Name The Term
Failing to Make Loan Payments
Default
The year home prices peaked
2006
In the boom period, the demand curve shifts which way? Is this an increase or decrease?
Right, increase
In Monday's loan game, what word explains why lenders approved every body for loans? (starts with an I)
Incentive
The Lender Takes the Home Back
Foreclosure
The interest rate in 2003 and 2004 was near what percentage?
1%
Which demand shifter is present in the following scenario: With lower interest rates, banks and lenders start giving out loans to people with weak credit
Number of buyers/consumers
In Monday's loan game, Linda and Rob's loan started at 4%, then jumped to what %?
8%
A loan to a borrower with weak credit
Subprime
What happened to interest rates between 2004-2006?
They began to reset
In the bust period, this happened to housing prices
They decreased
In what order did loans pass from wall street, lenders, and investors?
Lenders sold to Wall Street, Wall Street bundled them then sold to investors.
Bundling multiple loans into an investment
Securitization
Put these in order: Unemployment, interest rates, home prices, late payments
1. Interest rates
2. Home prices
3. Late payments
4. Unemployment
Which economic goal is shown in these statements?
1. Rising home values felt like savings.
2. After the crash, families lost homes, jobs, and retirement savings.
Security
What is the highest possible rating that a rating agency can give a loan?
AAA
Taking risks because others cover the losses
Moral Hazard
What rose first, late payments, or unemployment?
Late payments
Which economic goal is shown by the statements?
1. Money poured into homes and loan that looked safe, but hidden risk meant resources went to the wrong places.
Efficiency
What is it called when a loan starts with one rate, then jumps to a different rate over time?
An adjustable rate mortgage/loan