100 Fun Facts About Mortgage

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

Death pledge renders the Old French mort gage, literally 'dead pledge'; in the jurist Edward Coke's telling, the pledge dies either when the debt is paid or when the borrower defaults and loses the land.

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

80% is what is left to borrow: loan-to-value is the loan divided by the home's value, and above that level US lenders usually make the borrower buy mortgage insurance.

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

Interest dominates the early payments because it is charged on the large outstanding balance; the split flips over time until the last payments are almost entirely principal.

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

The 30-year fixed rate grew out of the New Deal: the Federal Housing Administration began backing long, fully amortised loans in place of short ones that had to be refinanced every few years.

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

Such a loan is a balloon mortgage: payments follow a long amortisation schedule, but the remaining balance falls due early. Before the FHA existed, most American mortgages were short balloon loans with big down payments.

Which mortgage type became closely tied to the mid-2000s subprime lending boom?

Interest-only loans let borrowers pay nothing toward principal for the first years; they spread in the 2000s housing boom, and when the interest-only period ended, payments jumped just as prices were falling.

What does Sharia law forbid that keeps observant Muslims from using a conventional mortgage?

Paying or receiving interest, known as riba, is forbidden, so in one common workaround the bank buys the house itself and the buyer pays it off in rent and instalments.

What does mortgage insurance protect?

The lender against borrower default: the borrower pays the premiums, yet any payout after a foreclosure goes to the lender, which is why it is demanded on loans with small down payments.

In mortgage jargon, one 'point' equals what?

A point is 1% of the loan amount, so one point on a $300,000 mortgage costs $3,000; borrowers pay discount points up front to buy a lower rate.

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

Property taxes and insurance premiums are collected in monthly instalments alongside the loan payment and held in escrow, so the servicer can pay the tax and insurance bills when they fall due.

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

A scrap of parchment, escroe in Old French, is the root: the deed was written on one and handed to a third party to hold until the bargain's conditions were met.

On an ARM, what is the 'teaser'?

A cheap introductory period with a below-market rate is the teaser; once it ends the rate resets toward the full index rate, so a low teaser sets the borrower up for above-average payment increases.

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

Abroad the product is a variable-rate or tracker mortgage, because the rate follows an index such as a central-bank base rate or, historically, LIBOR.

Which loan lets US homeowners aged 62 or over tap their home's value with no monthly repayments?

A reverse mortgage pays the owner rather than the bank: the FHA-insured version is open to homeowners of 62 and over and is repaid only when the borrower no longer lives in the home.

Which president signed the act that created the Federal Housing Administration?

Roosevelt signed the National Housing Act in 1934; beyond reviving home lending, he hoped it would put construction workers back on the job.

What minimum down payment did the FHA set for its insured loans in January 2009?

3.5% is the floor written into the Housing and Economic Recovery Act of 2008, which also barred sellers from funding a buyer's down payment.

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

The Fair Housing Act, Title VIII of the Civil Rights Act of 1968, banned discrimination in the sale, rental and financing of housing; FHA guidance had once told appraisers to avoid 'inharmonious racial groups'.

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

Refinance defaulted mortgages was its job: the Home Owners' Loan Corporation gave owners facing foreclosure longer, cheaper loans, and it also drew the colour-coded 'residential security' maps now synonymous with redlining.

Fannie Mae was set up in 1938 to do what with home loans?

Buy them from the lenders: the cash let banks make fresh loans, creating a secondary market in mortgages that at first dealt mainly in FHA-insured ones.

Freddie Mac was created in 1970 for what purpose?

To compete with Fannie Mae was the aim: Congress chartered the Federal Home Loan Mortgage Corporation in 1970, two years after Fannie itself had been turned from a government agency into a shareholder-owned company.

What happened to Fannie Mae and Freddie Mac in September 2008?

Conservatorship: they were put under a federal regulator that had existed for only weeks; the stopgap proved durable, and both were still under government control in 2024.

Which government agency guaranteed the first mortgage-backed security?

Ginnie Mae was carved out of Fannie Mae in 1968 to stay inside the government when Fannie went private, which is why the securities it guarantees carry the full faith and credit of the United States.

VA home loans were created by which 1944 law?

The GI Bill, formally the Servicemen's Readjustment Act of 1944, backed home loans with no down payment; millions of ex-servicemen took them up, helping drive the postwar move to the suburbs.

What is the range of a classic FICO credit score?

Classic FICO scores run from 300 to 850; when the three credit bureaus launched their rival VantageScore in 2006, it at first used an odd scale of 501 to 990 before switching to FICO's range.

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

Experian, Equifax and TransUnion are the three national bureaus; mortgage lenders usually pull a tri-merge report from all three and underwrite on the middle of the three scores.

The world's first building society was founded in Birmingham in 1775 at what?

An inn: Richard Ketley, landlord of the Golden Cross, formed the society there, and subscribers paid monthly into a common fund that financed a house for each of them.

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

A building society is a mutual owned by its members, the savers and borrowers, rather than by shareholders; Abbey National kicked off the UK demutualisation wave when it converted to a bank in 1989.

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

George runs a building and loan, the Bailey Brothers' Building and Loan; Frank Capra's Christmas classic has James Stewart talking a panicked crowd out of a run on it while Mr. Potter circles.

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

The mortgage value printed on each deed is half its purchase price, so Mediterranean Avenue's $60 price mortgages for $30; any houses on the colour group must be sold back before a property can be mortgaged.

What surcharge does Monopoly add when you lift a mortgage?

Lifting a mortgage costs the mortgage value plus a 10% charge, so a property mortgaged for $100 takes $110 to redeem, and its owner may not collect rent on it until it is lifted.

Between what years did the American subprime crisis unfold?

The crisis ran from 2007 to 2010, beginning when subprime lenders such as New Century failed in early 2007; subprime loans had grown from 5 percent of originations in 1994 to 20 percent by 2006.

The Case-Shiller index, which charted the 2000s boom and bust, tracks what?

US home prices: economists Karl Case and Robert Shiller built the index from repeat sales of the same houses, and on Shiller's own series prices peaked in early 2006 before sliding until 2012.

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

NINJA stood for no income, no job, no assets: approval rested on little more than a credit score, with no verification of the borrower's means at all.

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

Lehman Brothers filed for Chapter 11 on 15 September 2008 after rescue talks with Barclays and Bank of America fell through and Washington refused a bailout; no bigger bankruptcy had ever been filed in the US.

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

The Dodd-Frank Act, signed by Barack Obama in July 2010, created the Consumer Financial Protection Bureau and the Financial Stability Oversight Council to police lenders and systemic risk.

What term describes a lender-approved home sale for less than the mortgage balance?

A short sale needs the lender's consent because the price will not clear the debt; it is an alternative to foreclosure, though the owner still has to leave the home.

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

RealtyTrac counted foreclosure filings on about 2.9 million properties in 2010, roughly 2.2 percent of housing units or one in 45; banks repossessed more than 800,000 homes the following year.

A foreclosure carried out under a deed of trust's power-of-sale clause is called what?

A nonjudicial foreclosure lets the trustee sell the property after public notice, with no lawsuit, under the power-of-sale clause in the deed of trust; it is the usual route in California and Texas.

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

Christian Bale played Burry, a trained physician with a glass eye who actually read the fine print of subprime mortgage bonds, then bet against them with credit default swaps.

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

Margot Robbie, playing herself, explains subprime mortgages from a bubble bath; Anthony Bourdain and Selena Gomez also pop up as themselves to explain CDOs and synthetic bets.

Which Detroit mortgage lender was known as Quicken Loans until 2021?

Rocket Mortgage began in 1985 as Rock Financial; 'Rocket' was first the name of its online application, launched in 2015, and the whole company adopted it in 2021.

Which software company bought Dan Gilbert's mortgage brokerage and renamed it after one of its products?

Intuit, maker of Quicken and TurboTax, renamed the brokerage Quicken Loans; in 2002 Gilbert and fellow investors bought it back, and they kept the name until 2021.

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

A hypothec, from the Greek hypotheke, leaves both title and possession with the borrower, whereas a classic common-law mortgage conveyed title to the lender until the debt was paid.

What is a US home loan called when it exceeds the conforming loan limit?

A jumbo loan is bigger than the size limit set each year for standard mortgages, so lenders usually ask for a higher credit score and a larger down payment.

What does English law call a mortgagor's right to recover land by paying the debt late?

The equity of redemption, developed by the Court of Chancery in the seventeenth century, lets a mortgagor recover the land by paying the debt even after the legal due date; foreclosure is the lender's way to extinguish it.

Under which theory, used in most US states, does a mortgage borrower keep legal ownership?

Under lien theory the mortgage is only a charge on the property and the borrower keeps legal title; a minority of states follow title theory, under which the lender holds legal title until the loan is paid off.

What is the most common mortgage in Canada?

Five-year fixed closed mortgages are the Canadian standard: the rate is locked for a five-year term, typically amortised over 25 years, and the loan must then be renewed or refinanced.

Canada's housing agency CMHC was created to house whom?

Returning war veterans were its first task in 1946; founded as Central Mortgage and Housing Corporation, it went on to insure the home loans that private lenders make to Canadian buyers.

Which building society's 1997 demutualisation created a bank that later became part of Lloyds?

Halifax floated on the stock exchange in June 1997, merged with Bank of Scotland to form HBOS in 2001, and was taken over by Lloyds TSB in January 2009 during the financial crisis.

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

The capital is repaid with a life insurance policy, an endowment, funded alongside payments that cover only the loan's interest and meant to mature with enough to clear the debt; many fell short, producing a mis-selling scandal.

Which name, shared with Barnum's circus elephant, labels a US mortgage above the conforming limit?

Jumbo loans exceed the size that the two government-sponsored mortgage giants will purchase from lenders. Barnum's elephant gave English the word itself.

Which garden crop has a variety called Mortgage Lifter, after seedling sales paid off its 1930s breeder's home loan?

Tomato seedlings sold at $1 a plant cleared the debt of West Virginia's Marshall Byles, a breeder better known as Radiator Charlie. His fruit can weigh up to three pounds.

What did many American families once do with the mortgage document after making the final payment?

Burn it, ideally with guests watching: mortgage-burning parties marked the last payment, and the 1949 comedy Adam's Rib roasts hot dogs over one.

Which watery word describes a homeowner who owes more on the mortgage than the house is worth?

Underwater borrowers are also said to be upside down. Those most exposed after 2007 had borrowed 90% or even 100% of the property's value.

Which Moneyball author wrote The Big Short, the book about investors betting against subprime mortgages?

Michael Lewis's book spent 28 weeks on The New York Times best-seller list before Hollywood turned it into a 2015 film.

Which actor narrates Inside Job, the Oscar-winning documentary about the mortgage-fuelled crash of 2008?

Matt Damon voices Charles Ferguson's five-part film, which premiered at Cannes and won Best Documentary Feature at the 2011 Academy Awards.

Which British mortgage lender suffered the country's first bank run in 150 years during the credit crunch?

Northern Rock had borrowed short term on wholesale money markets to fund long-term home loans, so it ran dry when credit froze. Britain nationalised it in 2008.

Which animated film, derided in Hollywood as Disney's Folly, did Walt Disney mortgage his own house to help finance?

Snow White was a gamble that Disney's wife and his business partner both tried to talk him out of, and its cost was a massive sum for a 1937 feature.

Which political movement was sparked by CNBC's Rick Santelli ranting on air about a mortgage bailout?

The Tea Party took its name from Santelli's call, live from the Chicago Mercantile Exchange floor, for a protest over a 2009 plan to rescue struggling homeowners. The clip went viral.

Which cousin of Fannie Mae and Freddie Mac was created for student loans rather than mortgages?

Sallie Mae began in the early 1970s as the government's Student Loan Marketing Association and later turned into a fully private lender.

What nickname do Americans give savings and loan associations, a third of which failed between 1986 and 1995?

Thrifts specialise in taking savings deposits and making home loans, and by law no more than 20 percent of their lending can be commercial.

What name was given in 2010 to bank staff approving thousands of foreclosure papers without reading them?

Robo-signing got its name from a lawyer who read mortgage company employees' testimony and said they were like robots. Several of the largest US lenders paused foreclosures as a result.

What blunt nickname was given to stated-income mortgages, which let borrowers declare earnings without any proof?

Liar loans were nominally meant for the self-employed, whose earnings are hard to document, but the lack of verification made them a particularly simple target for fraud.

Which rating did Moody's give more than half the mortgage-related securities it assessed from 2000 to 2007?

Triple-A is the safest grade there is, and Moody's gave it to nearly 45,000 mortgage-related securities. Hundreds of billions of dollars' worth had been cut to junk by 2010.

Which four-letter acronym named the $700 billion US bank bailout programme that became law in October 2008?

TARP stood for the Troubled Asset Relief Program, which let the Treasury buy or insure assets tied to mortgages made on or before March 14, 2008, the day of the Bear Stearns rescue.

Which Federal Reserve chairman, Time's Person of the Year for 2009, steered the US through the mortgage meltdown?

Ben Bernanke went on to share the 2022 Nobel economics prize for research on banks and financial crises, the very subject he had lived through in office.

Which savings bank, seized by regulators in September 2008, became the largest bank failure in American history?

Washington Mutual's collapse dwarfed the 1984 failure of Continental Illinois: customers had pulled out $16.7 billion in little over a week.

Which legal term names the home-loan lender, who gains the right to sell the property if payments stop?

Mortgagee is the lender's label because the borrower, called the mortgagor, is the one who actually gives the mortgage; the bank only receives it.

What is the usual British name for a lender taking back a mortgaged home, loosely matching American foreclosure?

Repossession ends with the lender selling the home, and if it fetches more than the debt, the surplus goes back to the borrower.

Which British phrase names a mortgage on a property purchased specifically for renting out to tenants?

Buy-to-let opened up being a landlord, once the preserve of professionals and people rich enough to pay cash, to ordinary savers from the late 1990s.

Which three-letter cost figure must US lenders disclose within three business days of a mortgage application?

APR, the annual percentage rate, expresses the finance charge as a yearly rate so that borrowers can compare lenders. In the US the Truth in Lending Act governs how it is calculated.

Which type of borrowing lets homeowners draw, repay and draw again against the value of the house?

A home equity line of credit, or HELOC, typically has a draw period of about ten years, followed by a repayment period when the outstanding balance must be cleared.

What name is given to a home loan that ranks behind the original lender's claim if the property is sold?

A second mortgage can even be opened at the same moment as the first, a structure nicknamed a piggyback loan. Its lender is paid only from what remains after the first is cleared.

Which short-term borrowing, usually lasting two weeks to three years, tides a buyer over until permanent financing?

A bridge loan lets a buyer use the value locked in an existing home as the down payment on the next one before the old place has sold, though at a higher rate than usual.

Which term names the asset, in a mortgage the house itself, that a lender can claim if repayments stop?

Collateral is the reason a mortgage is cheaper than unsecured borrowing: the security it gives lenders can cut the rate by several percentage points.

What collective name covers the attorney, survey and recording fees paid when a US home purchase completes?

Closing costs can fall on either the buyer or the seller, and include the government's charge for entering the change of ownership in the official record.

Which mortgage approval step shares its name with the trade of the marine insurers at Lloyd's of London?

Underwriting began with insurers who literally wrote their names under a sea voyage's details to accept a share of the risk. A mortgage underwriter now judges whether a borrower is a safe bet.

Which company bought Countrywide Financial, then the largest US mortgage lender, for about $4 billion?

Bank of America got a costly bargain: in 2014 it agreed a near-$17 billion settlement over toxic mortgage securities, many of them sold by Countrywide.

Which policy, demanded by nearly all big US mortgage lenders, covers losses from defects in ownership records?

Title insurance exists because American deed recorders, unlike land registries in most of the industrialised world, do not guarantee who really owns a property.

Which extra cover is compulsory for a US mortgage on a building in one of FEMA's mapped high-risk zones?

Flood insurance became a federal concern in 1968, when Congress created a national programme that lets owners in participating communities buy government-administered cover.

Which type of British mortgage uses a borrower's linked savings balance to reduce the interest charged?

Offset mortgages charge interest on the net debt alone, so every pound left in the linked savings account works as if it were a repayment.

Which US tax break for homeowners has existed since the modern income tax was born in 1913?

The mortgage interest deduction was never designed to promote home ownership: the 1913 tax hit only the richest Americans, whose housing was no social concern.

What term describes a mortgage that a buyer can take over from the seller, original interest rate included?

Assumable loans are mostly government-backed, such as those insured by the FHA or guaranteed by the VA; most other US mortgages carry a due-on-sale clause that blocks a takeover.

What term describes a home loan whose lender may seize the property but cannot pursue the borrower personally?

Non-recourse home loans are the rule in a minority of US states: if the sale falls short of the debt, the lender there must swallow the loss.

Which company collects a homeowner's monthly mortgage payments, even after the loan has been sold to investors?

The servicer also negotiates any loan modification after a default, and conducts or supervises the foreclosure process if it comes to that.

Which three-letter acronym names the securities that repackaged subprime mortgage bonds before the 2008 crash?

CDOs have been called the engine that powered the mortgage supply chain, because their appetite for bonds gave lenders more incentive to make subprime loans.

Which French-derived word names each risk layer of a mortgage-backed security?

Tranche holders are generally paid in order from the most senior down, which is why the top layers of a deal could carry far higher ratings than the bottom ones.

Which US agency, first proposed by law professor Elizabeth Warren in 2007, enforces federal mortgage disclosure rules?

The Consumer Financial Protection Bureau grew out of the 2008 crisis, yet Warren never became its director: officials concluded she could not overcome Republican opposition.

Which term names a lender's agreement to pause or reduce mortgage payments for a borrower in temporary difficulty?

Forbearance is not forgiveness, because interest keeps accruing while payments are paused. Government-backed US home loans qualified for it under the 2020 CARES Act.

Which US cabinet department offers its own mortgages to property buyers in rural areas?

Agriculture Department loans come through its Rural Development arm, whose Section 502 programme mainly helps low-income households purchase homes in the countryside.

At which Wall Street firm did a former post-room clerk pioneer mortgage-backed securities in the late 1970s?

Salomon Brothers bought home loans from lenders across America and packaged them into bonds for investors worldwide. Its onetime post-room part-timer, Ranieri, rose to vice chairman.

What nickname describes a borrower strategically defaulting on a mortgage by posting the house keys to the bank?

Jingle mail is a metaphor for sending the keys back, and it names the choice to stop paying a home loan that the owner could afford to keep up.

Which Scandinavian country's mortgage bond system grew out of rebuilding its capital after a great fire in 1795?

Denmark lost a quarter of Copenhagen to the flames, and the kind of bond created to rebuild it went on to finance nearly all Danish real estate.

Which German mortgage bond was introduced by Frederick the Great in 1769 to ease a credit shortage for nobles?

The Pfandbrief was Prussia's answer to the devastation of the Seven Years' War, which had left the landowning nobility struggling to borrow.

Which former Goldman Sachs chief was US Treasury Secretary during the 2008 mortgage crisis and bank rescue?

Henry Paulson pushed through the law letting the Treasury spend $700 billion, having earlier resisted using public funds for fear of being labelled Mr. Bailout.

What kind of mortgage secures a loan on movable property such as a car or business equipment, not land?

Chattel comes from the same Old French word as cattle, and once meant property or goods of any kind. Such loans finance cars, commercial vehicles and other equipment.

What name was given to Depression-era farm foreclosure sales where neighbours bid tiny sums and handed the land back?

Penny auctions relied on menace as well as solidarity: the crowd intimidated anyone who tried to bid competitively, so the bank got only whatever small change was offered.

Which lender, founded in 1977 as India's first specialised mortgage company, merged with its own bank in 2023?

HDFC was set up under Hasmukhbhai Parekh with backing from India's business community, and the bank it later spawned grew into the country's largest private-sector bank.

Which 1974 US law made it illegal for mortgage lenders to discriminate by sex or marital status?

The Equal Credit Opportunity Act was won by a large coalition of women's and civil rights groups, and also bars lenders from discriminating by race, religion or age.

Which London benchmark rate, tainted by a 2012 rigging scandal, once set the cost of many adjustable-rate mortgages?

LIBOR published its last rates in June 2023, giving way to benchmarks such as SOFR, after Barclays' settlements revealed fraud and collusion in the banks' rate submissions.