COMM 329 Lecture Notes - Lecture 5: Secondary Mortgage Market, Mortgage Insurance, Investment Fund
29 Aug 2016
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Document Summary
Savers do not have access to better rates than what the local unions are offering in a segmented market; in a unified market they have much more choice. The segmented market refers to the large division between nha loans (loans insured through the nha) and conventional mortgage loans. A unified market is one where this divide is less pronounced (i. e. the terms offered to conventional loans are similar to those offered on nha loans?) Nha insured loans were limited to newly constructed homes. There were limits on the maximum size, minimum term, maximum rate, and on the maximum loan-to-value ratio. There was no secondary market on which to remove mortgages from the b/s of the institutions who made these loans. The nature of mortgages were long-term (25 years or longer) and fixed in rate. Banks found this unattractive; li companies found this attractive. Further, in 1954 revisions to the bank act allowed banks to make only nha-insured loans to consumers.
