Texas Real Estate Finance - Chp.2 - Money and the Monetary System

Sub-prime Mortgages (lending)

- A type of loan granted to individuals with poor credit histories (often below 600), who, as a result of their deficient credit ratings, would not be able to qualify for conventional mortgages.

Truth in Lending Act (TILA)

- The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction.

Roles of the FED

1. Establishing facilities for selling commercial paper, 2. supervise banking activities, 3. influence the availability, the sale and the cost of money and credit, 4. Lender of last resort

The Federal Reserve System includes how many geographical districts...? 6 8 12 20

12

The Federal Reserve was established in what year...? 1913 1931 1945 2009

1913

Instruments of credit can do which of the following...? AAll of the above BBe regulated by member banks of the Federal Reserve CCollect and clear checks DAdminister credit controls

All of the above BBe regulated by member banks of the Federal Reserve CCollect and clear checks DAdminister credit controls

National member banks of the Federal Reserve must do which of the following...? AAll of the above BMaintain reserves CClear checks DComply with the rules and regulations of the Federal Reserve

All of the above BMaintain reserves CClear checks DComply with the rules and regulations of the Federal Reserve

Money

Anything of value (NOT just cash)

Each district within the Federal Reserve is overseen by a...? ABoard of Directors BPresident CBoard of Associates DAttorney General

Board of Directors

Organization of the FED

Central banking system, 12 districts, each has their own board of directors

As the cost of borrowing money increases, the amount of lending activity will...? Increase Decrease Remain the same The cost of borrowing money is not related to lending activity

Decrease

The minimum interest rate set by the Federal Reserve for lending to other banks is known as the...? Subprime rate Discount rate Starter rate Prime lending rate

Discount rate

Which of the following helps to limit the impact on the economy and the financial system when a bank or thrift institution fails...? AFDIC BFHLB CTILA DRESPA

FDIC

Which of the following has broad powers in controlling credit and the amount of money in circulation in the United States...? Attorney General Department of Finance Federal Reserve U.S. Comptroller

Federal Reserve

Federal Open Market Committee (FOMC)

Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply - of they are selling the economy is slowing down

Office of the Comptroller of the Currency (OCC)

Government agency which sets standards and regulations for fiduciary lenders.

Money that is easily obtainable is considered...? M1 M2 M3 M4

M1

The supply of less liquid money is considered...? M1 M2 M3 M4

M2

The supply of money which is the least liquid is considered...? M1 M2 M3 M4

M3

US Mint

Make US coins

FHFA (Federal Housing Finance Agency)

On September 7, 2008 this agency placed Fannie Mae and Freddie Mac in Conservatorship. Appoint (blank) as a conservator or receiver of the GSEs. Regulates the FHLB

The Federal Deposit Insurance Corporation (FDIC) -

Preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails. (1933)

Which of the following are covered under TILA...? Real estate loans under 50,000 dollars Personal loans under 50,000 dollars Consumer loans under 50,000 dollars All of the above

Real estate loans under 50,000 dollars Personal loans under 50,000 dollars Consumer loans under 50,000 dollars All of the above

The Truth in Lending Act is also known as...? Regulation X TARP RESPA Regulation Z

Regulation Z

This refers to a type of loan granted to individuals with poor credit histories (often below 600), who, as a result of their deficient credit ratings, would not be able to qualify for conventional mortgages...? Prime mortgage Premium mortgage Discount mortgage Sub-prime mortgage

Sub-prime mortgage

The more money an individual has, the more purchasing power they have...? T (True) F (False)

T (True)

Which of the following is covered under Title 1 of the Consumer Protection Act of 1968...? HDIC TARP TILA RESPA

TILA

Regulation Z -

The Truth in Lending Act of 1968 is United States federal law designated to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.

Federal Reserve System

The federal banking system of the United States under the control of central board of governors (Federal Reserve Board) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.

Discount Rate -

The minimum interest rate set by the Federal Reserve for lending to other banks

What happens when the Federal Reserve decreases the bank's required reserves amount...? Economic activity slows down There is a boost in economic activity Lending on real estate transaction decreases The real estate market stalls

There is a boost in economic activity

The economy generally grows when which of the following occurs...? There is an increase in the money supply There is a decrease in the money supply When the money supply remains even A decrease in the population

There is an increase in the money supply

Federal Home Loan Bank System (FHLB)

Twelve regional wholesale banks that loan funds to FHLB members to bolster local community lenders.

The Office of the Comptroller of the Currency falls under the control of the...? AU.S. Treasury BAttorney General CThe Federal Deposit Insurance Corporation DThe U.S. Central Bank

US Treasury

Instruments of credit

a document (as check, letter of credit, or bond) other than paper money that evidences a debt.

Dodd-Frank Act

a law enacted in the aftermath of the financial crisis of 2008-2009 that strengthened government oversight of financial markets and placed limitations on risky financial strategies such as heavy reliance on leverage

Reserves

deposits that a bank keeps as cash in its vault or on deposit with the Federal Reserve - protects the depositors - raising the reserves will slow the economy - lowering the reserves will stimulate the economy

Bureau of Engraving and Printing

the federal agency that produces the nation's paper currency, immigration papers, IDs, new bills to reduce counterfeiting, passports, Federal Reserve notes and security documents