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Real Estate Financing: Practices

Terms

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Adjustable-rate-mortgage (ARM)
A loan characterized by a fluctuating interest rate, usually one tied to a band or savings and loan association cost-of-funds index
Amortized Loan
A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan
Balloon Payment
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized
Blanket Loan
A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt
Community Reinvestment Act of 1977 (CRA)
Under the Act, financial instructions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small forms.
Computerized Loan Origination (CLO)
An electronic network for handling loan applications through, remote computer terminals linked to various lenders' computers
Construction Loan
A short-term loan usually made during the construction phase of a building project
Conventional Loan
A loan that requires no insurance or guarantee
Equal Credit Opportunity Act (ECOA)
The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, or marital status
Fannie Mae
A quasi-government agency established to purchse any kind of mortgage loans in the secondary mortgaged market from the primary lenders
Farm Credit System (System)
A federal agency of teh Department of Agricultural that offers programs to help families purchase or operate family farms.
Farmer Mac
An agency that operates similiary to Fannie Mae and Freddie Mac, but for agricultural loans

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