Homework
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Introduction: Banks originally owned and maintained in their portfolios all the real estate loans they created. However, this often caused banks to restrict new loans due to capital restrictions. With the creation of the secondary market, banks were able to sell a large number of their real estate loans, creating additional liquidity for new home purchases. In this Assignment, you will apply your understanding of how loans are sold by primary lenders to the secondary market, and how the secondary market creates liquidity for the real estate market.
The Real Estate Credit Market
The following Course Outcome is assessed in this Assignment:
o Diagram how money flows in the real estate credit market.
Introduction:
Visual presentations to buyers and sellers in real estate is a necessity in order to illustrate complex processes and explain various considerations that can affect seller and buyer decisions. In this Assignment, you will apply diagramming to show the flow of funds in a particular scenario. Read the scenario and respond to the checklist items.
Scenario: Henri and Lila who own the Three Forks Restaurant have decided to possibly purchase a home and they can put down 20% on a home loan. They have been informed by the bank that their loan might be sold off at some point after closing.
Checklist:
i. Explain the kind of mortgage market they will apply to and what mortgage interest rate they might obtain based on a 30-year, fixed-rate mortgage at this rate.
ii. Diagram how the mortgage will travel through different channels to end up being sold on Wall Street. (You can use the insert tab in Microsoft Word, then select SmartArt.)
iii. Explain the diagram and discuss each step in the overall process.
Format your homework according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.