Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 1

What is one disadvantage of government-sponsored loans?

1. Lower interest rates

2. Less regulation

3. Greater reporting requirements

4. Easier qualification criteria

The correct answer is: Greater reporting requirements

Greater reporting requirements is a notable disadvantage of government-sponsored loans because these loans often involve strict oversight and compliance measures due to their backing by governmental entities. This can mean that borrowers and lenders are required to provide extensive documentation, undergo regular audits, and follow precise guidelines. These requirements can create additional administrative burdens for both the borrower and the lender. In contrast, lower interest rates are typically seen as an advantage of government-sponsored loans, as they can help make housing more affordable. Less regulation does not apply here, as government-sponsored loans often come with more regulatory scrutiny rather than less. Finally, easier qualification criteria is another advantage often associated with these loans, aimed at expanding access to homeownership.