Real Estate Financing Practice

Overview of the Real Estate Financing Market Federal Reserve System reserve requirements discount rates Primary mortgage market Secondary mortgage market FNMA – Fannie Mae GNMA – Ginnie Mae FHLMC – Freddie Mac Federal Reserve System reserve requirements discount rates Primary mortgage market Secondary mortgage market FNMA – Fannie Mae GNMA – Ginnie Mae FHLMC – Freddie Mac

Financing Techniques Straight loan (term loan) – interest only and then principal in full at the end of the term Balloon payment loan – partially amortized and then has a balloon Amortized loans (normal type of loan) Straight loan (term loan) – interest only and then principal in full at the end of the term Balloon payment loan – partially amortized and then has a balloon Amortized loans (normal type of loan)

ARM index margin rate cap and payment cap adjustment period conversion option Growing equity mortgage (GEM) Reverse annuity mortgage (RAM) – more commonly called a reverse mortgage ARM index margin rate cap and payment cap adjustment period conversion option Growing equity mortgage (GEM) Reverse annuity mortgage (RAM) – more commonly called a reverse mortgage

Loan Programs Conventional loans (versus non- conventional) See book for underwriting guidelines Private mortgage insurance (PMI) FHA Loans (Insured) up-front FHA insurance premium FHA housing quality standards must be appraised by FHA approved appraiser Conventional loans (versus non- conventional) See book for underwriting guidelines Private mortgage insurance (PMI) FHA Loans (Insured) up-front FHA insurance premium FHA housing quality standards must be appraised by FHA approved appraiser

VA Loans (Guaranteed) see book for details certificate of eligibility is crucial VA Loans (Guaranteed) see book for details certificate of eligibility is crucial

Other Financing Techniques Purchase-money mortgage Package loan – includes personal property Blanket loan – includes multiple parcels Wraparound loan Open-end loan Construction loan Sale-and-leaseback Buydown Home equity loan Purchase-money mortgage Package loan – includes personal property Blanket loan – includes multiple parcels Wraparound loan Open-end loan Construction loan Sale-and-leaseback Buydown Home equity loan

Financing Legislation Truth-in-Lending Act and Regulation Z see book for details Equal Credit Opportunity Act see book for details Community Reinvestment Act see book for details Real Estate Settlement Procedures Act (RESPA) Truth-in-Lending Act and Regulation Z see book for details Equal Credit Opportunity Act see book for details Community Reinvestment Act see book for details Real Estate Settlement Procedures Act (RESPA)

Computerized Loan Origination and Automated Underwriting Here’s how it works.....