The Mortgage Market in the United States: Its Products and Participants

Abstract

I began my SIP project on September 9, 1992, working for ES Financial Corporation (ESF) in Grand Rapids, Michigan. ESF is a mortgage servicing company for timeshare loans. They have been in this business for about ten years and are one of only seven in the United States. ESF services mortgages for resorts all over the country, but its main target market centers on resorts east of the Mississippi river. I served as an intern for ESF for one month of my SIP quarter and for three months of my CD quarter in the fall of 1991. ESF has been considering entering the mortgage market as a servicer for home loans for about one year. As a result of the company's interest in this area, I decided to do my SIP project on the home mortgage market. Because of extenuating circumstances, I was unable to complete my internship with ESF this fall, but I was able to continue with my research. My paper divides the mortgage market into eight separate parts and discusses each in depth. I will give a brief description of my paper and what you will find in each section. • HISTORY--A discussion of the mortgage market since its birth in the 1930's. It includes the development of the secondary market and the growth of the primary market. • FINANCIAL TERMINOLOGY--A discussion of the participants in a loan, the mortgagor and the mortgagee. It includes the paperwork and the fees that the borrower can expect when applying for a loan. • TYPES OF LOANS--A discussion of the ''basic" loans that are offered by lenders in the primary market. Includes comparisons between similar loans along with the advantages and disadvantages of each loan. • TYPE OF PROPERTY--A discussion of single family. two to four family. second home. and timeshare properties. Includes the mortgage and lender which is best for each type. • PRIMARY MORTGAGE MARKET--A discussion of each member within the primary mortgage market including savings and loans, commercial banks. mutual savings banks. credit unions, mortgage bankers, and mortgage brokers. • SECONDARY MORTGAGE MARKET--A discussion of the largest members within the secondary market including the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Housing Administration, the Veteran's Administration, and the Farmer's Home Administration. • REQUIREMENTS--A discussion of the federal and state regulations of becoming a mortgage company along with regulations regarding mortgage servicers. • FUTURE--A brief discussion of the future of regulation, federal deposit insurance, and mortgage foreclosure laws.