Which of the following was a contributing factor to the rising default and foreclosure rates beginning in the latter half of 2006?
A) the increasing share of 30-year, fixed rate loans as a share of outstanding mortgages
B) the rigid standards of rating agencies, such as Moody's and Standard and Poors, which limited the development of mortgage-backed securities
C) the price-stability policies of the Federal Reserve during 1998-2008
D) the erosion of lending standards during the preceding decade

Question

Quizplus · Accepted Answer

The erosion of lending standards during the preceding decade contributed significantly to the rising default and foreclosure rates beginning in the latter half of 2006. Lending standards were relaxed, and loans were given to people who did not have the capacity to pay them back, resulting in a high level of default and foreclosure.

Which of the Following Was a Contributing Factor to the Rising