Chap022 - Chapter 22 The Residential Mortgage Market...

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Chapter 22 - The Residential Mortgage Market Chapter 22 The Residential Mortgage Market Learning Objectives You will discover how the largest of all domestic financial markets in the United States—the residual mortgage market—functions in order to supply credit to build and buy homes, apartments, and other dwellings for individuals and families. You will come to understand the problems faced by lenders of residential mortgage money in designing new loan contracts that will protect them against inflation and other risks. You will discover what important jobs are performed by federal government agencies or by government-sponsored mortgage firms, such as Fannie Mae (FNMA) and Ginnie Mae (GNMA), in supporting the development of the market for home mortgage loans. Key Topics Outline Trends in Home Prices and Loan Terms The Structure of the Mortgage Loan Market Mortgage Lending Institutions and Their Preferred Market Segments Government Reshapes the Mortgage Market: Lending, Guaranteeing, Making Markets Mortgage-Linked Securities and Prepayment Risk Innovations in Mortgage Instruments Refinancing Existing Loans and Home Equity Borrowing Chapter Outline 22.1. Introduction to the Residential Mortgage Market 22.2. Recent Trends in New Home Prices and the Terms of Mortgage Loans 22.3. The Structure of the Mortgage Market 22.3.1. Volume of Mortgage Loans 22.3.2. Residential versus Nonresidential Mortgage Loans 22.4. Mortgage-Lending Institutions 22.5. The Roles Played by Lending Financial Institutions in the Mortgage Market 22.5.1. Savings and Loan Associations 22.5.2. Commercial Banks 22.5.3. Life Insurance Companies 22-1
Chapter 22 - The Residential Mortgage Market 22.5.4. Saving Banks 22.5.5. Mortgage Bankers 22.6. Government Activity in the Mortgage Market 22.6.1. The Impact of the Great Depression on Government Involvement in the Mortgage Market 22.6.2. Launching the Federal Home Loan Bank System 22.6.3. Setting Up the Federal Housing Administration (FHA) and the Veterans Administration (VA) 22.6.4. The Creation of Fannie Mae—A Government-Sponsored Enterprise (GSE) 22.6.5. The Creation of Ginnie Mae (GNMA) 22.6.6. The Federal Home Loan Mortgage Corporation—Another Government- Sponsored Enterprise (GSE) 22.7. Innovations in Mortgage Instruments 22.7.1. Fixed-Rate Home Mortgage—The Oldest Form of Home Loan 22.7.2. Variable-Rate and Adjustable Mortgage Instruments 22.7.3. Interest-Only Mortgages 22.7.4. Reverse-Annuity Mortgages 22.7.5. Epilogue on the Fixed-Rate Mortgage 22.8. Pricing and Other Issues in Home Mortgage Lending 22.8.1. Pricing Home Mortgages and the Treasury Security Market 22.8.2. Mortgage Lock-Ins, Loan Modifications, and Foreclosures 22.8.3. Refinancing Home Mortgage and “Cash Outs” 22.8.4. Predatory Lending 22-2
Chapter 22 - The Residential Mortgage Market Key Terms Appearing in This Chapter conventional home mortgage loan, 691 residential mortgages, 693 nonresidential mortgages, 693 Federal Housing Administration (FHA), 699 Federal Home Loan Bank (FHLB) System, 699 Veterans Administration (VA), 699 Federal National Mortgage Association (FNMA), 700 Government-sponsored enterprises (GSEs), 700

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