Real-Estate-Tracht-Fall06 - MORTGAGE LENDERS AND MORTGAGE...

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Unformatted text preview: MORTGAGE LENDERS AND MORTGAGE LOANS- 1. STATE LAW= RE/Mortgage law= jurisdiction where property is located o Pressure twds standardization thru integration of financial markets (natl, intl)- 2. Many policies to support homeownership b/c thought to be good (sense of belonging, obligation to comm., stake in econ & social order) o Ex: tax law (interest on HM is deductible on fed taxes); feds sponsor 2ndary home Mor. Mark.- BASIC INFO o LTV= amt of loan / value of property (higher riskier) o Mortgage= security interest in a piece of real property that secures performance of an obligation, permits mortgagee to have property sold upon default?; title to property sold in condition that title existed in when mortgage was perfected (recorded) Note= contract defining primary obligations (interest, date, default ramifications) Mortgage= document creating security interest in real property= right of lender upon default to sell property and apply proceeds of sale to debt o Security Interest = interest that secures an obligation (usually to repay a loan) o EQUITY IN THE PROPRTY = diff b/w the value and the amt. owed on the prop o Rollover= loan is periodically repriced at an agreed spread over the appropriate, currently prevailing rate o GSE= Privately held corporations with public purposes created by the U.S. Congress to reduce the cost of capital for certain borrowing sectors of the economy o Primary Market = where original loans are made Cyclical Market- usually liberal extensions inc in delinquencies + foreclosures Varied Markets (single fam v other; old v new; low rent v luxury; urban v rural) o secondary Mortgage market = where existing mortgage loans are bought and sold; market in mortgage backed securities HUGE- mortgage loans securitized by FNMA, FLMC= $3.5 trillion o Mortgage Servicing = collection of payments, remittance of proceeds to lenders, assuring insurance and taxes paid, corrective action post-delinquency (usually done by other, get %) May be done by L but usually not; get - % per yr o Secondary Securities Market = can have this for anything involving a stream of payment- bundle the loans, sell interests in them get liquidity Note: havent had downturn since this blew up dont know what effect corp bankruptcy would have o Subordination = to the extent 2 interests are inconsistent the sr. interest will govern o Underwriter = institutions that guarantee that when a mortgage lender makes a loan, its favorable enough terms that loan can be met by borrower loan can be funded o Securitization = process by which mortgages are typically sold as part of pool of similar mortgages o Coupon = periodic interest payments made to bondholders during life of the bond o Primary role of Lawyers = risk management/anticipation look 2 3 risk areas: (1) Borrowers repayment (honest? Credit worthy?...
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This note was uploaded on 04/04/2008 for the course LAW ALL taught by Professor Multiple during the Fall '06 term at NYU.

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Real-Estate-Tracht-Fall06 - MORTGAGE LENDERS AND MORTGAGE...

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