Mortgage Quiz

What does the bank get in exchange for the money lent for a mortgage?

• The keys to the house

• A monthly payment

• A deed

• Ownership of the house

What is the consequence of stopping payments on a mortgage?

• The bank charges a fine

• The interest rate increases

• The person with the deed takes the house

• The mortgage is forgiven

What was a significant trend in the early 2000s related to mortgages?

• Decrease in the number of investors

• Investors began investing in mortgages

• Banks stopped selling mortgages

• Decrease in housing prices

What is a NINJA Loan?

• A loan given to people with a verified income and job

• A loan with a fixed interest rate

• A loan requiring significant assets as collateral

• A loan given to people with no income, no job, or assets

What is an Adjustable Rate Mortgage?

• A mortgage with a high fixed interest rate

• A mortgage with an interest rate that is low initially but can increase

• A mortgage that can only be adjusted once a year

• A mortgage with an interest rate that decreases over time

Subprime mortgages are considered less than good because they are more likely to be given to people who are:

• A) More likely to pay back the mortgage

• B) Less likely to need a mortgage

• C) Less likely to pay back the mortgage

• D) More likely to refinance the mortgage

What is often a characteristic of subprime mortgages in terms of interest rates and terms?

• A) Fixed rates and short terms

• B) Variable rates and long terms

• C) Fixed rates and long terms

• D) Variable rates and short terms

What did the increase in money to pay for houses lead to, as shown in the image?

• A decrease in home prices

• A rise in home prices

• A solid investment belief

• Credit agencies making false statements

What event occurred in January 2008 that contributed to the financial crisis?

• The stock market fell over 50%

• People couldn't afford mortgage payments, leading to foreclosures

• Biggest investment banks failed or were bought out

• People withdrew money, causing banks and credit to freeze

What happened to the biggest investment banks in September 2008?

• They received additional funding from big investors

• They saw an increase in mortgage payments

• They either failed or were bought out

• They contributed to the stock market falling over 50%