Deck 8: Buyouts: the Lbo Lobby Makes Its Move on Washington Max Hollandand Viveca Novak

Question 1

In the early 2000's, approximately percent of subprime loans required little or no income verification.

A) 60
B) 50
C) 30
D) 10

Answer 1

A

Question 2

On what basis did the Mortgage Bankers Association resist regulation by the federal government?

Answer 2

not answered

Question 3

The Home Owners' Loan Corporation, first developed during the Great Depression to prevent foreclosures, was re-established following the subprime scandal of the 2000's.

Answer 3

False

Question 4

Kuttner argues that there are better ways to help low-income Americans become homeowners or avoid foreclosures than to rely on mortgage brokers. What housing policies does Kuttner suggest? Which do you agree with, and why?

Question 5

In the early 2000's, as many as 30 percent of subprime loans required little or no verification of income.

Question 6

"Subprime" mortgage refers to

A) below what is considered optimal.
B) loan denial because of poor credit history.
C) income that is too low to qualify for loans.
D) credit that is extended to people who would not ordinarily qualify for loans.

Question 7

Which state had the highest foreclosure rate in 2007?

A) California
B) Nevada
C) Ohio
D) North Dakota

Question 8

Unlike banks and savings and loan association, mortgage companies are not directly regulated by the federal government.

Question 9

Which of the following best characterizes the federal government's response to the subprime scandal?

A) A new federal agency was created to regulate mortgage companies, similar to the regulation of banks and savings and loan associations.
B) The Office of Federal Housing Enterprise Oversight, which monitors Fannie Mae and Freddie Mac, created standards for oversight of mortgage companies.
C) The regulatory agencies did nothing until 2007 when Congress began to investigate the Mortgage Bankers Association.
D) The Home Owners' Loan Corporation, first developed in the 1930's, was re-established to assist low- income Americans with home ownership and prevention of foreclosure.

Question 10

The value of subprime loans steadily decreased during the 2000's.

Question 11

Explain how mortgage companies are able to make subprime loans.

Question 12

A mortgage is considered "subprime" when the buyer's income is too low to qualify for a conventional loan.

Question 13

In an effort to prevent foreclosures in the late 2000's, housing policies not taken include all of the following except:

A) underwriting standards
B) subsidized mortgages
C) starter homes
D) credit counseling for new home buyers
E) the SEC investigation of New Century Financial Corporation