Finance
Under the Community Reinvestment Act (CRA), Massachusetts banks are evaluated on:
ATheir compliance with fair lending laws only
BTheir efforts to meet the credit needs of the communities in which they operate, including low- and moderate-income areas✓ Correct
CThe number of Massachusetts properties they finance
DTheir profitability ratios
Explanation
The CRA requires federal banking regulators to evaluate how well banks serve the credit needs of the communities where they do business, including low- and moderate-income neighborhoods.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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