Which of the statements about subprime lending is false? Before the 2008 financial crisis, financial institutions increased the number of subprime loans they issued as home prices continued to rise. If a home owner is unable to afford the mortgage payments, the homeowner can always pay off the mortgage by selling the home. Subprime lending occurs when financial institutions issue loans to individuals who are less likely to be able to repay their loan than individuals who meet a set of standards. The risks associated with subprime lending increase as the likelihood of falling home prices increase.
Which of the statements about subprime lending is false? Before the 2008 financial crisis, financial institutions increased the number of subprime loans they issued as home prices continued to rise. If a home owner is unable to afford the mortgage payments, the homeowner can always pay off the mortgage by selling the home. Subprime lending occurs when financial institutions issue loans to individuals who are less likely to be able to repay their loan than individuals who meet a set of standards. The risks associated with subprime lending increase as the likelihood of falling home prices increase.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Which of the statements about subprime lending is false?
Before the 2008 financial crisis, financial institutions increased the number of subprime loans they issued as home prices continued to rise.
If a home owner is unable to afford the mortgage payments, the homeowner can always pay off the mortgage by selling the home.
Subprime lending occurs when financial institutions issue loans to individuals who are less likely to be able to repay their loan than individuals who meet a set of standards.
The risks associated with subprime lending increase as the likelihood of falling home prices increase.
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