Impact of the Secondary Mortgage Market in History
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Questions and Answers

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?

    <p>Due to fear and panic spreading across the nation</p> Signup and view all the answers

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

    <p>Provide banks with additional funds for liquidity</p> Signup and view all the answers

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

    <p>Allowed banks to have more liquidity by selling mortgages to the government</p> 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?

    <p>Government National Mortgage Association (Ginnie Mae)</p> Signup and view all the answers

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

    <p>To purchase single-family mortgages</p> Signup and view all the answers

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

    <p>Freddie Mac</p> Signup and view all the answers

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

    <p>Ginnie Mae</p> Signup and view all the answers

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

    <p>1965</p> Signup and view all the answers

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

    <p>Elimination of poverty and racial injustice</p> Signup and view all the answers

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

    <p>Federal Deposit Insurance Corporation</p> Signup and view all the answers

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

    <p>National Housing Act</p> Signup and view all the answers

    What impact did Fannie Mae have on the mortgage market?

    <p>Increased mortgage liquidity</p> Signup and view all the answers

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

    <p>In order to sell mortgages to Fannie Mae</p> Signup and view all the answers

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

    <p>They were authorized to become private, for-profit businesses</p> Signup and view all the answers

    Why did Fannie Mae become profitable according to the text?

    <p>$50,000 mortgage was bought for $80,000 immediately</p> Signup and view all the answers

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

    <p>Ensuring fair housing practices</p> Signup and view all the answers

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

    <p>Federal Reserve System</p> Signup and view all the answers

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

    <p>Buying back corporate bonds and mortgage-backed securities</p> Signup and view all the answers

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

    <p>Federal Truth in Lending Laws</p> Signup and view all the answers

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

    <p>$1.25 trillion in total government-backed mortgages were purchased</p> Signup and view all the answers

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

    <p>Information to make informed borrowing decisions</p> Signup and view all the answers

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

    <p>To ensure lenders provide clear information about key terms of lending agreements</p> Signup and view all the answers

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

    <p>Equal Credit Opportunity Act (ECOA)</p> Signup and view all the answers

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

    <p>Department of Justice (DOJ)</p> Signup and view all the answers

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

    <p>To promote accuracy, fairness, and privacy of information in consumer reporting agency files</p> Signup and view all the answers

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

    <p>The unique features of the loan products and methods of loan servicing</p> Signup and view all the answers

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

    <p>Details about the estimated charges they will incur when taking on a mortgage</p> Signup and view all the answers

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