Community Spokesperson: As a Result of a Recent Surge of Foreclosures, Many Homes in our Town are Vacant and Falling into Disrepair.

Question: 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.

“Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair.”- is a GMAT critical reasoning passage with answers. This particular GMAT critical reasoning topic has been taken from the book “GMAT CR Practice Question 10.”

Candidates need a strong knowledge of English GMAT critical reasoning. This GMAT critical reasoning question consists of a comprehension question and 4 options to choose from. The GMAT critical reasoning questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts.

Answer: C
Explanation: This is a GMAT critical reasoning question. We have to select the option that gives the indication that the plan suggested by the community is likely to fail.

Let’s go through each of the available options and choose the best one.

Option 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 option is incorrect because this statement provides a reason why residents would not leave, which will weaken the snowball effect. This may contribute to the success of the plan, rather than failure. So, Option A is incorrect.

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

This option is incorrect because the spokesperson never said that implementing the suggested plan is the only way to prevent panicked residents from leaving the town. The spokesperson simply said that this is one way to prevent the snowball effect. So, Option B is incorrect.

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

This option is correct because if crime rates have risen in the town, it makes the town a less desirable place to live and the potential buyers will be discouraged from buying homes in the town, even if it offers special discounts. This option weakens the recommended plan. So, Option C is correct.

Option 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.

This option is incorrect because it says “some buyers”. It is true that some buyers might leave after five years. But as long as the town encourages potential buyers to fill the vacant homes, the snowball effect will be prevented and recommended plan will succeed. So, Option D is incorrect.

Option E: 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.

This option is incorrect because it never discusses how special mortgages and low-interest rates would be funded. Cutting the funds for community programs might be a demerit of executing the plan but it does not mean that the plan will fail. So, Option E is incorrect.

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