A b competitive equality banking act 1987 lifetime

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Unformatted text preview: . Competitive Equality Banking Act (1987); lifetime rate caps on Competitive HEL HEL Home Equity Loan Consumer Protection Act (1988); rules for Home disclosure, limit flexibility on changing terms disclosure, All Rights Reserved Dr. David P Echevarria 3 REAL ESTATE MORTGAGES D. Desirable Features for a Mortgage (Lender) 1. 2. 3. 4. 5. Yield flexibility: Responsiveness to changing market rates Constant real payments; keeping pace with inflation Payment stability; minimize late payment/default problems Full security: market value greater than loan amount Servicing simplicity a. b. b. 6. Collecting principal and interest when rates are changing Collecting For mortgages allowing negative amortization, tracking changing For principal and interest payments can be difficult principal Marketability a. b. c. Ability to sell in a secondary market Sales of mortgage backed securities (MBS) help control total lender risk Substituting capital market funds for financial institution's funds All Rights Reserved Dr. David P Echevarr...
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