Freddie Mac, otherwise Federal Mortgage Mortgage Corp (FHLMC): A shareholder-had, in public traded bodies-paid firm (GSE) chartered by Congress when you look at the 1970
FICO Score: A decimal credit rating generated by the latest Reasonable Isaac Organization (FICO). Loan providers evaluate borrowing from the bank exposure located in area on their Credit ratings. When the a lender runs borrowing from the bank to anyone with a low FICO rating, the mortgage are subprime. The brand new development of Credit ratings facilitated the increased automation out-of mortgage behavior, deleting subjectivity from the process, also decreasing the amount of enters to the borrowing choices. Look for Todd Baker interviews.
Economic crisis Query Commission: An effective ten-representative bipartisan commission billed by frontrunners of your Us Congress assigned to research the causes of the fresh 2008 Economic crisis. Get a hold of Karstens memo.
Monetary Privacy Laws: Depending because of the Gramm-Leach-Bliley Act from inside the 1999, which provision desired to protect consumer privacy by the requiring financial institutions to add observes about their entry to customers’ personal information (really, an online privacy policy). Sees need to be with ease readable, and you can users need to be allowed to decide out-of discussing particular private information. See Chouliara memo.
Economic Services Adaptation Operate away from 1999 (Gramm-Leach-Bliley Act or GLBA): Closed of the Chairman Statement Clinton in the 1999, so it statute repealed the latest Glass-Steagall Act’s separation off commercial and investment banking, facilitated the manufacture of monetary holding companies, and accelerated this new deregulation of your own economic industry. Find Chouliara memo.
Because of the broadening liquidity having loan providers and then make these types of loans, Freddie Mac supporting homeownership and you will rental houses having center-money Us citizens
Foreclosure: The court procedures that allow a creditor for taking ownership from mortgaged possessions market it in the event of borrower default. The procedure depends on for each state’s legislation. Property foreclosure greatly influences borrowers’ credit scores and generally impedes them off acquiring significant upcoming financing.
Such as for example Fannie mae, Freddie Mac shopping financing out of loan providers and you can securitized mortgage loans into the home loan-recognized ties. While doing so, it actually was and additionally beholden to the stockholders due to the fact a friends. Today, Freddie Mac try as an alternative managed because of the Federal Casing Fund Department (FHFA). Following crisis, Freddie Mac computer try placed under bodies conservatorship. The big difference in Federal national mortgage association and you will Freddie Mac computer is the fact Fannie Mac tends to purchase https://paydayloanalabama.com/helena/ loans away from huge industrial banking institutions, when you’re Freddie Mac computer purchases finance off quick so you’re able to average-measurements of banking institutions.
Front-avoid ratio (Mortgage-to-money proportion): A good option tiny fraction away from spending on a mortgage to have confirmed height of money. Basically, economic advisors advise that no more than 28% out-of month-to-month money wade towards the property costs. See Edward Pinto interview.
Glass-Steagall Operate: A foundation of The brand new Offer, which 1933 guidelines split up financing and you will commercial banking, whilst carrying out the latest Government Put Insurance Organization. Look for Chouliara memo.
Home equity: The part of good residence’s most recent well worth held by citizen – the difference between the fresh new residence’s worth plus the user’s home loan balance. The amount of home collateral can transform over time based on costs regarding the housing industry, money produced to your mortgage, and you can any the new loans.
Home mortgage Revelation Work (HMDA): A 1974 statute that needs particular mortgage brokers to reveal guidance throughout the mortgage loans they make. HMDA mandates you to definitely mortgage brokers statement information regarding each other profitable and you will ineffective mortgage apps however, will not mandate any kind of choices.
Home ownership and you will Guarantee Coverage Operate (HOEPA): Extra because the a modification toward Insights inside the Lending Work into the 1994, that it act aligned to dissuade abusive methods at home loan world. They helped render coverage to own consumers in order that if the that loan met a particular high-pricing exposure test, the financial institution must give even more disclosures with the greatest costs of loan and you may consequences for defaulting. Discover Karstens memo.