Question 1

Which is a practice that borrowers choose to engage in?&#10;A)foreclosures&#10;B)deficiency judgments&#10;C)strategic defaults&#10;D)all of the above

Accepted Answer

Foreclosures and deficiency judgments are actions taken by lenders, not borrowers. Strategic defaults, on the other hand, are a practice that borrowers choose to engage in when they decide to stop making their mortgage payments even though they can still afford to do so. This is typically done in situations where the value of the property has declined significantly and the borrower owes more on the mortgage than the property is worth. By strategically defaulting, the borrower may be able to negotiate a loan modification or other debt relief options with the lender.

Question 2

Payday loans carry an interest rate of&#10;A)less than 25 percent.&#10;B)about 50 percent.&#10;C)about 75 percent.&#10;D)more than 100 percent.

Accepted Answer

Payday loans often have an interest rate that is higher than 100 percent, and can even reach as high as 500-600 percent in some cases. This is because they are short-term loans with very high fees, and the interest is compounded daily. It is important to consider other options before resorting to a payday loan, such as borrowing from friends or family, or seeking assistance from a nonprofit organization.

Question 3

Churning is the practice of encouraging investors to make multiple unnecessary trades in order to create extra income for the broker. Because it benefits a few at the expense of the many, churning violates the utility principle.

Accepted Answer

Churning is unethical because it prioritizes the broker's profits over the client's best interests. This violates the utility principle, which states that actions should be taken to maximize overall happiness or well-being for everyone involved. By encouraging excessive and unnecessary trades, the broker is effectively wasting the client's money and time, which ultimately harms the client's financial well-being.

Question 4

According to the principle of duties, an action is considered moral when it respects the rights of others and immoral when it violates another's rights.

Accepted Answer

The principle of duties, also known as deontological ethics, focuses on the morality of actions based on adherence to rules or duties, rather than the consequences of the actions or whether they respect or violate another's rights.

Question 5

Combining universal ethical principles with long-term thinking can help prevent unethical actions in lending.

Accepted Answer

When lenders combine universal ethical principles such as fairness, honesty, and respect with long-term thinking, they are more likely to make decisions that consider the best interests of all stakeholders and avoid unethical actions that prioritize short-term gains over long-term sustainability.

Question 6

When many homeowners lose their homes, the effect on the community may be&#10;A)lower property values.&#10;B)more crime.&#10;C)less ability to provide basic services.&#10;D)all of the above

Accepted Answer

When many homeowners lose their homes, it can lead to lower property values as the abandoned and foreclosed homes may not be well-maintained. This can also attract criminal activity and contribute to more crime in the area. Additionally, the local government may have less revenue from property taxes and therefore have less ability to provide basic services such as public schools, road maintenance, and law enforcement. All of these factors together can have a significant negative impact on the community.

Question 7

Match between columns&#10;                        Premises: The consumer practice of paying credit card bills before making mortgage payments&#10;The consumer practice of paying credit card bills before making mortgage payments&#10;The consumer practice of paying credit card bills before making mortgage payments&#10;The consumer practice of paying credit card bills before making mortgage payments&#10;The consumer practice of paying credit card bills before making mortgage payments&#10;The consumer practice of paying credit card bills before making mortgage payments&#10;The consumer practice of paying credit card bills before making mortgage payments&#10;The consumer practice of paying credit card bills before making mortgage payments&#10;The process of repossessing a home from a homeowner&#10;The process of repossessing a home from a homeowner&#10;The process of repossessing a home from a homeowner&#10;The process of repossessing a home from a homeowner&#10;The process of repossessing a home from a homeowner&#10;The process of repossessing a home from a homeowner&#10;The process of repossessing a home from a homeowner&#10;The process of repossessing a home from a homeowner&#10;The practice of charging excessively high interest rates&#10;The practice of charging excessively high interest rates&#10;The practice of charging excessively high interest rates&#10;The practice of charging excessively high interest rates&#10;The practice of charging excessively high interest rates&#10;The practice of charging excessively high interest rates&#10;The practice of charging excessively high interest rates&#10;The practice of charging excessively high interest rates&#10;A law that sets maximum acceptable rates of interest&#10;A law that sets maximum acceptable rates of interest&#10;A law that sets maximum acceptable rates of interest&#10;A law that sets maximum acceptable rates of interest&#10;A law that sets maximum acceptable rates of interest&#10;A law that sets maximum acceptable rates of interest&#10;A law that sets maximum acceptable rates of interest&#10;A law that sets maximum acceptable rates of interest&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;An action that a lender may take when a foreclosure does not generate enough money to pay off a mortgage loan&#10;A short-term loan made at a high rate of interest&#10;A short-term loan made at a high rate of interest&#10;A short-term loan made at a high rate of interest&#10;A short-term loan made at a high rate of interest&#10;A short-term loan made at a high rate of interest&#10;A short-term loan made at a high rate of interest&#10;A short-term loan made at a high rate of interest&#10;A short-term loan made at a high rate of interest&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan balance that is larger than the value of the asset for which the loan was made&#10;A loan made for the purpose of buying a home&#10;A loan made for the purpose of buying a home&#10;A loan made for the purpose of buying a home&#10;A loan made for the purpose of buying a home&#10;A loan made for the purpose of buying a home&#10;A loan made for the purpose of buying a home&#10;A loan made for the purpose of buying a home&#10;A loan made for the purpose of buying a home

Accepted Answer

The Answer of payday loan and foreclosure and mortgage and is...

Question 8

Mortgage lenders played a large role in starting the &#34;Great Recession.&#34;

Accepted Answer

Mortgage lenders gave out risky loans to people who couldn't afford them, leading to a housing bubble and ultimately the collapse of the housing market. This, in turn, triggered the "Great Recession" of 2008.

Question 9

After losing a home and having it sold at auction, a homeowner can be assured that all his or her debts to the lender have been discharged.

Accepted Answer

Losing a home and having it sold at auction does not necessarily discharge all of the homeowner's debts to the lender. If the sale price does not cover the full amount owed on the mortgage and any associated fees, the homeowner may still owe a deficiency balance to the lender. Additionally, there may be other liens or judgments against the property that the sale proceeds do not cover.

Question 10

Charging high interest rates is an ethically sound practice according to the egoism principle.

Accepted Answer

The answer of Charging high interest rates is an ethically...

Question 11

An average U.S. household carries _____ in credit card debt.&#10;A)less than $5,000&#10;B)about $5,000&#10;C)about $7,500&#10;D)more than $10,000

Accepted Answer

The answer of An average U.S. household carries _____ in...

Question 12

When borrowers cannot pay, it is easier for credit card companies to recover their losses than for mortgage lenders.

Accepted Answer

The answer of When borrowers cannot pay, it is easier...

Question 13

With a secured loan, such as a home loan, retaking the collateral generally ensures the lender will recover most or all of its costs.

Accepted Answer

The answer of With a secured loan, such as a...

Question 14

After the housing market collapsed, many homeowners owed more on their homes than their homes were worth because&#10;A)they had made small down payments.&#10;B)they had taken home equity loans.&#10;C)home values fell sharply.&#10;D)all of the above

Accepted Answer

The answer of After the housing market collapsed, many homeowners...

Question 15

Which ethical issue in lending is described in the chapter?&#10;A)encouraging people to borrow more money than they can afford to repay&#10;B)charging excessively high interest rates&#10;C)both a and b&#10;D)neither a nor b

Accepted Answer

The answer of Which ethical issue in lending is described...

Question 16

At the time the chapter was written, how many U.S. homeowners owed more on their homes than the home was worth?&#10;A)1 in 25&#10;B)1 in 10&#10;C)1 in 5&#10;D)1 in 4

Accepted Answer

The answer of At the time the chapter was written,...

Question 17

For the most part, credit card companies can charge high fees, raise rates, and lower credit limits without violating the law.

Accepted Answer

The answer of For the most part, credit card companies...

Question 18

A homeowner might choose to skip mortgage payments over credit card payments because&#10;A)credit cards are seen as more basic to survival.&#10;B)many mortgage lenders do not seek to repossess the property immediately.&#10;C)credit cards are often cancelled after a small number of missed payments.&#10;D)all of the above

Accepted Answer

The answer of A homeowner might choose to skip mortgage...

Deck 9: Ethical Lending and the Great Recession