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Unformatted text preview: h are deposits in business and personal checking accounts. Rarely are such funds used for long–term mortgage lending, due to the highly volatile nature of such funds–that is, they may be withdrawn on demand by the depositor and therefore cannot be depended on to remain in the account for very long. For this reason they are also referred to as transaction money or transaction accounts. Type of institution – Depository financial intermediary. Time deposits or interest–bearing savings accounts, provide the bank with long–term funds that are invested into a variety of outlets, including real estate financing. Commercial banks may make almost any type of loan on virtually any type of reasonable collateral. Although their primary function is to make short–term business loans, California banks are aggressive players in the home loan market. Organization – Commercial banks are stockholder owned and subject to federal corporate income taxes. They may be chartered under either federal or state laws. Federally chartered or national banks are regulated by the Comptroller of the Currency, must be members of the Federal Reserve System (Fed), and have their deposits insured by the Federal Deposit Insurance Corporation (FDIC). State chartered banks may elect to belong to the Fed, in which case they are regulated by the Fed; or they may be insured and regulated by the FDIC. A few state chartered, non– member banks are regulated under state laws. Banks range in size from under $5 million in assets to over $100 billion. 3-2 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 3: INSTITUTIONAL LENDERS
Types of loans – Commercial banks provide the most significant aid to housing through construction period loan–funds advanced during construction and prior to permanent mortgage financing. Banks routinely account for over 40% of home construction loans, and the majority of apartment project loans. Commercial banks are a primary source for short–term construction financing, when the builder or developer has a “t...
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- Spring '10