Chapter 13 Sources of Financing ____________________________ Financing • Primary Market – where lenders originate loans. • Secondary Market – provides a way for lenders to sell a loan. Primary Loan Sources • • • • • • • Savings and Loan Associations Commercial Banks Life Insurance Companies Mortgage Companies Mortgage Brokers Computerized Loan Origination (CLO) Municipal Bonds Secondary Loan Sources • • • • FNMA GNMA FHLMC Farmer Mac The Secondary Mortgage Market Primary Market Secondary Market Mortgage Lenders Financial Intermediaries Borrowers Mortgage Investors Mortgage Loan Delivery Systems 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. Other Financing Conditions • Due-on-Sale – call clause. • Prepayment - penalty for the right to repay a loan early.