Finance
Which government-sponsored enterprise (GSE) purchases conventional conforming mortgages in the secondary market, providing liquidity to Alaska lenders?
AFHA
BVA
CFannie Mae (FNMA)✓ Correct
DHUD
Explanation
Fannie Mae (Federal National Mortgage Association) and Freddie Mac purchase conforming conventional mortgages from lenders on the secondary market, replenishing lender funds so they can make more loans.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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