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5-8 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 5: GOVERNMENT PARTICIPATION & BACKED LOANS
As fiscal agent for the federal government, the Treasury assisted in funding the origination of secondary market entities, such as Federal National Mortgage Association (1938) and Government National Mortgage Association. The resale market established by these agencies has provided the principal source of permanent loan funds for residential real estate. Ostensibly, the Federal Reserve and the Treasury reached an accord in 1951 and pledged to coordinate their activities to create some degree of economic stability. Real estate lenders who, in the late 1970s and 1980s, saw permanent loan rates reach the 17% to 19% level and the national prime rate (now gradually being replaced by the generic base rate) attain a whopping 21% level, obviously feel that the two agencies merely give lip service to the accord. A basic understanding of the forces at work affecting the supply of money and credit is important to the understanding of how the mortgage money market works. National and local factors in the lending area must be considered when making the underwriting (business) decision in granting a new real estate loan. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
Under FIRREA (to be discussed in next section), the Office of Thrift Supervision (OTS) was formed to regulate the S&Ls. This had been handled by the Federal Home Loan Bank BOARD (FHLBB), which was eliminated by FIRREA.. The FDIC was granted initial responsibility for the Resolution trust Corporation (RTC), which was formed to liquidate the assets of fraudulent and failed S&Ls. By the time, this was complete, hundreds of S&Ls had ceased to exist. The FDIC is appointed receiver or conservator for the purpose of reorganization or liquidation of failed banks and savings associations. When acting in either of these capacities,...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10