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Работа № 87707




Тип работы: Реферат. Предмет: Ин. языки. Добавлен: 30.4.2015. Сдан: 2015. Страниц: 32. Уникальность по antiplagiat.ru: < 30%

Описание (план):


Introduction 3
1 Mortgage loan basics 4
1.1 Basic concepts and legal regulation 4
1.2 Mortgage underwriting 5
1.3 Mortgage loan types 6
2 Repaying the mortgage 10
3 National differences 14
4 Mortgage insurance 19
Conclusion 20
Literature sources 22


The object of the research is mortgage housing loans.
The subject of the research is the mortgage as a way of living conditions improvement.
The purpose of this work is to research the development of mortgage housing lending system.
Methods: analysis and design, synthesis, comparative analysis, correlation.
Research and development: we gave basis for mortgage loans; describe methods of repayment of mortgage loans; national differences found in the mortgage system of mortgage lending; studied the mortgage insurance policy.
Elements of scientific innovation: the study outlined the essence of mortgage lending, as well as features of mortgage lending in different countries.
Realm of the possible practical applications: the results obtained in the course work can be used for studying the course "Macroeconomics".
Technical and economic, social (and) or significant environmental dependence: implementation of proposed areas for the discussion of issues of improving social market economy of the Republic of Belarus.
The author of work confirms, that the settlement-analytical material resulted in it correctly and objectively reflects a condition of researched process, and all borrowed of literary both other sources theoretical and methodological positions and concepts are accompanied by references to their authors.

A mortgage loan, also referred to as a mortgage, is used by purchasers of real property to raise money to buy the property to be purchased or by existing property owners to raise funds for any purpose. The loan is "secured" on the borrowers property. This means that alegal mechanism is put in place which allows the lender to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event that the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a "law French" term used by English lawyers in the middle ages meaning "death pledge", and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.
Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lenders rights over the secured property take priority over the borrowers other creditors which means that if the borrower becomes bankrupt or insolvent the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.
In many jurisdictions, though not all (Bali, Indonesia being one exception), it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. That’s why this research is so actual.
The object of the research is mortgage housing loans.
The subject of the research is the mortgage as a way of living conditions improvement.
The purpose of this work is to research the development of mortgage housing lending system.
Therefore we have to solve some questions:
- to give basics on mortgage loans;
- to describe the ways of repaying mortgage loans;
- to find out national differences in mortgage housing lending system;
- to learn the mortgage insurance policy.
1 Mortgage loan basics

1.1 Basic concepts and legal regulation

According to Anglo-American property law, a mortgage occurs when an owner (usually of a fee simple interest in realty) pledges his or her interest (right to the property) assecurity or collateral for a loan. Therefore, a mortgage is an encumbrance (limitation) on the right to the property just as an easement would be, but because most mortgages occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such real property. As with other types of loans, mortgages have an interest rate and are scheduled to amortize over a set period of time, typically 30 years. All types of real property can be, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lenders risk.
Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property (see commercial mortgages). Although the terminology and precise forms will differ from country to country, the basic components tend to be similar:
1. Property: the physical residence being financed. The exact form of ownership will vary from country to country, and may restrict the types of lending that are possible.
2. Mortgage: the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase home insurance and mortgage insurance, or pay off outstanding debt before selling the property.
3. Borrower: the person borrowing who either has or is creating an ownership interest in the property.
4. Lender: any lender, but usually a bank or other financial institution. (In some countries, particularly the United States, Lenders may also be investors who own an interest in the mortgage through a mortgage-backed security. In such a situation, the initial lender is known as the mortgage originator, which then packages and sells the loan to investors. The payments from the borrower are thereafter collected by a loan servicer.)
5. Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size.
6. Interest: a financial charge for use of the lenders money.
7. Foreclosure or repossession: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to a mortgage loan; without this aspect, the loan is arguably no different from any other type of loan.
8. Completion: legal completion of the mortgage deed, and hence the start of the mortgage.
9. Redemption: final repayment of the amount outstanding, which may be a "natural redemption" at the end of the scheduled term or a lump sum redemption, typically when the borrower decides to sell the property. A closed mortgage account is said to be "redeemed".
Many other specific characteristics are common to many markets, but the above are the essential features. Governments usually regulate many aspects of mortgage lending, either directly (through legal requirements, for example) or indirectly (through regulation of the participants or the financial markets, such as the banking industry), and often through state intervention (direct lending by the government, by state-owned banks, or sponsorship of various entities). Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system.
Mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an Annuity (finance theory) and calculated according to the time value of moneyformulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan (the original loan) would be slowly paid down through amortization. In practice, many variants are possible and common worldwide and within each country.
Lenders provide funds against property to earn interest income, and generally borrow these funds themselves (for example, by taking deposits or issuing bonds). The price at which the lenders borrow money therefore affects the cost of borrowing. Lenders may also, in many countries, sell the mortgage loan to other parties who are interested in receiving the stream of cash payments from the borrower, often in the form of a security (by means of a securitization).
Mortgage lending will also take into account the (perceived) riskiness of the mortgage loan, that is, the likelihood that the funds will be repaid (usually considered a function of the creditworthiness of the borrower); that if they are not repaid, the lender will be able to foreclose and recoup some or all of its original capital; and the financial, interest rate riskand time delays that may be involved in certain circumstances.

1.2 Mortgage underwriting

Mortgage underwriting is the process a lender uses to determine if the risk (especially the risk that the borrower will default) of offering a mortgage loan to a particularborrower is acceptable. Most of the risks and terms that underwriters consider fall under the three C’s of underwriting: credit, capacity and collateral. (In the UK they are known as the three canons of credit - capacity, collateral and character.)
To help the underwriter assess the quality of the loan, banks and lenders create guidelines and even computer models that analyze the various aspects of the mortgage and provide recommendations regarding the risks involved. However, it is always up to the underwriter to make the final decision on whether to approve or decline a loan. Critics have suggested that the complexity inherent in mortgage securitization can limit investors ability to monitor risk, and that competitive mortgage securitization markets with multiple securitizers may be particularly prone to sharp declines in underwriting standards as lenders reach for revenue and market share. Private, competitive mortgage securitization is believed to have played an important role in the U.S. subprime mortgage crisis.
Risks for the lender are of three forms: interest rate risk, default risk, and prepayment risk.
There is a risk to the lender that the rate on an adjustable-rate mortgage may decrease. If this is not matched by correlated decreases in rates on the lenders liabilities, profits will suffer.
If a rate on a mortgage contract increases significantly, this is normally favorable to the lender in the absence of correlated increases in rates on liabilities. However, the lender faces the risk that the interest rate increase could be unaffordable to the borrower, forcing the borrower into default, in which case it could be necessary to foreclose on the property (with substantial costs of foreclosure).
In addition, the lender faces the risk that the value of the property underlying the mortgage could drop in value to below the outstanding balance on the mortgage; if this event induces the borrower to default due to moral hazard, the lender must not only incur the costs of implementing a foreclosure but also must sell the property at a price that fails to recoup the lenders investment.
One additional risk for lenders is prepayment. If market interest rates drop, a borrower could refinance the fixed-rate mortgage, leaving the lender with an amount that now can be invested only at a lower rate of return. This risk can be mitigated by various sorts of prepayment penalties that will make it unprofitable to refinance even if the rates of other lenders decrease.

1.3 Mortgage loan types

There are many types of mortgages used worldwide, but several factors broadly define the characteristics of the mortgage. All of these may be subject to local regulation and legal requirements.
- interest: Interest may be fixed for the life of the loan or variable, and change at certain pre-defined periods; the interest rate can also, of course, be higher or lower.
- term: Mortgage loans generally have a maximum term, that is, the number of years after which an amortizing loan will be repaid. Some mortgage loans may have no amortization, or require full repayment of any remaining balance at a certain date, or even negative amortization.
- payment amount and frequency: The amount paid per period and the frequency of payments; in some cases, the amount paid per period may change or the borrower may have the option to increase or decrease the amount paid.
- prepayment: Some types of mortgages may limit or restrict prepayment of all or a portion of the loan, or require payment of a penalty to the lender for prepayment.
The two basic types of amortized loans are the fixed rate mortgage (FRM) and adjustable-rate mortgage (ARM) (also known as a floating rate or variable rate mortgage). In some countries, such as the United States, fixed rate mortgages are the norm, but floating rate mortgages are relatively common. Combinations of fixed and floating rate mortgages are also common, whereby a mortgage loan will have a fixed rate for some period, for example the first five years, and vary after the end of that period.
1. In a fixed rate mortgage, the interest rate, remains fixed for the life (or term) of the loan. In case of an annuity repayment scheme, the periodic payment remains the same amount throughout the loan. In case of linear payback, the periodic payment will gradually decrease.
2. In an adjustable rate mortgage, the interest........

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