Final answer:
The false statement about conventional loans is that their qualification requirements are uniformly fixed by state law. Conventional loans are not government-backed and may require a higher down payment than FHA loans. Lender requirements vary and are not fixed by law. All of the following are true.
Step-by-step explanation:
All of the following are true of conventional loans except one: C) The qualification requirements are uniformly fixed by state law. Conventional loans are a type of mortgage that are not insured or guaranteed by the government. They often require a higher down payment than non-conventional loans, such as those insured by the Federal Housing Administration (FHA). The requirements for these loans can vary between lenders and are not uniformly fixed by law. This flexibility allows for a range of policies and underwriting standards among financial institutions.
Securitization has changed the way banks approach lending. In the past, banks would scrutinize borrowers to ensure they would repay the loan. Now, some banks plan to sell the loans they create, which may lead to less scrutiny at the outset. Non-traditional, or subprime loans, sometimes have low or no down payment and may not require detailed checks of the borrower's income or credit history, which can lead to higher risk for the lender. Furthermore, according to historical practices, especially before the financial crisis in the mid-2000s, some institutions made risky loans, known as NINJA loans, to borrowers with no income, no job, or assets.