Deck 22: The Residential Mortgage Market Stock

Question 1

Securities issued by Freddie Mac are not guaranteed by the federal government.

Answer 1

True

Question 2

Mortgage pools or trusts now account for more mortgage loans than savings and loans associations according to your text.

Answer 2

False

Question 3

A strong housing market can provide an incentive for households to refinance their homes simply to capture some of the additional equity associated with rising home prices.

Answer 3

True

Question 4

According to your text mortgage pools or trusts account for approximately what percentage of mortgages in the U.S. market?

A) 5%
B) 10%
C) 25%
D) 49 and %
E) 55%

Question 5

When two home owners trade their houses with each other this is known as a:

A) Land lease
B) Lease-purchase deal
C) Reverse mortgage
D) Switch loan
E) None of the above

Question 6

Like the Federal housing administration (FHA) the veteran's administration (VA) offered to insure residential mortgages and helped to _____________________ required to buy a new homes.

A) Lower both loan rates and down payments
B) Lower loan rates
C) Lower the down payment
D) Raise loan rates and lower down payment
E) None of the above

Question 7

What has happened in recent years to the prices of new homes? To interest rates and other terms on conventional home mortgage loans? What are the causes of these trends?

Question 8

Residential mortgages may be classified in several different ways. Please describe the structure of the mortgage market as it relates to each of the following dimensions:

Question 9

How does the behavior of the home mortgage market reveal the problems that both home buyers and mortgage lenders face as they operate in this huge financial marketplace?

Question 10

Please list the principal mortgage lending institutions in the United States. Which is most important? In what particular areas of the market?

Question 11

Please identify the following federal agencies and describe their roles or functions: FHA, VA, FHLB, FNMA, GNMA and FHLMC.

Question 12

How has the federal government's intervention in the home mortgage market over the past several decades changed the structure and operation of the home mortgage market? For what reason has all of this been done?

Question 13

A number of new mortgage instruments have appeared in recent years. These new financial instruments include variable rate mortgages (VRMs), adjustable mortgage instruments (AMIs), Canadian rollover mortgages (CRM) and reverse-annuity mortgages in addition to the more conventional fixed-rate mortgage (FRM). Please describe how each of these home mortgage instruments works and what their advantages are.

Question 14

What is a mortgage lock-in? Does it benefit the borrower or the lender? When might it not be a good idea?

Question 15

What is a loan modification agreement? What is its purpose?