The Dodd-Frank Act Ushered in a New Standard for Home

question 6

Multiple Choice

The Dodd-Frank Act ushered in a new standard for home mortgage underwriting. Which of the following standards is now required of any lender when underwriting a home loan?

• A) Ability-to-repay standard
• B) Ability-to-prepay standard
• C) Ability-to-securitize standard
• D) Ability-to-lend standard

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Definitions:

Equilibrium Interest Rate

The interest rate at which the quantity of loanable funds demanded equals the quantity supplied, leading to a balance in the money market.

Equilibrium Level Of Saving

The point at which the amount households save equals the amount they invest, resulting in a balance within the economy's financial resources.

U.S. Government Debt

The total amount of money that the United States federal government owes to creditors, including both public debt and intra-governmental obligations.

Budget Deficit

An economic situation where a government's expenditures exceed its revenue over a specified period of time, leading to borrowing or money printing.