#1
Which government-sponsored enterprises (GSEs) play a significant role in the secondary mortgage market in the United States?
Fannie Mae and Freddie Mac
ExplanationFannie Mae and Freddie Mac are key GSEs involved in the U.S. secondary mortgage market.
#2
What is the primary function of the secondary mortgage market in the United States?
To purchase mortgages from primary lenders
ExplanationIt functions to buy mortgages from primary lenders, providing liquidity to the mortgage market.
#3
Which of the following is NOT a characteristic of mortgage-backed securities (MBS)?
They eliminate credit risk for investors.
ExplanationMBS do not eliminate credit risk; investors bear credit risk in these securities.
#4
What is the main reason for the federal government's involvement in the secondary mortgage market through GSEs?
To stabilize the housing market
ExplanationGovernment's role aims to stabilize the housing market through GSEs like Fannie Mae and Freddie Mac.
#5
What is the primary source of funding for Fannie Mae and Freddie Mac?
Issuing government bonds
ExplanationFannie Mae and Freddie Mac fund operations by issuing government bonds.
#6
Which of the following statements about Fannie Mae and Freddie Mac is true?
They were created by an act of Congress to provide stability to the housing market.
ExplanationCongress established Fannie Mae and Freddie Mac to ensure housing market stability.
#7
Which federal agency oversees Fannie Mae and Freddie Mac?
Federal Housing Finance Agency (FHFA)
ExplanationFHFA is responsible for regulatory oversight of Fannie Mae and Freddie Mac.
#8
What is the conforming loan limit for conventional mortgages backed by Fannie Mae and Freddie Mac in 2022?
$548,250
ExplanationThe conforming loan limit for 2022 is $548,250 for Fannie Mae and Freddie Mac-backed conventional mortgages.
#9
What role does Ginnie Mae play in the secondary mortgage market?
Guaranteeing securities backed by FHA and VA loans
ExplanationGinnie Mae guarantees securities backed by FHA and VA loans in the secondary mortgage market.
#10
What is the purpose of the Federal Home Loan Bank System (FHLBank System) in relation to the secondary mortgage market?
To offer liquidity to member institutions by providing advances secured by mortgage loans
ExplanationFHLBank System provides liquidity to member institutions through advances secured by mortgage loans.
#11
Which legislation established Fannie Mae and Freddie Mac as government-sponsored enterprises (GSEs) and provided regulatory oversight?
The Housing and Economic Recovery Act
ExplanationThe Housing and Economic Recovery Act established GSE status and regulatory oversight for Fannie Mae and Freddie Mac.