Affirmative lending refers to the practice of adjusting the demographic distribution of loan recipients to better match the demographics of area residents or depositors. This practice is mandated for federally chartered lending institutions under the Community Reinvestment Act (CRA). By improving access to credit for historically underrepresented groups, affirmative lending aims to reduce financial disparities and foster greater community investment.
The American Bankers Association (ABA) is a trade organization representing officers of commercial banks in the United States. It provides a range of services, advocacy, and publications to support the banking industry.
The remaining amount after subtracting relevant values, such as the outstanding principal on a loan or the remaining funds in an account.
A financial institution that accepts deposits, offers checking and savings account services, and loans to individuals and businesses. Banks also provide various financial services like wealth management, currency exchange, and safe deposit boxes.
A Certificate of Deposit (CD) is a financial product commonly offered by banks and credit unions that provides an interest rate premium in exchange for the customer's commitment to leave a lump-sum deposit untouched for a predetermined period.
A commercial bank is a financial institution that offers a broad range of financial services such as business loans, consumer loans, checking and savings accounts, and credit cards. Most deposits at these banks are insured by the Federal Deposit Insurance Corporation (FDIC).
The discount rate serves as a critical financial mechanism for converting future income streams into present-day values, ensuring the appropriate valuation and feasibility of real estate investments.
Disintermediation refers to the process where financial intermediaries, such as banks or savings and loan associations, are bypassed, and funds are directly invested into other assets to seek higher yields.
The Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency that provides deposit insurance to depositors in American commercial banks and savings institutions, ensuring the stability and public confidence in the nation's financial system.
A financial institution is a company whose 'product' involves money, such as making loans, investments, and accepting deposits. These institutions are fundamental to the functioning of the financial system and economy.
In real estate and finance, 'FLOAT' refers to the period between a transaction (such as a deposit or withdrawal) and the time it's credited or deducted, the difference between a variable interest rate and its pegged index, and the act of incurring a debt through loans or bonds.
A letter of credit is a financial instrument issued by a bank that guarantees a buyer's payment to a seller will be received on time and for the correct amount. It reduces risk in transactions, especially in real estate, by substituting the bank's credit for the customer's.
A nonperforming loan (NPL) is a loan for which the borrower is not making interest payments or repaying any principal. This typically occurs when payments are more than 90 days past due or the maturity date has already passed without full repayment.
A performing loan is a loan on which the borrower is making the scheduled payments without default or breach of terms. Performing loans are contrasted with nonperforming loans where payments are overdue by 90 days or more.
The prime rate is the lowest commercial interest rate charged by banks on short-term loans to their most creditworthy customers. It significantly influences other rates, including those for mortgages and consumer loans.
