Crisis Origins
This Type of high-risk mortgage, given to borrowers with poor credit, became the toxic core of the 2008 financial crisis.
(A) Prime Mortgage
(B) Subprime Mortgage
(C) Reverse Mortgage
(D) Balloon Mortgage
(B) Subprime Mortgage
This investment bank, founded in 1850, became the largest bankruptcy in U.S. history when it collapsed in September 2008.
(A) Bear Stearns
(B) Lehman Brothers
(C) Merrill Lynch
(D) Goldman Sachs
(B) Lehman Brothers
Odinet's book Foreclosed focuses on this legal process that allows lenders to seize and sell a home when a borrower defaults on their mortgage.
(A) Eminent Domain
(B) Foreclosure
(C) Bankruptcy
(D) Eviction
(B) Foreclosure
Passed in 2010, this sweeping financial reform law created the Consumer Financial Protection Bureau and introduced new mortgage servicing rules.
(A) Sarbanes-Oxley Act
(B) Glass-Steagall Act
(C) Dodd-Frank Act
(D) Gramm-Leach-Billey Act
(C) Dodd-Frank Act
The 2008 crisis wiped out approximately this many trillions of dollars in U.S. household wealth through lost home equity and retirement savings.
(A) $3 Trillion
(B) $8 Trillion
(C) $13 Trillion
(D) $20 Trillions
(C) $13 Trillion
This government-sponsored entity, along with Fannie Mae, bought and guaranteed mortgage-backed securities, helping inflate the housing bubble.
(A) Freddie Mac
(B) Ginnie Mae
(C) Sallie Mae
(D) The Federal Reserve
(A) Freddie Mac
This insurance giant required a $180 billion government bailout after its financial products division sold enormous quantities of credit default swaps on toxic MBS.
(A) MetLife
(B) Prudential
(C) AIG
(D) State Farm
(C) AIG
In Foreclosed, Odinet argues that this electronic registry, created by the mortgage industry, obscured chain of title on millions of loans and undermined transparency in foreclosure proceedings.
(A) MERS
(B) FHFA
(C) HMDA
(D) RESPA
(A) MERS
This federal agency, created by Dodd-Frank, was designed to protect consumers from predatory financial products, including abusive mortgage practices.
(A) FDIC
(B) OCC
(C) CFPB
(D) FINRA
(C) CFPB
This federal program, authorized in 2008, gave the Treasury up to $700 billion to stabilize financial markets by purchasing toxic assets and equity stakes in banks.
(A) HAMP
(B) QE1
(C) TARP
(D) FDIC Guarantee Program
(C) TARP
Financial firms bundled thousands of mortgages into these tradeable securities, which spread risk and ultimately catastrophe across global markets.
(A) Treasury Bonds
(B) MBSs
(C) Municipal Bonds
(D) Exchange-traded Funds
(B) MBSs
These middlemen, central to Odinet's Foreclosed, collect mortgage payments from homeowners and distribute funds to investors, often prioritizing investors over struggling borrowers.
(A) Title Companies
(B) Mortgage Servicers
(C) Underwriters
(D) Escrow Agents
(B) Mortgage Servicers
Odinet uses this term for the agreement governing the relationship between mortgage servicers and investors, dictating what the servicer can and cannot do with a defaulted loan.
(A) Mortgage Deed and Trust
(B) Promissory Note
(C) Pooling and Servicing Agreement (PSA)
(D) HUD-1 Statement
(C) Pooling and Servicing Agreement (PSA)
Robo-signing refers to bank employees signing foreclosure documents without review, violating this legal requirement that a signer have direct knowledge of the facts attested to
(A) The Parol Evidence Rule
(B) The Requirement of Personal Knowledge and Proper Attestation Under Oath
(C) The Statute of Frauds
(D) The Best Evidence Rule
(B) The Requirement of Personal Knowledge and Proper Attestation Under Oath
Critics argued the government response to the crisis prioritized bailing out these institutions, sometimes called 'too big to fail', while providing insufficient relief to underwater homeowners.
(A) Community Banks
(B) Large Financial Institutions/Wall Street Banks
(C) Insurance Companies
(D) Credit Unions
(B) Large Financial Institutions/Wall Street Banks
This practice, where lenders issued mortgages and immediately sold them off, removed incentive to verify a borrower's ability to repay.
(A) Amortization Model
(B) Direct Lending Model
(C) Originate-to-distribute Model
(D) Portfolio Lending Model
(C) Originate-to-distribute Model
Tasked with objectively rating financial products, these institutions are criticized for giving AAA ratings to toxic MBS partly because issuers paid their fees, a textbook conflict of interest.
(A) The Federal Reserve
(B) The SEC
(C) Credit Rating Agencies (Moody's, S&P, Fitch)
(D) The OCC
(C) Credit Rating Agencies (Moody's, S&P, Fitch)
Odinet argues that mortgage servicers have a fundamental conflict of interest because their fees are often tied to THIS activity, rather than to successfully helping borrowers.
(A) Refinancing Loans
(B) Default Servicing and Collecting Fees from Delinquent Loans
(C) Issuing New Mortgages
(D) Selling REO Properties
(B) Default Servicing and Collecting Fees from Delinquent Loans
This 2012 settlement, worth approximately $25 billion, was reached between five major banks and state attorneys general over widespread robo-signing and foreclosure fraud.
(A) The Dodd-Frank Consent Decree
(B) The National Mortgage Settlement
(C) The TARP Agreement
(D) The Basel III Compact
(B) The National Mortgage Settlement
This 2009 federal program was designed to help struggling homeowners modify their loans and avoid foreclosure, but was widely criticized for its poor implementation and low success rate.
(A) HARP
(B) HOPE NOW
(C) HAMP
(D) Making Home Affordable
(C) HAMP
Rating agencies gave this coveted top-tier rating to many MBS products that were actually filled with high-risk subprime loans.
(A) BB+
(B) A+
(C) BBB
(D) AAA
(D) AAA
This controversial practice highlighted by Odinet occurs when a servicer simultaneously pursues foreclosure while supposedly negotiating a loan modification with the homeowner.
(A) Robo-signing
(B) Dual Tracking
(C) Note Splitting
(D) Loss Mitigation
(B) Dual Tracking
Odinet advocates for structural reforms so that the party making decisions about a homeowner's fate has an actual financial stake in the loan's outcome. This addresses a flaw called what?
(A) Adverse Selection
(B) Moral Hazard in the Servicer Model
(C) Regulatory Capture
(D) The Principal-Agent Problem in Servicing
(D) The Principal-Agent Problem in Servicing
This legal doctrine, raised in foreclosure defense, holds that a party cannot enforce a promissory note unless it can prove it owns or holds the note, a problem MERS enormously complicated.
(A) Equitable Subrogation
(B) Lis Pendens
(C) Standing/Holder in Due Course Doctrine
(D) Res Judicata
(C) Standing/Holder in Due Course Doctrine
Odinet and other scholars argue communities of color suffered disproportionately from predatory lending and foreclosure, consistent with this broader pattern of systemic inequality in financial services.
(A) Redlining
(B) Predatory Inclusion and Racial Wealth Gap Exploitation
(C) Blockbusting
(D) Steering
(B) Predatory Inclusion and Racial Wealth Gap Exploitation