Finance S2: Nature & Cycle of RE Finance

When you pledge your home to the lender as collateral for a loan and you have the right to possess and control, but the lender gets that right in the event of default.

• Collateral

• Hypothecation

• Leverage

• Disintermediation

Banks use the money from _________ to lend money to borrowers.

• Account holders' checking accounts

• Account holders' savings accounts

• Interest paid from loans

• Grouped mortgages

Interest rates affect borrowers monthly payments. When interest rates are low it makes which things easier for borrowers to do: (Select 2)

• Homes more affordable

• Homes more expensive

• Diminishes buyer numbers

• Entices refinance

All of these but one DIRECTLY influence markets at a local level.

• Zoning ordinances

• Employment trends

• Large-scale economic events

• Building standards

The primary market sells loans to the secondary market in order to make funds to local lenders available. When these loans are packaged in the secondary market they are called...

• Mortgage-backed securities

• Investments

• Collateralized debt obligation

• Collateralized loan obligation

In this phase of the real estate life cycle, home prices are overvalued and unemployment is low. There is an increasing supply of homes due to new construction.

• Expansion

• OverSupply/HyperSupply

• Recession

• Recovery

In this phase of the real estate life cycle, unemployment increase, supply exceeds demand, and home prices fall.

• Expansion

• OverSupply/HyperSupply

• Recession

• Recovery

All of these are factors that would increase supply over demand and cause a buyer's market, but which one?

• Availability of inventory

• New construction

• Renovations or conversions

• Growing population

All of these are factors that would increase demand over supply and cause a seller's market, but which one?

• Low or falling interest rates

• High/Low Employment

• Renovations or conversions

• Availability of loans or credit

"The Fed" refers to the....

• Federal Bureau of Investigation

• Federal Government

• Federal Reserve

• Federal Income Tax