1 Chapter 13
CHAPTER 13: Sources of Financing
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The secondary market is big new today and
blamed for a lot of housing troubles. Check
the Internet to current events to discuss in
class.
Chapter 13 2
Page Ref.
Hard Soft
back back Topic
207 216 Opening Remarks
208 218 Savings and Loan
Association
209 219
209 220
210 220
212 223
213 214
215 226
217 229
Teaching Tips
Start this chapter with a discussion of the difference between the
primary (where loans are made) and secondary (where loans are
sold) mortgage markets.
Stress: The effect of disintermediation and long-term loans.
Commercial Banks
Life Insurance
Companies
Mortgage
Companies
Computerized Loan
Origination
Traditional Delivery
System
Secondary Market
Delivery Systems
FNMA
“Fannie Mae”
GNMA
“Ginnie Mae”
Stress: Banks tend towards short-term loans and adjustable rate
mortgages.
Expanding the Text: While life insurance companies can predict
policy payoffs with a relative degree of accuracy, other types of
insurance companies cannot. Therefore, real estate investing by
“non-life” insurance companies is rare.
Summary: Compare the activities of a mortgage banker to those
of a mortgage broker. Mortgage bankers typically: 1. make loans
2. sell loans 3. service loans Mortgage brokers merely bring
borrowers and lenders together.
Local Distinction: How big of a factor are CLOs in your
community?
Stress: Three problems are addressed in this paragraph. Point out
the impact the secondary market of today has had in helping real
estate agents make sales by making available loanable funds.
Summary: Two types of investors in secondary market:
1. Private, portfolio purchasers
2. “Poolers”
Summary:
1. 1938: Organized by the federal government.
2. 1968: Divided into two parts and became a private entity but
retained close government ties, i.e., quasi-public.
3. Today: Primarily buys FHA, VA, some Conventional loans.
4. Income: Sale of FNMA stock, bonds, and notes.
Check the Internet for current news!
Summary:
1. 1968: Created by the federal government as a spin-off of
FNMA. It is a division of HUD.
2. Today: Underwrites HUD/FHA, VA, and certain FMHA
loans.
212 213
3 Chapter 13
MORGAGE DELIVERY SYSTEMS
Chapter 13 4
Page Ref.
Hard Soft
back back Topic Teaching Tips
216 228 (, Summary:
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