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Unformatted text preview: . MORTGAGE REVENUE BONDS
The State of California and local governments have the authority to issue bonds. Interest paid on the bonds is tax exempt to the investors. Bonds sold by state and local governments are used to finance mortgages are called mortgage revenue bonds. Because the bonds are tax exempt, the interest rate is less than on a standard bond, and as a result, mortgage loans can be made at rates that are below market rate. The government agencies do not guarantee the bonds. The bonds are backed by the mortgages created by the bond funds. The issuer of the bond merely acts as a conduit; local lenders process, close, and then service the loans for the government. These Dynasty School (www.dynastySchool.com) 7-13 REAL ESTATE FINANCE
bond issues generally work the same way as other mortgage–backed securities, but the paperwork is much more complex. CHAPTER QUIZ
1. A loan which is paid in full by equal periodic payments over the loan term is called: A. B. C D. 2. Amortized Straight Balloon payment Negative The entire principal is due in a lump sum at the end of the term of a(n): A B C D. Amortized loan Straight note Interest–only loan Both B and C 3. A loan with a balloon payment is most likely to be: A B C. D. Fully amortized Partially amortized Straight Both (A) and B 4. The nominal rate of interest is: A B C D Stated in a promissory note to the lender 10% in California because the rate is set by law Interest that is compounded daily Also known as the legal rate as set by California law 7-14 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 7: LOAN PAYMENTS & SECONDARY MARKETS
5. All of the following participate in a national secondary market for real estate mortgages, except A. FDIC B. FHLMC. C. GNMA. D. FNMA. The formula for interest calculations is: A B. C D. 7. I=PxRxT R=I/PXT T=I/PXR All of the above 6. The objectives and mechanics of the secondary mortgage market are many and varied, including A. B. C....
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- Spring '10