Impact of the Secondary Mortgage Market in History

What was President Franklin D. Roosevelt's proposed solution to prevent the catastrophe caused by bank failures?

Implement stricter regulations on bank lending practices
Create a federal agency to purchase mortgages from banks (correct)
Encourage individuals to invest more in the stock market
Raise interest rates to discourage large withdrawals

In the context of the text, what purpose did the secondary mortgage market serve for banks?

Offering lower interest rates to mortgage borrowers
Increasing the profits of banks through mortgage sales
Implementing stricter lending criteria for banks
Providing additional funds for banks to repay customers wanting to withdraw money (correct)

What was the consequence of banks failing and businesses closing during the crisis described in the text?

Stock market prices surged due to increased investments
The federal government nationalized all banks
Mortgages went unpaid and homes were foreclosed (correct)
Individuals increased their savings deposits in banks

Why did individuals start withdrawing money from their bank accounts during the crisis?

Due to fear and panic spreading across the nation (C) Signup and view all the answers

What did the federal government aim to achieve by purchasing mortgages from banks in the secondary mortgage market?

Provide banks with additional funds for liquidity (D) Signup and view all the answers

How did the concept of the secondary mortgage market change the lending practices of banks?

Allowed banks to have more liquidity by selling mortgages to the government (A) Signup and view all the answers

Which government agency guarantees timely payment on mortgages backed by the Federal Housing Administration or the Department of Veteran’s Affairs?

Government National Mortgage Association (Ginnie Mae) (A) Signup and view all the answers

What was the main purpose behind creating the Federal Home Loan Mortgage Corporation (Freddie Mac) in 1970?

To purchase single-family mortgages (C) Signup and view all the answers

In the Secondary Mortgage Market, which entity was designed to purchase single-family mortgages?

Freddie Mac (C) Signup and view all the answers

Which government agency operates under the Department of Housing and Urban Development (HUD)?

Ginnie Mae (D) Signup and view all the answers

When did the Department of Housing and Urban Development (HUD) become a cabinet-level department?

1965 (B) Signup and view all the answers

What were the two main goals of the 'Great Society' social reforms?

Elimination of poverty and racial injustice (D) Signup and view all the answers

What governmental agency was created to guarantee payment on passbook accounts?

Federal Deposit Insurance Corporation (C) Signup and view all the answers

Which act passed in 1934 aimed at improving the mortgage market?

National Housing Act (D) Signup and view all the answers

What impact did Fannie Mae have on the mortgage market?

Increased mortgage liquidity (B) Signup and view all the answers

Why did banks start following Fannie Mae's procedures and policies?

In order to sell mortgages to Fannie Mae (D) Signup and view all the answers

What change occurred in 1968 with regards to agencies like Fannie Mae?

They were authorized to become private, for-profit businesses (B) Signup and view all the answers

Why did Fannie Mae become profitable according to the text?

$50,000 mortgage was bought for $80,000 immediately (C) Signup and view all the answers

What is the main purpose of HUD in real estate financing?

Ensuring fair housing practices (B) Signup and view all the answers

Which institution is commonly referred to as 'The Fed'?

Federal Reserve System (C) Signup and view all the answers

What was one of the actions taken by the Federal Reserve Board in the early 1990s?

Buying back corporate bonds and mortgage-backed securities (A) Signup and view all the answers

Which legislation governs real estate financing and requires specific information for borrowers?

Federal Truth in Lending Laws (B) Signup and view all the answers

What action did the Federal Reserve Board take in 2008 related to stabilizing the housing market?

$1.25 trillion in total government-backed mortgages were purchased (B) Signup and view all the answers

In real estate financing, what does the Truth in Lending Act require borrowers to be given?

Information to make informed borrowing decisions (B) Signup and view all the answers

What is the main purpose of the Truth in Lending Act disclosures?

To ensure lenders provide clear information about key terms of lending agreements (D) Signup and view all the answers

Which legislation prohibits credit discrimination based on various factors like race and marital status?

Equal Credit Opportunity Act (ECOA) (D) Signup and view all the answers

Who enforces the Equal Credit Opportunity Act (ECOA) and looks for patterns of discriminatory lending practices?

Department of Justice (DOJ) (D) Signup and view all the answers

What is the primary goal of the Fair Credit Reporting Act (FCRA)?

To promote accuracy, fairness, and privacy of information in consumer reporting agency files (B) Signup and view all the answers

What aspect of loan products does the Real Estate Settlement Procedures Act (RESPA) instruct lenders to disclose?

The unique features of the loan products and methods of loan servicing (D) Signup and view all the answers

What type of information must mortgage borrowers receive according to the Real Estate Settlement Procedures Act (RESPA)?

Details about the estimated charges they will incur when taking on a mortgage (A) Signup and view all the answers