Exam 22: Mortgage Market and Mortgage Instruments

FNMA has significantly improved the resale potential of most home mortgage loans.

The Federal National Mortgage Association is presently authorized to trade only in VA and FHA-guaranteed mortgages.

Conventional home mortgages are guaranteed by the government.

The Federal Home Loan Bank System was created to supervise the activities of savings and loan associations.

The average contract interest rate on conventional mortgage loans dipped to about 6 percent as the twentieth century drew to a close. By late in the year 2001 home mortgage interest rates had dropped further to the lowest levels experienced since the 1960s.

This mortgage loan is of much shorter term than a conventional fixed-rate mortgage and usually requires the borrower to renegotiate and refinance the loan on the due date. This instrument is the:

The purchase price of a conventional single family residence in the U.S. has more than quadrupled over the past two decades.

The financial institution that historically has preferred to make single-family home mortgage loans, but recently with the passage of deregulation is now devoting a larger share of its portfolio to new kinds of assets (such as mobile home loans, consumer installment loans and commercial credit) is the:

The various maturity classes into which CMOs are often divided are known as:

Savings and loan associations rarely service the mortgage loans they make.

During the 1980s FNMA began to issue and guarantee securities backed by conventional mortgage loans.

The mortgage market is the largest primary security market in the U.S.

Congress created the Mortgage Guarantee Insurance Corporation (MGIC) in 1978.

Variable-rate mortgages are ____ for the borrower and so they carry a ____ initial interest rate than do fixed-rate mortgages.

Government agencies today dominate the mortgage market for low and moderately priced loans.

Today the majority of Fannie Mae's mortgage-related assets are actually:

The creation of this organization reflected a desire by the federal government to develop a stronger secondary market for conventional home mortgages. This organization's name is the:

"Creative financing" techniques includes such practices and financial instruments as second mortgages, home-leasing plans, land leasing and property exchanges, according to your text.

Using the the description or the definition below, identify each of the key terms and concepts presented in this chapter a. Credit funds extended to a home buyer by a private lender without a government guarantee of the home loan. b. Loans secured by single family homes and other dwellings. c. Loans secured by real property that is part of businesses and farms. d. Guaranteed mortgage loans for the purchase of low-priced and medium-priced homes. e.A federal agency, now privately owned, that was originally set up during the 1930s to develop a resale market for home mortgage loans and thereby provide lenders with an additional source of mortgage funding.

The total of all mortgages outstanding in the U.S. in 2009 was more than $14 trillion.