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Organization ethics article 2

In a story format, discuss the key details and crucial issues offered in the case. Expression count: 158 Countrywide Financial began in 1969 through 2000 was one of the place’s largest lenders (Ferrell, 2010). In the late 1990’s and early 2000’s, Countrywide Financial presented subprime mortgage loans. Subprime home loans were financial loans that were offered to people who may not ordinarily be able to qualify for standard loans as a result of Income, deficiency of credit or perhaps low credit history.

Because of the composition of these home mortgages, people located It hard for making payments if the economy slowed up.

The real estate marketplace and the overall economy was adversely affected by the top number of people who had been unable to make payments prove mortgages. Across the nation Financial’s earnings were posltlve until 3 years ago, when the economic climate slowed and real estate rates dropped. In 2008, Traditional bank of America bought Across the nation Financial.

Traditional bank of America had even more assets that could handle the crisis, and Bank of America would be able to handle the ethical research involving Countrywide’s questionable financing practices.

Reference: Ferrell, O. C. (2010). Business Ethics: Honest Decision Making and Cases, 9th Ed.. Cengage Learning What were the incentives pertaining to Countrywide to create so many subprime loans? Word count: 168 Countrywide Monetary benefited financially from giving subprime home mortgages.

Since the interest rate, fees and terms of subprime mortgages are typically greater than conventional loans, the lenders are able to profit from this type of loan (Moulton; Bozeman, 2011). Between 1982 and the year 2003, Countrywide reported substantial profits, and the offered profitable returns on stock investors. By providing mortgages and loans to borrowers who not in most cases qualify, the ees and interest were collected via thousands of borrowers with this kind of loan.

Additionally, they extended financial loan privileges to a large amount of the population who would not really ordinarily be able to own homes. I feel that Countrywide Financial’s Bonus for supplying subprime mortgage loans was for financial advantage. I believe that they can should have well-known the effects these kind of loans could have If the economic system took a downturn. These people were too Thinking about the profits to become made and continued the practice despite the negative effects It might have on people as well as the country in general. Moulton, S., & Bozeman, B. (2011).

The Pulicness of Coverage Environments: An assessment of Subprime Mortgage Financing. Journal of Public Government Reseach & Theory, 21(1), 87-115. appear in: 10. 1093/jopart/muq005 Ferrell, To. C. (2010). Business Values: Ethical Making decisions and Instances, 8th Male impotence., What was Countrywide’s logic in thinking that originating loans for people with poor credit evaluations would bring about positive final results? Word count: 182 Ahead of the real estate problems, the subprime mortgage market was lauded for assisting people achieve homeownership (Ferrell, 2010).

Subprime mortgages helped minorities and lower income persons be able to manage to own a home. At the moment, it was thought of as a confident financial tool. Since there have been more persons being able to achieve loans to possess a house, other industrial sectors benefited in the effects of the subprime mortgage loan practice. Contractors, the building supply industry and real estate firms were all profiting from these kinds of lending procedures. It looked that these types of loans were supporting many sectors. In a speech given by Govenor Edward Gramlich in May, 2004 (www. federalreserve. v), he spoke of these lending practices and explained “the elevated availability of subprime mortgage credit rating has created new opportunities to get homeownership and has allowed recently credit-constrained property owners to borrow against the fairness in their homes to meet various needs.


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