Section 6

Question 1

What is Adjustable - rate mortgage (ARM)?

Answer 1

A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost of funds index.

Question 2

Amortized loan

Answer 2

A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

Question 3

Balloon payment

Answer 3

A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Question 4

Blanket loan

Answer 4

A mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien on repayment of a definite portion of the debt.

Question 5

Primary Mortgage Market

Answer 5

The lenders that originate Mortgage Loans

Question 6

identify the types of institutions in the primary mortgage market

Answer 6

• Thrifts, savings associations, and commercial banks
• insurance companies
• Credit unions
• Pension funds
• Endowment funds
• Investment groups financing
• mortgage banking companies
• mortgage brokers

Question 7

Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act)

Answer 7

Requires that each individual state must license and register mortgage loan originators (MLOs)

Question 8

Mortgage loan originator (MLO)

Answer 8

Anyone who, for compensation or expectation of compensation takes a residential mortgage loan by phone or in person

Question 9

Secondary mortgage market

Answer 9

Various agencies that purchase existing mortgages from banks and savings associations and assemble those mortgages into packages called blocks or pools