Interest only[ edit ] The main alternative to a principal and interest mortgage is an interest-only mortgagewhere the principal is not repaid throughout the term. This type of mortgage is common in the UK, especially when associated with a regular investment plan. With this arrangement regular contributions are made to a separate investment plan designed to build up a lump sum to repay the mortgage at maturity. This type of arrangement is called an investment-backed mortgage or is often related to the type of plan used:
Overview[ edit ] The FHLBank System was chartered by Congress in and has a primary mission of providing member financial institutions with financial products and services that assist and enhance the financing of housing and community lending.
The 11 FHLBanks are each structured as cooperatives owned and governed by their member financial institutions, which today include savings and loan associations thriftscommercial bankscredit unions and insurance companies. A primary benefit of FHLBank membership is access to reliable liquidity through secured loans, known as advances, which are funded by the FHLBanks in the capital markets from the issuance of discount notes or term debt, collectively known as consolidated obligations COs.
Institutions must purchase stock in order to become a member. In return, members obtain access to low-cost funding, and also receive dividends based on their stock ownership. The FHLBanks are self-capitalizing in that as members seek to increase their borrowing, they must first purchase additional stock to support the activity.
FHLBanks are exempt from all corporate federal, state, and local taxation, except for local real estate tax. The mission of the FHLBanks reflects a public purpose increase access to housing and aid communities by extending credit to member financial institutionsbut all 11 are privately capitalized and, apart from the tax privileges, do not receive taxpayer assistance.
The principal assets of the FHLBanks are advances secured loans to membersmortgage loans held for portfolio, and other investments. The FHLBanks are required by regulation to hold collateral in excess of the actual loan amount for any given borrower.
The FHLBanks are funded through the daily sale of debt securities in the global capital markets. See external links At December 31,each of the FHLBanks was in compliance with its statutory minimum capital requirements  and the FHLBank System as a whole is above its minimum capital requirements.
The Banks were required to pay 20 percent of their net income after payments to the Affordable Housing Program toward the RefCorp bond payments. This was in order to provide funds to "building and loan" institutions, providing liquidity and making mortgages available.
Initially, the FHLBanks made direct loans to home owners, but transferred this responsibility to the Home Owners' Loan Corporation when it was created the following year.
On September 7,the U. Treasury announced a new credit facility for the three housing government-sponsored enterprises. This enabled the Secretary of the Treasury to purchase FHLBank debt in any amount subject to the pledging of advances and other assets as collateral.
The authority for this facility expired on December 31, FHA loan requirements and guidelines for mortgage insurance, lending limits, debt to income ratios, credit issues, and closing costs. Depending on the terms and conditions of your home loan, most FHA loans today will require MIP for either 11 years or the lifetime of the mortgage.
The Federal Home Loan Banks (FHLBanks, or FHLBank System) are 11 U.S. government-sponsored banks that provide reliable liquidity to member financial institutions (not individuals) to support housing finance and community investment.
With their members, the FHLBanks represents the largest collective source of home mortgage and community credit in the United States.
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