Podcast
Questions and Answers
A home buyer, loan originator, mortgage lender, and loan servicer are all part of the residential mortgage process.
A home buyer, loan originator, mortgage lender, and loan servicer are all part of the residential mortgage process.
True
The loan originator, lender, and servicer are always part of the same company.
The loan originator, lender, and servicer are always part of the same company.
False
The mortgage lender always services the loan.
The mortgage lender always services the loan.
False
Retail lenders are a type of loan originator.
Retail lenders are a type of loan originator.
Signup and view all the answers
The mortgage industry has not experienced any major crises in its history.
The mortgage industry has not experienced any major crises in its history.
Signup and view all the answers
Which of the following best describes the role of a loan originator in the mortgage process?
Which of the following best describes the role of a loan originator in the mortgage process?
Signup and view all the answers
What is a key difference between a mortgage lender and a loan servicer?
What is a key difference between a mortgage lender and a loan servicer?
Signup and view all the answers
Which entity is responsible for providing the actual financial capital for a mortgage loan?
Which entity is responsible for providing the actual financial capital for a mortgage loan?
Signup and view all the answers
What distinguishes a 'retail lender' within the mortgage industry?
What distinguishes a 'retail lender' within the mortgage industry?
Signup and view all the answers
What is the primary role of an intermediary who brings together lenders and borrowers for a commission?
What is the primary role of an intermediary who brings together lenders and borrowers for a commission?
Signup and view all the answers
A non-profit organization that provides banking services for a labor union is known as a:
A non-profit organization that provides banking services for a labor union is known as a:
Signup and view all the answers
Which legislation was enacted in response to the S&L crisis, imposing new rules on savings and loan associations?
Which legislation was enacted in response to the S&L crisis, imposing new rules on savings and loan associations?
Signup and view all the answers
What term is used to describe a period when housing prices increase to unsustainable levels?
What term is used to describe a period when housing prices increase to unsustainable levels?
Signup and view all the answers
What is a key characteristic of a subprime loan?
What is a key characteristic of a subprime loan?
Signup and view all the answers
What term is often used to collectively describe savings and loan institutions?
What term is often used to collectively describe savings and loan institutions?
Signup and view all the answers
Which of the following best describes a loan originator's role in the mortgage process?
Which of the following best describes a loan originator's role in the mortgage process?
Signup and view all the answers
What happens after a mortgage lender approves and funds a loan?
What happens after a mortgage lender approves and funds a loan?
Signup and view all the answers
Which event led to the passage of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)?
Which event led to the passage of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)?
Signup and view all the answers
What was the primary goal of the Troubled Asset Relief Program (TARP)?
What was the primary goal of the Troubled Asset Relief Program (TARP)?
Signup and view all the answers
In 2008, what action did the government take regarding Fannie Mae and Freddie Mac?
In 2008, what action did the government take regarding Fannie Mae and Freddie Mac?
Signup and view all the answers
Study Notes
Learning Objectives
- Students should be able to explain the basic mortgage process
- Students should be able to distinguish between different types of loan originators and how they help borrowers
- Students should be able to describe government regulations affecting loan originators
- Students should be able to list the different types of mortgage lenders and how their businesses have changed over time
- Students should be able to discuss important historical events in the mortgage industry including the Depression and the Savings and Loan crisis, and how the government responded
- Students should be able to summarize the factors leading up to the mortgage and financial crisis and the impact it may have on the mortgage industry
Suggested Lesson Plan
- Students should be given Exercise 4.1 to review the previous chapter
- The instructor should provide a brief overview of Chapter 4, and review the learning objectives for the chapter
Present Lesson Content
- Description of the Mortgage Industry
- Basic steps in the mortgage process
- Loan origination
- Types of loan originators
- Government regulation
- Mortgage Lenders
- Depository institutions
- Mortgage companies
- Alternative sources of funding
- Government Intervention in Mortgage Lending
- The Depression
- Savings and loan crisis
- The Mortgage and financial crisis
Chapter 4 Outline: The Mortgage Industry
- Basic Steps in Mortgage Process
- The process involves a home buyer, loan originator, mortgage lender, and loan servicer
- The entities may not all be part of the same company
- Often, someone other than the lender services the loan
- Loan Origination
- Retail lenders
- Deal directly with borrowers, who deal with loan officers or loan originators
- Wholesale lenders
- Use intermediaries, such as brokers or correspondents
- Retail lenders
Types of Mortgage Lenders
- Banks
- Savings banks
- Credit unions
- Mortgage companies
Government Intervention in Mortgage Lending
- The Depression
- The government created the Federal Housing Administration to help stabilize the mortgage industry
- The FHA provided insurance that protected lenders against defaulting borrowers and made it easier for them to provide long-term loans
- The Savings and Loan Crisis
- Deregulation of the 1980s allowed S&Ls to make riskier investments
- Many S&Ls failed and needed a large government bailout in the 1980s
- The government created new regulations to help stabilize the industry
The Mortgage and Financial Crisis
- Factors contributing to the crisis
- Growth of the subprime market
- Relaxation of underwriting standards
- Looser rules and lax oversight
- Foreclosure crisis
- Home values declined
- Many homeowners had mortgages greater than the value of their property
Government Response to the Mortgage and Financial Crisis
- Government actions to address the crises
- Housing and Economic Recovery Act
- Takeover of Fannie Mae and Freddie Mac
- Troubled Asset Relief Program
- 2010 Dodd-Frank Act
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz covers the basic mortgage process, types of loan originators, and government regulations affecting them. Additionally, it discusses historical events such as the Savings and Loan crisis and the factors leading up to the financial crisis, providing a comprehensive understanding of the mortgage industry.
