Chapter 13 Sources of Financing

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Chapter 13Sources of Financing

• ____________________________

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Financing

• Primary Market where lenders originate loans.
• Secondary Market provides a way for lenders to
  sell a loan.

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Primary Loan Sources

• Savings and Loan Associations
• Commercial Banks
• Life Insurance Companies
• Mortgage Companies
• Mortgage Brokers
• Computerized Loan Origination (CLO)
• Municipal Bonds

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Secondary Loan Sources

• FNMA
• GNMA
• FHLMC
• Farmer Mac

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The Secondary Mortgage Market
Primary Market
Secondary Market
Mortgage Investors
Borrowers
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Mortgage Loan Delivery Systems
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Usury

• 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.

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Other Financing Conditions

• Due-on-Sale call clause.
• Prepayment - penalty for the right to repay a
  loan early.