1 / 17

Chapter Eleven

Chapter Eleven. THE MORTGAGE MARKETS. Chapter Eleven. The Mortgage Markets. What Are Mortgages?. A long-term loan secured by real estate. Mortgage Loan Borrowers. Characteristics of the Residential Mortgage. Mortgage Interest Rates Loan Terms Mortgage Loan Amortization.

bena
Télécharger la présentation

Chapter Eleven

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter Eleven THE MORTGAGE MARKETS

  2. Chapter Eleven The Mortgage Markets

  3. What Are Mortgages? • A long-term loan secured by real estate

  4. Mortgage Loan Borrowers

  5. Characteristics of the Residential Mortgage • Mortgage Interest Rates • Loan Terms • Mortgage Loan Amortization

  6. Mortgage Interest Rates • Market Rates • Term • Discount Points A variety of fun mortgage calculators http://interest.com/calculators/index.shtml

  7. Mortgage Rates versus Treasury Bonds Figure 11-1: Mortgage Rates and Long-Term Treasury Interest Rates, 1985–2002 Current mortgage interest rates http://www.interest.com/

  8. Effective Rate of Interest

  9. Loan Terms • Collateral • Down Payments • Private Mortgage Insurance • Borrower Qualification

  10. Distribution of Principal and Interest

  11. Types of Mortgage Loans • Insured and Conventional Mortgages • Fixed-Rate Mortgages • Adjustable-Rate Mortgages • Other Types • Graduated-Payment Mortgages (GPMs) • Growing Equity Mortgages (GEMs) • Shared-Appreciation Mortgages (SAMs) • Equity Participation Mortgages • Second Mortgages • Reverse Annuity Mortgages (RAMs)

  12. Figure 11-2: Share of the Mortgage Market Held by Major Mortgage-Lending Institutions

  13. Three Distinct Elements to Mortgage Loans • The originator packages the loan for an investor • The investor holds the loan • The servicing agent handles the paperwork

  14. Mortgage Pass-Through • Definition: A security that has the borrower’s mortgage payments pass through the trustee before being disbursed to the investors

  15. Mortgage Pools Figure 11-3: Value of Mortgage Principal Held in Mortgage Pools, 1984–2001

  16. Mortgage-Backed Securities

  17. Securitized Mortgages • Benefits • Reduces the problems caused by regional lending institution’s sensitivity to local economic fluctuations • Borrowers have access to a national capital market • Investors have low-risk and long-term investments in mortgages without having to service the loan

More Related