Subprime lending

Lack of access to homeownership unfairly disadvantages people of color. People of color, especially Hispanic and African American people, relatively lack access to homeownership in the United States, as shown by the rates of homeownership over time (U.S. Census Bureau, updated constantly). This disparity in large part traces its roots to redlining, a government-sanctioned pattern of racially discriminatory mortgage- and other- lending practices that largely segregated people of color into neighborhoods that failed to accrue as much wealth for the residents over generations. As the Greenlining Institute notes in their webpage about economic equity, “Homeownership… is crucial for family wealth-building and neighborhood stability” (accessed 12…

after many mishaps in the past few years. One of Wells Fargo biggest mishaps was their unfair lending practices and also a more resent problem were bank employees issuing unwanted credit cards and opened unauthorized accounts that charged customers fees and damaged their credit. First let’s discuss the history of Wells Fargo as a company. In 1852 Henry Wells and William Fargo founded Wells, Fargo & Co. to serve the West. The new company…

referring to rich mixed with poor, or poor whites intertwined with poor blacks. Red lining is not just limited to home owning, it also hurts African-Americans looking for help with mortgage, retail, credit cards, insurance, and student loans. Reverse lending is defined as “another name for predatory lending. The lender does not refuse to do any business inside the red lined area, but instead targets the residence for predatory practices (The free dictionary)”. Lenders or insurers target minority…

College Paper 1 Paper 1. College Essay It is high time that corporations and economies as a whole embrace the value that diversity plays in both the work place and our communities. Too long has this been thrown under the table and not given the attention it deserves. According to the Business Journal “Diversity represents a broad spectrum of people and perspectives, and includes acceptance and respect” (businessjournal.com, 2016). As a matter of fact, diversity is the bonding agent that leads…

This is done mainly because of the reason of tackling with high default rates of that group of people’ (mbaskool, n.d). Fannie Mae soon began to demand that lending institutions they were dealing with portrayed evidence to prove that they were not engaging in the act of redlining. The new requirements enforced by Fannie Mae subsequently lead to lending institutions lowering their standards on granting loans and charging higher interest rates on loans. This in turn meant that technically Fannie…

Subprime mortgage refers to mortgage securities backed by securities with high credit and default risks. The investment banks created clubs or pools of securities with a wide range of securities that included subprime mortgages. The investment banks sold the securities to investors throughout the world without appreciating the long-term consequences of the decline in housing prices. The rapid decline in housing prices in the United States started a domino effect throughout the world (Friedman,…

paper to fully explain such a complex issue with so many inter-related elements as the 2008 financial crisis, undoubtedly one of its main causes was the bursting of the housing bubble in 2005. The bursting of the housing bubble was primarily triggered by what is commonly referred to as the subprime mortgage crisis. The subprime mortgage crisis came about from many banking and governmental policies that encouraged home ownership, in the manner that banks were providing home owner loans to people…

This cheap credit was sought after via the US banks and low income citizens. This created a point of leverage for the banks as they knew that they could supply the credit that was so sought after by the low income citizens. This excess of cheap credit coupled with the rise in house prices, provided the opportunity for banks to invest and leverage current investments with subprime mortgages. The explosive level of growth experienced by the banks and hedge funds was soon halted. Interest rates…

overcollateralization. It is designed to protect the investors from the losses on the underlying loans. Creation of Subprime Mortgage Market and Re-Sold In Secondary Securities Market Subprime lending is defined as the type of lending to the borrowers who have weakened credit histories and reduced capacity of repayment to the lender. These borrowers have a high risk of default in repaying the loan to the lender. When the borrower is unable to repay the loan after so many plans given by the…

The subprime mortgage crisis of 2008 continues to be a hot topic today because it still impacts the lives of people today. Consequently, there are many theories explaining why this crisis happened, who were key players, and who were negatively impacted. It is clear that subprime mortgages existed because it provided attractive returns however, these attractive returns came with extremely high risks that eventually did not work out in both the lenders and borrowers favor. According to Pajarska…