ch[1]. 12(1) - Chapter 12 The Mortgage Markets Chapter...

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Chapter 12 The Mortgage Markets
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Chapter Preview We identify characteristics of typical residential mortgages and the usual term and types of mortgages available. We then review who provides and services the loans, along with the growth in the secondary mortgage market. Topics include: What Are Mortgages? Characteristics of Residential Mortgages Types of Mortgage Loans Mortgage-Lending Institutions
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What Are Mortgages? A long-term loan secured by real estate An amortized loan whereby a fixed payment pays both principal and interest each month
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What Are Mortgages? The next slide shows the total amount of mortgage debt outstanding in the U.S. during 2004. It further delineates by type of property. The table shows roughly $9.4 trillion outstanding. How does this compare to the value of all the stock on the NYSE?
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What Are Mortgages? Mortgage Loan Borrowers
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What Are Mortgages? History Mortgages were used in the 1880s, but massive defaults in the agricultural recession of 1890 made long-term mortgages difficult to attain. Until post-WWII, most mortgage loans were short-term balloon loans with maturities of five years or less.
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What Are Mortgages? History Balloon loans, however, caused problems during the depression. Typically, the lender renews the loan. But, with so many Americans out of work, lenders could not continue to extend credit. As a part of the depression recovery program, the federal government assisted in creating the standard 30-year mortgage we know today.
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Characteristics of the Residential Mortgage Mortgages can be roughly classified along the following three dimensions: Mortgage Interest Rates Loan Terms Mortgage Loan Amortization
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http://interest.com/calculators/index.shtml Characteristics of the Residential Mortgage: Mortgage Interest Rates The stated rate on a mortgage loan is determined by three rates: Market Rates: general rates on Treasury bonds
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ch[1]. 12(1) - Chapter 12 The Mortgage Markets Chapter...

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