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What is Net Lending?
The amount of extra funds that a sector has available to provide for either direct and indirect lending purposes to other similar counter-parts.
Net lending is used as a balancing item in the capital account. It is calculated as follows:
Where:
CT = Capital Transfers
NFS = Non-Financial Assets Read more for examples and further explanation including related video clips and also comments
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What is FED Pass?
An action taken by the Federal Reserve that looks to increase the availability of credit by moving additional reserves into the banking system. The supply of loans is increased as more funds are injected into major banks, typically allowing lenders to originate more mortgages at lower interest rates. Read more for examples and further explanation including related video clips and also comments
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What is Warehouse Lending?
A line of credit extended by a financial institution to a loan originator to fund a mortgage that a borrower initially used to buy a property. The loan typically lasts from the time it is originated to when the loan is sold into the secondary market, whether directly or through a securitization. Read more for examples and further explanation including related video clips and also comments
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What is With Approved Credit – WAC?
A condition requiring a purchaser using financing to have adequate credit – as approved by his or her financial lending institution – for the transaction to go through. Read more for examples and further explanation including related video clips and also comments
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What is Points?
1. A 1% change in the face value of a bond or a debenture.
2. In futures contracts, a price change of one one-hundredth, or 1% of one cent.
3. A $1 price change in the value of common stock.
4. In real estate mortgages, the initial fee charged by the lender, with each point being equal to 1% of the amount of the loan. It can also refer to each percentage difference between a mortgage’s interest rate and the prime interest rate. Read more for examples and further explanation including related video clips and also comments
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What is Loan Application Fee?
A fee charged to process an application for a loan, such as a home mortgage from a lender or mortgage broker. Loan application fees are charged to cover some of the costs involved in processing the application including credit checks, property appraisals and basic administrative costs. Read more for examples and further explanation including related video clips and also comments
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What is Credit Worthiness?
An assessment of the likelihood that a borrower will default on their debt obligations. It is based upon factors, such as their history of repayment and their credit score. Lending institutions also consider the availability of assets and extent of liabilities to determine the probability of default. Read more for examples and further explanation including related video clips and also comments
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What is Asset-Liability Committee – ALCO?
A risk-management committee in a bank or other lending institution that generally comprises the senior-management levels of the institution. The ALCO’s primary goal is to evaluate, monitor and approve practices relating to risk due to imbalances in the capital structure. Read more for examples and further explanation including related video clips and also comments
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What is Firm Commitment?
1. A lending institution’s promise to enter into a loan agreement with a specific entity within a certain period of time.
2. An underwriter’s agreement to assume all inventory risk and purchase all securities directly from the issuer for sale to the public at the price specified. Read more for examples and further explanation including related video clips and also comments
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What is Mortgage Index?
The benchmark interest rate an adjustable-rate mortgage’s fully indexed interest rate is based on. An adjustable-rate mortgage’s interest rate, known as the fully indexed interest rate, is comprised of an index value plus a margin. The margin tends to be constant, but the index’s value is variable. Several benchmark interest rates serve as mortgage indexes. Read more for examples and further explanation including related video clips and also comments
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