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Sources of Financing in Mortgage Markets

Explore the primary and secondary loan sources in the financial market, including mortgage companies, intermediaries, and key players like FNMA and GNMA. Learn about financing conditions like usury laws and prepayment penalties. Discover how mortgage investors and borrowers navigate the loan delivery systems.

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Sources of Financing in Mortgage Markets

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  1. Chapter 13Sources of Financing ____________________________

  2. Financing • Primary Market – where lenders originate loans. • Secondary Market – provides a way for lenders to sell a loan.

  3. Primary Loan Sources • Savings and Loan Associations • Commercial Banks • Life Insurance Companies • Mortgage Companies • Mortgage Brokers • Computerized Loan Origination (CLO) • Municipal Bonds

  4. Secondary Loan Sources • FNMA • GNMA • FHLMC • Farmer Mac

  5. Financial Intermediaries Mortgage Lenders The Secondary Mortgage Market Primary Market Secondary Market Mortgage Investors Borrowers

  6. Mortgage Loan Delivery Systems

  7. Usury • State legislation that imposes an interest rate ceiling on loans. • U.S. Congress passed legislation that exempts from state usury limits most first lien home loans made by institutional lenders.

  8. Other Financing Conditions • Due-on-Sale – call clause. • Prepayment - penalty for the right to repay a loan early.

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