Ch. 3 Real Estate Financing Principles:
Real Estate Finance 1
Primary mortgage market - Correct Answers ✅made up of
lenders who originate loans. They make the money available
directly to borrowers.
Savings associations - Correct Answers ✅financial
institution whose primary function is to promote thrift and
home ownership. Often offer their depositors a higher rate of
interest on their deposits than commercial banks offer.
Invests at least part of their deposits in residential mortgage
loans.
State-chartered savings institutions are licensed by the State
of Texas and are regulated by the - Correct Answers
✅Department of Savings and Mortgage Lending (SML).
Savings institutions are chartered, regulated, examined and
supervised by the - Correct Answers ✅Office of Thrift
Supervision (OTS).
Office of Thrift Supervision (OTS) - Correct Answers
✅enforces regulations to ensure that both federal and state-
chartered thrift institutions operate in a safe and sound
manner.
Commercial bank - Correct Answers ✅financial institution
that is designed to act as a depository for funds and as a
lender for commercial activities- usually short-term loans.
,Ch. 3 Real Estate Financing Principles:
Real Estate Finance 1
Commercial banks primarily do short term loans, such as: -
Correct Answers ✅Construction loans - Usually last from
three to twelve months.
Home improvement loans - Can extend up to five years.
Manufactured housing loans - Usually run ten years, or
sometimes longer, depending on how permanently the home
is attached to the property.
Credit Unions - Correct Answers ✅nonprofit financial
institutions into which members place their money, usually
through direct deposit. Pay no income tax, so they can pay
higher interest rates on deposits than other savings
institutions. Also offer a wide variety of loans at far lower
interest rates than their competitors.
Insurance Companies - Correct Answers ✅major source of
credit for shopping centers, office buildings, hotels and
motels, industrial buildings and large apartment complexes.
Typically invest up to a third of their assets in real estate
loans.
Real Estate Investment Trust (REIT) 1960 - Correct Answers
✅formed by federal tax law to influence small investors to
combine their resources w/ others to raise venture capital for
real estate transactions. Exempt from corporate tax if they
invest at least 75 percent of their assets in real estate and
, Ch. 3 Real Estate Financing Principles:
Real Estate Finance 1
distribute 95 percent or more of their annual real estate
income to their investors.
REITs prefer to target their lending activities towards -
Correct Answers ✅land development projects and
permanent financing for condominiums, high rises,
warehouses, office complexes, single-family subdivisions and
other major projects.
Mortgage Bankers - Correct Answers ✅can represent life
insurance companies, real estate investment or mortgage
trusts and, in some cases, other banks.
Mortgage broker - Correct Answers ✅usually retained by a
borrower to help obtain financing for a specific commercial
property.
Loans originated in the primary mortgage market can be
bought, sold, or traded in the - Correct Answers
✅secondary mortgage market.
The major participants in the secondary mortgage market
include: - Correct Answers ✅Federal National Mortgage
Association (FNMA or Fannie Mae)
Government National Mortgage Association (GNMA or Ginnie
Mae)
Real Estate Finance 1
Primary mortgage market - Correct Answers ✅made up of
lenders who originate loans. They make the money available
directly to borrowers.
Savings associations - Correct Answers ✅financial
institution whose primary function is to promote thrift and
home ownership. Often offer their depositors a higher rate of
interest on their deposits than commercial banks offer.
Invests at least part of their deposits in residential mortgage
loans.
State-chartered savings institutions are licensed by the State
of Texas and are regulated by the - Correct Answers
✅Department of Savings and Mortgage Lending (SML).
Savings institutions are chartered, regulated, examined and
supervised by the - Correct Answers ✅Office of Thrift
Supervision (OTS).
Office of Thrift Supervision (OTS) - Correct Answers
✅enforces regulations to ensure that both federal and state-
chartered thrift institutions operate in a safe and sound
manner.
Commercial bank - Correct Answers ✅financial institution
that is designed to act as a depository for funds and as a
lender for commercial activities- usually short-term loans.
,Ch. 3 Real Estate Financing Principles:
Real Estate Finance 1
Commercial banks primarily do short term loans, such as: -
Correct Answers ✅Construction loans - Usually last from
three to twelve months.
Home improvement loans - Can extend up to five years.
Manufactured housing loans - Usually run ten years, or
sometimes longer, depending on how permanently the home
is attached to the property.
Credit Unions - Correct Answers ✅nonprofit financial
institutions into which members place their money, usually
through direct deposit. Pay no income tax, so they can pay
higher interest rates on deposits than other savings
institutions. Also offer a wide variety of loans at far lower
interest rates than their competitors.
Insurance Companies - Correct Answers ✅major source of
credit for shopping centers, office buildings, hotels and
motels, industrial buildings and large apartment complexes.
Typically invest up to a third of their assets in real estate
loans.
Real Estate Investment Trust (REIT) 1960 - Correct Answers
✅formed by federal tax law to influence small investors to
combine their resources w/ others to raise venture capital for
real estate transactions. Exempt from corporate tax if they
invest at least 75 percent of their assets in real estate and
, Ch. 3 Real Estate Financing Principles:
Real Estate Finance 1
distribute 95 percent or more of their annual real estate
income to their investors.
REITs prefer to target their lending activities towards -
Correct Answers ✅land development projects and
permanent financing for condominiums, high rises,
warehouses, office complexes, single-family subdivisions and
other major projects.
Mortgage Bankers - Correct Answers ✅can represent life
insurance companies, real estate investment or mortgage
trusts and, in some cases, other banks.
Mortgage broker - Correct Answers ✅usually retained by a
borrower to help obtain financing for a specific commercial
property.
Loans originated in the primary mortgage market can be
bought, sold, or traded in the - Correct Answers
✅secondary mortgage market.
The major participants in the secondary mortgage market
include: - Correct Answers ✅Federal National Mortgage
Association (FNMA or Fannie Mae)
Government National Mortgage Association (GNMA or Ginnie
Mae)
