Finance
In Maine, which government-sponsored enterprise (GSE) purchases conventional conforming mortgages from lenders in the secondary mortgage market?
AFHA and VA
BFannie Mae and Freddie Mac✓ Correct
CMaine Housing only
DThe Federal Reserve Bank
Explanation
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) purchase conforming conventional mortgages from originating lenders in the secondary market, providing liquidity for mortgage lending.
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Key Terms to Know
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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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