South-Western Publishing©2002 By Charles J. Jacobus Real Estate Principles Ninth Edition Real Estate: An Introduction to the Profession Ninth Edition South-Western Publishing©2002

Chapter 13 Sources of Financing _______________________________________

South-Western Publishing©2002 Financing Primary Market – where lenders originate loans. Secondary Market – provides a way for lenders to sell a loan.

South-Western Publishing©2002 Primary Loan Sources Savings and loan Associations Commercial Banks Life Insurance Companies Mortgage Companies Mortgage Brokers Municipal Bonds

South-Western Publishing©2002 Secondary Loan Sources FNMA GNMA FHLMC Farmer Mac

South-Western Publishing©2002 The Secondary Mortgage Market Secondary MarketPrimary Market Mortgage Lenders Borrowers Financial Intermediaries Mortgage Investors

South-Western Publishing©2002 Mortgage Loan Delivery Systems

South-Western Publishing©2002 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.

South-Western Publishing©2002 Other Financing Conditions Due-on-Sale – call clause. Prepayment- penalty for the right to repay a loan early.

South-Western Publishing©2002 Key Terms Alienation clause Automated underwriting system Computerized loan origination Disintermediation Fannie Mac Mortgage broker Mortgage company Participation certificates Primary market Secondary market Usury