In his article he explains the “rules of a mortgages” he states “if you and your spouses combined income is 80,000 a year, your payments should not exceed 1,866.” If a minority family living in canarsie, has an estimated average income of 35-66,000 a year it is possible that it is very hard for them to pay a mortgage, along with other financial expenses, on their own. There is a possibility that many of them have to rent from a home owner, or a home owner has to rent out part of their home to afford these payments. After listening to a…
The current legislation of the Dodd-Frank Wall Street Reform and Consumer Protection Act consists of multi-layered regulations for financial stability of institutions, consumer protection, oversight protocols, and liquidation authorities (U.S. Securities and Exchange Commission, 2017). Embedded in this lengthy reform act are conditions for transfers of power and amendment rights that basically give the authorized entities the empowerment to shape certain attributes of the financial system if it is found necessary to assure that misconduct or criminal actions are not being utilized on unwary consumers. The Dodd-Frank Act also retains authority over nonfinancial institutions, which is one of the main issues that have business owners in a frenzy to have portions of the Act abolished. In Section 172 of the Dodd-Frank Act this concept is realized through the Orderly Liquidation Purposes which specifies that nonfinancial institutions can be subject to examination by the authorized entities in the Dodd-Frank Act (U.S. Securites and Exchange Commission, 2017). In essence, nonfinancial institutions may be ordered to turn…
There was a long term American Policy of promoting home ownership. The main aim was to make the financing of a new home as easy as possible for the homebuyer. Overtime, various financial institutions have been set up to promote homeownership such as Fannie Mae (The Federal National Mortgage Association). This government sponsored enterprise (GSE) was founded during the great depression by Congress, its aim was to stimulate the housing market by making more mortgages available to moderate-to-low income borrowers. They do not originate or provide mortgages to borrowers, they purchase already issued mortgages off the mortgage originators and guarantees them via the secondary mortgage market.…
Through this repeal banks created a mortgage called a subprime mortgages. Subprime mortgages are mortgages for borrowers with less than perfect credit and low savings. Directly after the repeal went through, there was a dramatic increase in subprime borrowing. In 1999 as the FNMA began a firm effort to make home loans more accessible to American with low credit and savings than lenders typically required. This effort was created with a notion that every American could one day own their dream house, even if you had bad credit.…
The Federal Housing Administration (FHA) was created by National Housing Act of 1934. The FHA set standards for mortgages, properties, and buyers and insured loans originated by qualified lenders. While the FHA provided reassurance to mortgage lenders and created liquidity for the housing market, HOLC helped to avert default in the U.S. by refinancing defaulted loans. The Home Owner’s Loan Corporation (HOLC) raised capital by issuing bonds and buying FHA-insured mortgages. Subsequently, the HOLC purchased these toxic financial instruments; they reconstructed mortgages.…
This allowed them to easily access the mortgage lending market. Their weaknesses include being…
The Great Recession was caused by a number of different factors and the effects were abundant. With so much disagreement on what truly caused the recession, it is apparent that it cannot be pinpointed to one single event or action, but rather a number of factors that set off this devastating economic event. The recession can be blamed on a combination of factors such as deregulations by politicians, AIG, the S.E.C, and many others. The effects of the recession were felt by homeowners, banks, and many working Americans as the economy declined, leaving numerous drowned in debt.…
The Adoption Assistance and Child Welfare Act (AACWA) of 1980 (Pub. L. 96-272) was enacted after it was discovered that too many children were being placed in foster care too quickly and for too long during the 1970’s. The AACWA was to promote keeping the families together and placing the children in permanent placement rather than placing them in foster care. Title IV-E was created as part of the AACWA and provides federal funding for educating and training the child welfare workforce in belief that well trained child welfare workers will bring about better quality service to children.…
still wanting to keep interest rates down and keeping a deregulation attitude towards the banks and economy this was a recipe for disaster. Eventually government bailouts would come into the picture to fix things, which will also be discussed later in the paper. While the United States banking system and Federal Reserve had a deregulation policies, which does stimulate bank competition and creates lower interest rates, and better rates for borrowers. This also can hurt the economy as the U.S. has seen in recent years. With the competition between banks and pressure to give more mortgage loans there was a lot of revenue and potential opportunity for banks who lent subprime loans.…
. Applying the four methods of ethical reasoning (utilitarianism, rights, justice and virtue), do you believe Massey Energy behaved in an ethical manner? Why or why not? Massey Energy did not act in an ethical manner toward rights of workers, justice, virtue or utility. Utilitarianism methods of reasoning wasn’t apparent at Massey Energy because the end result of the business didn’t justify what they were creating as a company.…
In 1994, President Bill Clinton introduced the National Homeownership Strategy (NHS) with the goal of raising homeownership to an all time high. Again, the conversation continued to be about the benefits of homeownership, not the ever-present, significant risks. The NHS attempted to create 8 million new homeowners while helping low-income families and minorities that had previously been left behind in the government’s efforts to increase homeownership. The NHS proposal outlines three primary methods by which it would accomplish that goal: Encouraging the construction of low-cost housing, targeting “underserved” communities, and reducing down payment requirements (National Homeownership Strategy).…
The first point of call is what FHA is. To get a full grasp of what FHA is, we ought to go back in the past and this time, 1929. The financial disaster that happened during this time lead to many people losing their properties. The crisis made it hard for homeowners to pay back the home loan, that didn’t leave many options for mortgage lenders, but to bear the expenses related to foreclosing the…
Since when did a house become a tool for profit? Is it wrong for people who could not otherwise afford it to own their own home? The Great Recession was caused, in part, by a “house of cards” that was built by subprime home loans.…
This data belong to the group of people who were given loans based on their credit history and job situation. But, the mortgages today were given to anyone without checking their income or assets status. Hence, most of this data was irrelevant and was proved so when Adam Davidson stated that most of the mortgage pools at the time were expected to go beyond 50% foreclosure rate (Blumberg and Davidson). If Mike Francis would have thought about these other external factors and incorporated them to make adjustments to his anchors instead of just relying on the historical data, maybe he would have foreseen the crisis that was about to hit…
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 and Jociene (2014) the subprime mortgage crisis was caused by the credit boom and the housing market bubble.…