Which of the Following Contributed to the Rising Mortgage Default

question 135

Multiple Choice

Which of the following contributed to the rising mortgage default and foreclosure rates and the eventual economic crisis of 2008?

• A) Tightened mortgage lending standards and the reduction of loanable funds during 2001-2005.
• B) The increase in the greed of Wall Street bankers and other commercial lenders.
• C) The substantial increase in sub-prime and adjustable rate mortgages as a share of the total during 2001-2006.
• D) The increase in the household savings rate during the two decades following 1985.
• E) The increase in fixed rate mortgages as a share of the total during the decade prior to the crisis.

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Definitions:

Litigation Crisis

A crisis driven by a lawsuit (or the threat of one) that plays out in the court of public opinion as well as in the legal system.

Organizational Crisis

A critical event or point of decision that poses a significant threat to a business or institution and requires immediate action to prevent or mitigate damage.

Negative Outcomes

Unfavorable results or consequences that arise from a particular action or decision, often contrary to the desired or expected effect.

Performance

The act of carrying out a task or function, commonly evaluated in terms of its efficiency, effectiveness, and quality.