50 Fun Facts About Mortgage

The word 'mortgage' comes from a Law French term meaning what?

The pledge 'dies' either when the debt is paid or when the borrower defaults and loses the property.

A buyer who puts 20 percent down has a mortgage with what loan-to-value ratio?

Go above 80 percent LTV in the US or Canada and mortgage insurance is usually required.

In the early years of a standard amortising mortgage, most of each payment goes toward what?

The split flips over time until the last payments are almost entirely principal.

What is the most common mortgage type in the United States?

Canadians mostly take five-year fixed-rate closed mortgages, and Britons lean toward variable rates.

What is a mortgage nicknamed when its balance falls due long before its payment schedule ends?

Before the FHA existed, most American mortgages were short balloon loans with big down payments.

Which mortgage type, where principal is never paid down, became tied to the subprime crisis?

Borrowers count on selling or refinancing before the whole principal comes due.

Why can observant Muslims not use a conventional mortgage?

One workaround has the bank buy the house outright and act as landlord while the buyer pays it off.

What does mortgage insurance protect?

It is typically required on loans above 80 percent loan-to-value and pays out after foreclosure.

In mortgage jargon, one 'point' equals what?

Borrowers pay discount points up front to buy a lower rate and a smaller monthly payment.

A mortgage escrow account is used to pay which two costs?

The word comes from Old French escroe, a scrap of parchment held by a third party until a deal closed.

The word 'escrow' derives from an Old French word for what?

The scroll was the deed a third party held until the transaction was complete.

On an ARM, what is the 'teaser'?

Caps limit how often and how far the rate can move after the teaser period ends.

Outside the United States, what is an ARM more commonly called?

The rate follows an index such as a central-bank rate or, historically, LIBOR.

How old must a borrower be to take out an FHA-insured HECM reverse mortgage in the US?

The first HECM went to Marjorie Mason of Kansas in 1989, a year after the programme was signed into law.

When was the Federal Housing Administration created?

The National Housing Act set it up to insure private lenders' loans; it joined the new HUD in 1965.

Since 2009, what has been the minimum down payment on an FHA-insured loan?

The 3.5 percent floor took effect in January 2009; the agency's early rules had already cut the typical down payment to 10 percent and stretched terms to 20 or 30 years.

Which 1968 law outlawed the redlining that FHA appraisal standards had encouraged?

FHA guidance had once told appraisers to avoid 'inharmonious racial or nationality groups'.

The New Deal's HOLC, created in 1933, existed mainly to do what?

It made just over a million loans by 1935 and drew the colour-coded 'residential security' maps now synonymous with redlining.

Fannie Mae was founded in which year as part of the New Deal?

Its real name is the Federal National Mortgage Association; it went private in 1968 and into conservatorship in September 2008.

Freddie Mac was created in 1970 for what purpose?

The Federal Home Loan Mortgage Corporation is headquartered in McLean, Virginia, and was also placed in conservatorship in 2008.

Which regulator placed both Fannie Mae and Freddie Mac into conservatorship in September 2008?

The Federal Housing Finance Agency's move was described as one of the most sweeping government interventions in private financial markets in decades.

Which government agency created and guaranteed the first mortgage-backed security in 1970?

Its securities are still the only MBS backed by the full faith and credit of the US government.

VA home loans were created by which 1944 law?

Formally the Servicemen's Readjustment Act, it lets eligible veterans buy with no down payment and no private mortgage insurance, in exchange for a funding fee.

What is the range of a classic FICO credit score?

FICO scores were introduced in 1989 by Fair, Isaac and Company, and the bureaus launched rival VantageScore in 2006.

Which three national credit bureaus supply the data behind US mortgage credit checks?

Lenders often pull all three and use the middle score.

The world's first building society was founded in 1775 in which English city?

Richard Ketley, landlord of the Golden Cross inn, started it; Britain's Nationwide is now the world's largest.

A building society differs from a bank in that it is owned by whom?

Abbey National kicked off the UK demutualisation wave in 1989 and eight more societies followed by 1999.

In It's a Wonderful Life, George Bailey runs what kind of institution in Bedford Falls?

Frank Capra's 1946 film has James Stewart talking a panicked crowd out of a bank run while Mr. Potter circles.

In Monopoly, how much does the bank pay you when you mortgage an unimproved property?

Unmortgaging costs the same amount plus 10 percent interest.

What surcharge does Monopoly add when you lift a mortgage?

It is one of the few places a fixed rate has not changed since the 1930s.

Between what years did the American subprime crisis unfold?

Subprime loans grew from 5 percent of originations in 1994 to 20 percent by 2006.

By roughly how much did the price of a typical American house rise between 1997 and the 2006 peak?

The bubble then deflated with lenders starting foreclosure on nearly 1.3 million properties in 2007 alone.

What did the acronym NINJA stand for in the crisis-era loans?

Approval rested on little more than a credit score, with no income verification at all.

Which major Wall Street firm filed for bankruptcy in September 2008?

Bear Stearns had warned of trouble a year earlier when two of its mortgage hedge funds imploded.

Which 2010 law was signed to address the causes of the mortgage crisis?

It created the Consumer Financial Protection Bureau, which now writes the mortgage disclosure rules lenders live by.

How many properties did lenders begin foreclosure proceedings on in 2007?

That was a 79 percent jump on 2006, and by 2009 the figure had climbed to 2.8 million.

In 2010, roughly one in how many US homes received a foreclosure filing?

The next year banks were on track to repossess more than 800,000 homes.

A foreclosure that runs without a court, under a power-of-sale clause, is called what?

A borrower can also hand back the keys through a deed in lieu of foreclosure to settle the debt.

Who plays hedge-fund manager Michael Burry in the 2015 film The Big Short?

Adam McKay's film, from Michael Lewis's book, won the Oscar for Best Adapted Screenplay.

In The Big Short, which actress explains subprime mortgages from a bubble bath?

Anthony Bourdain and Selena Gomez also pop up as themselves to explain CDOs and synthetic bets.

Rocket Mortgage began life in 1985 under what name?

Dan Gilbert's Detroit brokerage was bought by Intuit in 1999, renamed Quicken Loans, and became Rocket Mortgage in 2021.

Which software company bought Dan Gilbert's mortgage brokerage in 1999 and renamed it Quicken Loans?

The deal valued the company at $370 million; Gilbert later bought it back.

In civil-law countries, what alternative name is given to a mortgage?

Whatever the name, the lender takes a lien on the property while the owner raises money to buy it or for any other purpose.

What was the Anglo-Saxon loan-disguised-as-a-sale used to secure land when interest was illegal called?

The lender became absolute owner until redemption, leaving borrowers dangerously exposed if he refused to hand the land back.

Under which Lord Chancellor did borrowers gain an absolute right to redeem their land even if repayment was late?

This right, the equity of redemption, has stopped lenders holding any interest beyond the debt since the 17th century.

Which legal view, adopted by most US states, lets the borrower keep title to a mortgaged home?

Only a few states follow title theory, under which the lender holds legal title until the loan is paid off or foreclosed.

What is the most common mortgage in Canada?

Canada's market kept functioning through the subprime crisis, and Ottawa added a mortgage stress test in October 2016 to cool prices.

In which year was the Canada Mortgage and Housing Corporation created to tackle a post-war housing shortage?

CMHC provides mortgage insurance, mortgage-backed securities and housing research as the country's national housing agency.

What share of new UK mortgage lending did building societies hold in 1977, before banks moved in?

By 1987 their share had fallen to 66 percent as banks rose from 3 to 36 percent, and demutualisation pushed it lower still.

In a UK endowment mortgage, how is the principal eventually repaid?

Borrowers pay only interest during the term; many such policies fell short, prompting the FSA to tighten interest-only lending rules.