lender, managing escrow and impound funds, and sending remaining funds to the lender. The Loan Servicer conducts all of the administration of the loan for the lender.

Question 4

By what financing methods do FNMA and GNMA provide money for real estate loans?

Question 5

If a dollar is a dollar no matter where it comes from, what difference does it make if the source of a real estate loan was real savings or fiat money?

Question 6

Why are the secondary market pooling arrangements successful?