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Community spokesperson: As a result of a recent surge of foreclosures,

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Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?


(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.

(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.

(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.

(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.

(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.


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Originally posted by souvik101990 on 05 Sep 2017, 14:27.
Last edited by Bunuel on 02 Nov 2018, 04:35, edited 1 time in total.
Renamed the topic and edited the question.
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 06 Sep 2017, 04:54
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The passage describes the following "snowball effect":

  • Many homes are vacant and falling into disrepair.
  • We can infer that this has caused property values in the town to plummet.
  • Fearing a further decline in the value of their homes, panicked residents will begin to leave town.
  • If residents leave town, there will be an even greater number of vacant homes, which will presumably cause property values to continue to fall.
  • If property values continue to fall, more residents will presumably panic and leave their homes.

The community spokesperson has a plan: she recommends that, in order to prevent this snowball effect, "the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years." And the question is asking us to find the answer choice that most strongly indicates that this plan is unlikely to achieve its goals.

Quote:
(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.

The purpose of the plan is to prevent the snowball effect. Choice (A) is a reason why residents would NOT leave, which would lessen the snowball effect. If anything, this might contribute to the success of the recommended plan. Choice (A) certainly does not suggest that the plan will fail, so eliminate (A).

Quote:
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.

The spokesperson does not say that implementing the recommended plan is the ONLY way to prevent panicked residents from leaving town. The spokesperson simply suggests that this is ONE way to prevent the snowball effect. Eliminate (B).

Quote:
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.

If crime rates have risen and the town is a less desirable place to live, potential buyers might be discouraged from buying homes in the town, even if special mortgages are offered. Choice (C) is detrimental to the spokesperson's plan, so let's hang on to this one.

Quote:
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.

Notice that choice (D) says "SOME buyers". Sure, some buyers might leave after five years, but as long as the town can encourage people to fill the vacant homes, the snowball effect will be prevented and the plan will succeed. If MOST buyers were to leave after five years, the town could run into the same problem, but if only SOME buyers leave, there is no reason to expect that to happen. Eliminate (D).

Quote:
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.

The argument does not discuss how the special mortgages would be funded. Cutting the funding for many community programs might be a negative consequence of implementing the plan, but this does not suggest that the plan will fail. Eliminate choice (E).

Choice (C) is the best answer.
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 05 Sep 2017, 18:06
IMO D

topic at hand :- Can it prevent snowball effect by encouraging potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years ?

option D tells Government will only be able to attract buyers who won't be able to make payments after 5 years when interest rate are higher, hence snowball effect continues.

Any constructive criticism is always appreciated :)
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 05 Sep 2017, 21:09
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MadaraU wrote:
IMO D

topic at hand :- Can it prevent snowball effect by encouraging potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years ?

option D tells Government will only be able to attract buyers who won't be able to make payments after 5 years when interest rate are higher, hence snowball effect continues.

Any constructive criticism is always appreciated :)


Why cannot C is the answer?

In C, If crimes rates are increased, people will leave the city, no matter what mortgages are. Then snowball effect will continue.

In D, Government will able to attract buyers. So snowball effect will stopped now. we don't want to know whether snowball effect continue after 5 years or not.
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 05 Sep 2017, 21:41
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souvik101990 wrote:
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.



Conclusion :- Foreclosures------> Vacant homes-----> homes becoming dilapidated------>Fall in price -----> exodus of people and then again back to more foreclosures.

Solution suggested :- Low interest rate mortgages for first 5 years to encourage potential buyers

Any option that negates the effect of the solution is the one which will stand as a wall between the plan and its success.

C--> speaks of increasing crime rates and that the place is becoming less desirable as a place to live. However it does not show us why the plan of offering low mortgage rates will fail. A place becoming less desirable doesn't mean everyone will leave the city.

D--> This option however attacks the core of the assumption of the spokesperson..viz..Low interest rates for first five years. A low interest rate might spur the demand for homes in the short term. however in the long term when the interest rates will rise again, what if the same buyer is not able to pay the increased costs??

hence option D is the only one which serves to weaken the assumption in the plans of the spokesperson.


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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 12 Sep 2017, 20:16
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Boil it down - To prevent property prices from falling further , town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Type - weaken

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values. - Irrelevant - we are not concerned about those residents
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages. - Incorrect - just because there are other ways , it does not make this way a bad one
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live. - Correct
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years. - ISWAT - some might be very few people and that too might fail in repaying loans after 5 years
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs. Incorrect - it just tells how the town plans to fund and does not weaken the plan

Answer C
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 13 Sep 2017, 06:45
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values. -This is the opposite of the premise. The residents will leave irrespective of the # of years they have spent in their homes.
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages. -This is a fact set.
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live. -Correct. If the town becomes unsafe, no plan will work.
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years. -The banks should take care of such people who won't be able to pay post the increment in the interest rate. Also, there will always be some people who will not be able to repay the loan properly.
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs. -Out of scope
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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I have interpretation for choice E. If the town will cut funding for many problems, this will affect the community service and hence make less desirable. Why people should buy home in a town that is poor in service? While the town will subsidize the price, it will lower quality of life.

Where did I go wrong?

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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 26 Sep 2017, 07:45
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Mo2men wrote:
I have interpretation for choice E. If the town will cut funding for many problems, this will affect the community service and hence make less desirable. Why people should buy home in a town that is poor in service? While the town will subsidize the price, it will lower quality of life.

Where did I go wrong?

Thanks

This is a good point. Cutting funding for many community programs could also lower the quality of life. But remember that we are looking for an answer choice that provides the strongest indication that the plan is not likely to achieve its goal. Also, we do not know how much the funding for such programs would have to be cut. Perhaps the programs will not be significantly affected by the funding cuts.

So, which sounds like a stronger reason to leave town: a significant rise in crime rates or an unspecified decrease in funding for community programs? Although the latter might contribute to the problem, choice (C) is a better answer.

Great question!
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 04 Oct 2018, 19:11
GMATNinja,

Option C says 'less desirable' and I understand after going through different explanations of all other questions that word such 'expected' ' desirable' ' preferred' are not a firm answers or firm feelings and so can not predict the outcome. Whereas option D knows that some buyers will be at defaulter and plan will fail.

Appreciate your help to clarify.
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Re: Community spokesperson: As a result of a recent surge of foreclosures,  [#permalink]

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New post 09 Oct 2018, 20:16
NAvinash wrote:
GMATNinja,

Option C says 'less desirable' and I understand after going through different explanations of all other questions that word such 'expected' ' desirable' ' preferred' are not a firm answers or firm feelings and so can not predict the outcome. Whereas option D knows that some buyers will be at defaulter and plan will fail.

Appreciate your help to clarify.

I discourage you from rejecting non-quantitative words because they are not "firm." If you begin using this as a strategy for approaching critical reasoning, you will fall into a rigid pattern that costs you a lot of time without increasing your score.

Instead, be clear on what you're being asked and focus on the logic of each argument. In this particular case, the question asks us to identify which choice, if true, most weakens the argument.

In choice (C), "Crime rates have risen significantly" is not an ambiguous or subjective statement. It is stated as a hard fact about what's happened to the town. Similarly, people's response to that rise in crime rate is not ambiguous or subjective. We are told that the town, as a whole, has become a less desirable place to live due to the rise in crime. And the question asks us to analyze the consequences of the statement when it is true. So there's no need to doubt this statement as it is written.

On the other hand, the quantitative language in choice (D) is more ambiguous than it seems, and it doesn't do very much to weaken the logical argument. If we only know that some buyers will be unable to make their mortgage payments after the first five years, then there are many other potential buyers that we still know nothing about. They could very well be able to make their mortgage payments year after year. They may or may not be a flight risk -- we have no idea.

Ultimately, we are asked to analyze how each answer choice would affect the argument -- not whether the answer choices actually are true. (C) gives us a big new piece of evidence that has a large impact on the argument. (D) gives us an incomplete piece of evidence that has quite a small impact on the argument.

That's why we eliminate (D) and stick with (C). I hope this helps!
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