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The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int

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The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New Project RC Butler 2019 - Practice 2 RC Passages Everyday
Passage # 278, Date : 19-Aug-2019
This post is a part of New Project RC Butler 2019. Click here for Details


The ill-fated Home Construction Lending Act of 1901 (the HCLA) was intended to help families pay for the construction of their homes. Americans were flocking to rented apartments in big cities (as were immigrants from around the world), and the biggest supporters of the HCLA were builders and real estate firms located in rural areas. Their hope was that a family that could afford to buy property and build a house in a rural area, as opposed to renting an inexpensive, but crowded and possibly dangerous, apartment in a city, would choose the former. Ostensibly, the HCLA would make it easier for potential homeowners to borrow by providing a federally backed guarantee to the lender, which at the time was more likely to be an insurance company than a bank. In other cases, the government would actually buy the property and pay for the construction of the house. A family could move in and make payments to the government over a much longer period than they could if they were repaying a commercial lender. Unlike the typical amortized 30-year mortgage of today, home loans at the time were usually repaid over three or perhaps five years, and the borrower made a balloon payment of the entire principal at the end of the term. An HCLA loan from the government could be repaid—interest and principal—over as many as 15 years, and did not require a large final payment.

Many lenders, however, did not actually want to have their loans guaranteed, and they resisted providing HCLA loans. For these companies, more profit could be realized by repossessing property when borrowers defaulted on their loans. As to the properties bought and resold by the government, the relatively small payments made at a fixed interest rate cost the government money, and this arrangement was abandoned.

In the same year that saw the passage of the HCLA, the Tenement House Act forced builders in New York to improve the condition of their apartments. Lighting, ventilation, and toilet facilities were improved, and the Tenement House Commission was established to enforce the new law. Other cities followed suit. Urban life was now more attractive to men and women who would have otherwise preferred to live in a rural area, but who needed the employment opportunities that the cities could provide.


1. What is the primary purpose of this passage?

(A) To describe why the HCLA was passed, and why it proved ineffective
(B) To provide an overview of the home building situation in the early 20th-century America
(C) To give an example of a misguided attempt to regulate the urban housing industry
(D) To contrast the HCLA with current housing and home construction laws
(E) To elaborate on the reasons that Americans and foreigners flocked to the big cities in the United States during the early 1900s


2. Which of the following would most appropriately conclude this passage?

(A) The HCLA could not withstand this migratory push from rural life to city life, and was repealed less than six years after becoming law.
(B) At the same time, the farming industry was increasingly in the hands of large corporations.
(C) Even those elected officials who voted against the HCLA were surprised by its unpopularity.
(D) Though jobs were to be found in the large American cities, adjusting to urban life was still a shock for many young people who arrived at this time.
(E) The societal effect of the Tenement Housing Act continues to this day.


3. According to the passage, one reason that the HCLA was expected to increase home construction in rural areas was that, under the HCLA, _______.

(A) interest rates were lower
(B) the borrower could make smaller payments
(C) insurance companies, not banks, loaned the money
(D) the borrower would not be able to default
(E) the net cost to the borrower was reduced


4. According to the passage, the repercussions of the Tenement Housing Act _______.

(A) provided more employment for people moving to cities from rural areas
(B) had little effect on builders outside of New York City
(C) was abandoned because of its cost to the federal government
(D) convinced some people to try to find work in the big cities of the United States
(E) led to the passage of the HCLA


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Originally posted by Gnpth on 08 Jul 2017, 18:07.
Last edited by SajjadAhmad on 06 Oct 2019, 23:22, edited 5 times in total.
Updated - Complete topic (824).
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 08 Jul 2017, 23:36
I got all right, except second ,in 10 min. about second no where its mentioned HCLA repealed less than six years after becoming law.

please explain second
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 10 Jul 2017, 18:17
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mbaprep2016 wrote:
I got all right, except second ,in 10 min. about second no where its mentioned HCLA repealed less than six years after becoming law.

please explain second


2nd question is an inference. So basically the para-2 and 3 says the reason for the demise of HCLA. And also tells us when it happened. So A is correct.
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 11 Jul 2017, 03:40
Can someone help on #4 (options A and D), Though author did not mention the THA provided employment or convinced, it only facilitated. then how to reach to the answer.
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 18 Oct 2018, 22:45
KanakGarg wrote:
Can someone help on #4 (options A and D), Though author did not mention the THA provided employment or convinced, it only facilitated. then how to reach to the answer.


The last sentence in the 3rd Paragraph of the passage mentions:
Urban life was now more attractive to men and women who would have otherwise preferred to live in a rural area,

Hence it is safe to infer that "(D) convinced some people to try to find work in the big cities of the United States"
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 28 Jan 2019, 06:19
Good passage, lots of detail. 4/4 in 10:52. Solving passages in a shorter period of time takes practice but NEVER jepordize accuracy for an increase in a speed. That has to come naturally. Some passages, depending on the content and questions, might take longer than others. I had to think a few seconds before confirming my answers. Questions 1 and 3 were the biggest time killers for me. Not sure how I even considered choice C for question 1 to be a close contender! If anyone has questions, I'd be happy to help.
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 28 Jan 2019, 19:01
Could someone please explain why option B is incorrect for Q1? I was stuck between A and B and ended up picking option B instead.
Thanks!
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 28 Jan 2019, 19:06
csaluja wrote:
Could someone please explain why option B is incorrect for Q1? I was stuck between A and B and ended up picking option B instead.
Thanks!


Choice B talks about an overview. The passage goes in greater detail than just an overview. The author talks about why the HCLA was passed and how the act was not able to accomplish what it intended to do. Choice A closely resembles this. Choice B is incorrect because a general overview of a housing situation is incomplete. Hope this helps.
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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int  [#permalink]

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New post 22 Aug 2019, 10:58
Explanations:

1. What is the primary purpose of this passage?

(A) To describe why the HCLA was passed, and why it proved ineffective - The first para talks about why HCLA was passed. The second one talks about its cons. And the third one talks about another law which made ppl to migrate to city.
(B) To provide an overview of the home building situation in the early 20th-century America - The passage provides a detailed view. In particular about HCLA. So, not in general about the home building situation
(C) To give an example of a misguided attempt to regulate the urban housing industry - The passage was about rural housing
(D) To contrast the HCLA with current housing and home construction laws - No current laws were talked about in the passage
(E) To elaborate on the reasons that Americans and foreigners flocked to the big cities in the United States during the early 1900s - Flocked is an extreme word. And this passage was more concerned about HCLA.

(A) is the answer.

2. Which of the following would most appropriately conclude this passage?

The conclusion should say that HCLA failed or something along that lines.

(A) The HCLA could not withstand this migratory push from rural life to city life, and was repealed less than six years after becoming law. - This falls in line
(B) At the same time, the farming industry was increasingly in the hands of large corporations. - Inserts new idea about farming
(C) Even those elected officials who voted against the HCLA were surprised by its unpopularity. - Inserts a new idea regd elected officials. And those who voted against generally shouldn't be surprised by its unpopularity. Self-contradicting
(D) Though jobs were to be found in the large American cities, adjusting to urban life was still a shock for many young people who arrived at this time. - Whether it was a shock to young ppl is not the point of the passage
(E) The societal effect of the Tenement Housing Act continues to this day. - This seems relevant. But most passage talked about HCLA and if this option said that THA continues to this day and HCLA was repealed then it can be considered.

(A) is the answer.

3. According to the passage, one reason that the HCLA was expected to increase home construction in rural areas was that, under the HCLA, _______.

1st Para: A family could move in and make payments to the government over a much longer period than they could if they were repaying a commercial lender.

(A) interest rates were lower - intereset was never talked about in the passage
(B) the borrower could make smaller payments - HCLA increased the loan tenure and decreased the amount paid. And hence, this was expected to increase home construction
(C) insurance companies, not banks, loaned the money - True but The source was not the problem
(D) the borrower would not be able to default - Out of scope
(E) the net cost to the borrower was reduced - We never know whether net cost increased or decreased from the passage.

(B) is the answer.

4. According to the passage, the repercussions of the Tenement Housing Act _______.

Urban life was now more attractive to men and women who would have otherwise preferred to live in a rural area, but who needed the employment opportunities that the cities could provide.

(A) provided more employment for people moving to cities from rural areas - Opposite of the repercussion of the act. The act made moving from rural to cities more attractive.
(B) had little effect on builders outside of New York City - We dont know about this
(C) was abandoned because of its cost to the federal government - Out of scope
(D) convinced some people to try to find work in the big cities of the United States - According to the passage quoted above, this is sensible. Since moving to the city was more attractive, it could have convinced people to move to the city to find work.
(E) led to the passage of the HCLA - HCLA was passed before that

(D) is the answer.

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Re: The ill-fated Home Construction Lending Act of 1901 (the HCLA) was int   [#permalink] 22 Aug 2019, 10:58
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