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RE47R25: Residential Mortgage Loan Market and Credit Today

Objectives: This course is designed to take the licensee through all of the dynamics of today's residential mortgage financing market including the important aspects of credit reports and credit scoring, the changing nature of the Primary mortgage loan market and the broad variety of lenders and products available to all.
  1. The lending industry
    1. Primary Market - Sources of Mortgage loans today
      1. General market update
        1. Conventional loans (including defining a portfolio loan)
        2. FHA loans
        3. VA Loans
        4. Competition of mortgagees today
      2. Private Mortgage Insurance
        1. History and current use
        2. Mechanics of PMI
        3. Methods to eliminate PMI
          1. Refinance
          2. Appraisal-show improvements
          3. Formula utilized for elimination
      3. First Time Home buyer programs – provide examples of current state and local programs
  2. Mortgagor and Mortgagee - Note and Mortgage
  3. Secondary Mortgage Market
    1. Serves as primary lender sources of funds
      1. Role of Fannie Mae/ Freddie Mac
      2. Other investors
    2. Mortgage Broker/ banker role, including distinction between mortgage broker/ banker
    3. Loan application process
      1. Pre-Qualify vs. Pre-approval
      2. Application definition (Regulation X, §1024.2 Definitions)
      3. Qualifying standards – what are the current requirements?
      4. Loan to Value Ratios available
  4. Loan products and terms
    1. Loan terms
      1. Interest
        1. What is interest?
        2. Why do long-term interest rates change?
        3. How are long term interest rates determined
        4. Current interest rates,  outlook and impact on the current market
      2. Adjustable Rate or fixed rate Loan
        1. Current offerings and why it changes
        2. Importance for the consumer to understand the terms of an adjustable rate loan (2 loan caps, adjustment periods, APR)
  5. Points
    1. Definition
      1. What roles do they serve
      2. Truth in Lending and Regulation Z
      3. Predatory lending - subprime lenders
  6. Loan Repayment Methods
    1. Amortized loan
      1. History and importance today
        1. Evolution of the repayment period, trends today
      2. Straight Loan
      3. Negative Amortization Loan, including brief discussion of reverse mortgages
        1. Principal Owned
        2. Equity
        3. What if market decline.
        4. Determine timeframe you plan to own property.
    2. Loan products
      1. Discuss current trends in residential loans
      2. Alternatives to the use of PMI
      3. No Documentation loans
      4. Other Loan Products
        1. Construction Loans
        2. Purchase Money mortgage
        3. Bridge Loan
        4. Equity Loans and line of credit
        5. Other New current Products
  7. Role and importance of credit - Why is credit critical - what has changed?
    1. Credit Reporting Agencies
      1. TransUnion
      2. Equifax
      3. Experian
    2. Credit history - Rights of the Consumer
      1. Consumer must give permission for an inquiry into their credit history.
        1. Apply for a credit card
        2. Apply for a car loan
        3. Apply for a home loan
        4. Application for an apartment
      2. Opt Out - Rights of the consumer to limit soft inquiries into their history
      3. Process to get errors corrected
      4. Right to add a statement to your report disputing charge off, late payment etc.
      5. Receive a new report after investigation by credit bureau
    3. Credit Scores
      1. Discuss the various credit scores used
      2. Analysis of credit score range, what are current important thresholds
      3. What factors make up my score?
        1. Payment history 35 %
        2. Balanced Owed 30%
        3. Length of Credit History 15 %
        4. New Credit 10%
        5. Types of Credit 10%
      4. Negative Information - How long does the data stay on my report
  8. Role of the real estate licensee
    1. As a buyer/tenant agent
      1. Educating buyer on importance of confirming financials before starting the search process
      2. Rentals:
        1. Getting permission to pull an applicant for an apartment credit
        2. Reviewing the credit
        3. Sharing the information
        4. Can you show the report or provide it to the property owner.
    2. As a seller/landlord agent
      1. Objective review of financials with client
      2. Right/ obligation to contact lender/ mortgage broker
      3. Possibility of loan assumption

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