Mortgage finance has undergone a great deal of change in recent history. In fact, prior to 1981, the fixed rate loan was the only loan product available. The homebuyer locked into an interest rate that would remain unchanged for the term of the loan, which was anywhere from three to 30 years. In addition, a substantial down payment was required. Typically the same banking institution that originated the mortgage loan held the mortgage for the entire term, performing the servicing itself.
As a result, individuals who could not afford the down payment were effectively eliminated as potential homebuyers. There was no secondary market to replenish the funds loaned by the lender which limited the banking institution in the number of loans it was able to make, and defaults caused pervasive problems. Finally around 1980 many thrifts went out of business due to higher interest rates and subsequent loan defaults.
In this course, we will look at new loan programs, products, and features that have evolved since the introduction of adjustable rate loans in 1981. These special loans have been designed to make mortgage loans affordable for a much larger pool of potential homebuyers. Together with the creation of government sponsored enterprises (GSEs) like Freddie Mac and Fannie Mae to initiate the secondary mortgage market, a larger number of mortgage loans has been generated.
Course Outline:
Lesson 1 - Special Loan Basics
- History
- Special Loan Programs, Products, and Features
- Special Loan Programs
- Special Loan Considerations
Lesson 2 - Special Loan Products
- Adjustable-Rate Loans
- Balloon Loans
- Piggybacks
- Buydowns
- Construction Loans
- Less Common Special Loan Products (GP ARMs, GEMs, and GPMs)
Course Credit:
Completion of this course earns five points toward MBA's Certified Mortgage Banker (CMB), or Certified Mortgage Technologist (CMT) designations. This course also earns five points towards MBA's Mortgage Servicer: Loan Administration (CMS Level II) Professional Certificate. |