Term
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Definition
goal of real estates acquisition
diversification
economic benefits (deductibility of interest)
cost of acquisition and leverage
leverage -> risk |
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Term
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Definition
Real estate provides security interest for loan - historically stable
Money provided - commodity - price is interest rate
Willingness to lend is based on $ price
Real estate must compete in capital markets for funds |
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Term
| players in primary mortgage markets |
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Definition
government level
-federal reserve, FDIC, office of thrift supervision
primary lending level
-individuals, commercial banks, life insurance companies, pension funds, mortgage banker |
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Term
| how does the lender make money |
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Definition
collecting interest on mortgage
loan obligation feed (points)
servicing
trading in secondary markets |
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Term
| problems associated with the mortgage markets |
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Definition
foreclosure
liquidity (portfolio loans)
long-short squeeze (asset/liability management)
prepayment
diversification |
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Term
| basic elements of the mortgage |
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Definition
The parties
Loan amount and repayment
Interest rate
Description of property
Priority of mortgage (senior vs. junior position)
Prepayment clause
Due on sale clause (assumability of some types)
Condition of property
Default clause |
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