Freddie Mac, or Government Financial Mortgage Corp (FHLMC): A stockholder-had, in public areas exchanged government-sponsored corporation (GSE) chartered by Congress inside 1970

FICO Get: A quantitative credit history from new Fair Isaac Enterprise (FICO). Loan providers assess borrowing from the bank chance situated in region on the Credit scores. In the event that a lender offers credit in order to people with the lowest FICO rating, the borrowed funds is subprime. The newest introduction off Credit scores triggerred the elevated automation out-of financial choices, deleting subjectivity from the process, and also reducing the quantity of inputs for the borrowing decisions. Come across Todd Baker interview.

Overall economy Query Commission: An excellent ten-representative bipartisan commission energized from the management of the All of us Congress assigned to analyze what causes the brand new 2008 Overall economy. Find Karstens memo.

Monetary Confidentiality Signal: Founded by the Gramm-Leach-Bliley Work when you look at the 1999, which provision sought for to guard consumer privacy because of the demanding financial institutions to include observes about their accessibility customers’ private information (basically, an online privacy policy). Notices need to be easily understandable, and you may consumers have to be permitted to choose out of revealing particular private information. Come across Chouliara memo.

Economic Characteristics Adaptation Act of 1999 (Gramm-Leach-Bliley Act or GLBA): Signed by the President Bill Clinton inside the 1999, it statute repealed the brand new Glass-Steagall Act’s breakup off commercial and money banking, facilitated the manufacture of economic carrying enterprises, and you can accelerated the newest deregulation of the monetary business. Find Chouliara memo.

Of the growing exchangeability to own loan providers and make these types of money, Freddie Mac supporting homeownership and you may rental property for middle-money Americans

Foreclosure: The fresh legal procedures that enable a creditor for taking control out-of mortgaged assets market it if there is debtor standard. The particular procedure relies on per nation’s statutes. Foreclosures greatly impacts borrowers’ credit scores and usually impedes them from getting major upcoming money.

Instance Fannie mae, Freddie Mac purchases finance from lenders and you will securitized mortgage loans on financial-recognized ties. While doing so, it absolutely was along with beholden to help you their stockholders just like the a friends. Today, Freddie Mac computer are alternatively managed from the Federal Construction Financing Institution (FHFA). Pursuing the crisis, Freddie Mac computer was placed directly under regulators conservatorship. The top difference between Fannie mae and you can Freddie Mac computer is the fact Fannie Mac tends to pick funds regarding larger commercial financial institutions, if you find yourself Freddie Mac computer purchases finance out-of quick in order to medium-sized banking companies.

Front-prevent ratio (Mortgage-to-money proportion): A good idea tiny fraction out-of shelling out for home financing for certain level of money. Essentially, financial advisers advise that just about 28% out-of month-to-month earnings go into housing costs. Pick Edward Pinto interview.

Glass-Steagall Act: A foundation of This new Deal, which 1933 laws and regulations split investment and you will industrial financial, whilst performing brand new Federal Put Insurance policies Organization. See Chouliara memo.

Household guarantee: Brand new percentage of a great house’s current value stored because of the citizen – the difference between the newest home’s really worth together with owner’s mortgage balance. The amount of home security can change through the years based rates on the housing industry, repayments generated toward home loan, and you will one the money.

Home mortgage Disclosure Work (HMDA): Good 1974 law that really needs specific mortgage lenders to reveal information on mortgage loans they generate. HMDA mandates that lenders declaration facts about each other winning and you may ineffective home loan apps but doesn’t mandate any type of behavior.

Owning a home and you will Security Protection Act (HOEPA): Added once the an amendment towards Basic facts inside the Financing Work during the 1994, this operate aligned so you’re able to discourage abusive strategies home loan world. They aided render shelter to have consumers with the intention that in the event that a loan satisfied loans Gilbertown a certain high-rates publicity sample, the lending company was required to promote most disclosures on the ultimate rates of mortgage and you can effects to own defaulting. Select Karstens memo.