Australian ADIs Have Generally Applied Conservative Lending Standards When Making

question 100

Essay

Australian ADIs have generally applied conservative lending standards when making housing loans.Describe the four main elements of these standards.Describe two ways in which these standards were not applied in the US sub-prime loan market prior to the GFC.

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Definitions:

AGI

Adjusted Gross Income, calculated by taking gross income and subtracting specific deductions, determining eligibility for many tax credits and deductions.

Deductibility

Deductibility pertains to the eligibility of an expense to be subtracted from gross income to lower taxable income, based on tax laws and regulations.

Medical Expenses

Costs for healthcare services that are paid out-of-pocket by an individual or covered by insurance.

Casualty Loss

A loss resulting from a sudden, unexpected, or unusual event such as a storm, theft, or car accident, which can potentially be deducted from one's taxes.