1. © 2010 by Cengage Learning Sources of Financing Chapter 13 ________________ Sources of Financing

2. © 2010 by Cengage Learning  Primary Market – where lenders originate loans.  Secondary Market – provides a way for lenders to sell a loan.

3. © 2010 by Cengage Learning  Savings and Loan Associations  Commercial Banks  Life Insurance Companies  Mortgage Companies  Mortgage Brokers  Municipal Bonds  Computerized Loan Origination (CLO)

4. © 2010 by Cengage Learning  FNMA  GNMA  FHLMC  Farmer Mac

5. © 2010 by Cengage Learning Mortgage Lenders Borrowers Financial Intermediaries Mortgage Investors Primary Market Secondary Market The Secondary Mortgage Market

6. © 2010 by Cengage Learning Mortgage Loan Delivery Systems

7. © 2010 by Cengage Learning  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.

8. © 2010 by Cengage Learning  Due-on-Sale – call clause.  Prepayment - penalty for the right to repay a loan early.

9. © 2010 by Cengage Learning Alienation clause Automated underwriting system Computerized loan origination Disintermediation Fannie Mac Freddie Mac Mortgage broker Mortgage company Participation certificates Primary market Secondary market Usury Key Terms