...Netherlands Abstract Purpose – The purpose of this paper is to show how some of the assumptions about the current financial crisis are wrong because they misunderstand what takes place in the mortgage market. Design/methodology/approach – The paper discusses four wrong assumptions: one related to regulation, one to leveraging, one to subprime lending and one to predatory lending. It briefly discusses some policy implications. Findings – The role of the state in the mortgage market is more complex than suggested by those who blame the state for not doing anything. The concept of leveraging can explain, at least in part, why the losses in financial markets are bigger than the losses in the housing market. Many subprime loans were sold to prime borrowers. Subprime lending was not designed to increase homeownership rates, but to fuel profits by exploiting vulnerable borrowers. Practical implications – It is too easy to argue that everyone made mistakes; most borrowers cannot be blamed for being sold risky, overpriced loans. A rescue plan is needed for defaulting borrowers and those already in foreclosure. Originality/value – The paper does not present new research, but brings together research that demonstrates that the roots of the crisis in the mortgage market are in many ways different from what is suggested by professionals and journalists alike. Keywords Recession, Credit, Mortgage default, Loans, Regulation, United States of America Paper type Viewpoint 94 critical perspectives...
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...The Subprime Mortgage Crisis and What to Do about It A Review of the Literature The fuse for the subprime financial shock was set early in this decade, following the tech-stock bust, September 11th, and the invasions of Afghanistan and Iraq. The subprime mortgage crisis is a historic turning point in our economy and our culture. The disruption in our credit markets is already of historic proportions and will have important economic impacts. More importantly, this crisis has set in motion fundamental societal changes – changes that affect our consumer habits, our values, our confidence to the future, and our psychological status. After this financial crisis, our economic went downturns and worsen now. When we talk about or hear about the subprime mortgage crisis, to fully understand the crisis help us to avoid the crisis happening again in the future. This literature review considers different opinions of the subprime mortgage crisis by responding to the following questions: 1. What are subprime mortgages? 2. How did the subprime mortgage crisis happen? 3. What are the causes of the subprime mortgage crisis? 4. Was the subprime mortgage crisis in the U.S. totally unexpected? 5. What to do to avoid it happening again in the future? By answering these questions, we can have understandings of the subprime mortgage crisis and find out the solutions to the crisis. When Americans taking advantage of the easy credit conditions, we take for granted the problems behind the credit...
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...ABSTRACT Six years after the housing market crashed in 2008 the primary cause of the crash continues to be debated. Speeches have been made and books have been written on the subject. Observers and analysts have attributed the reason for the housing crisis and its collapse in the U.S. to everyone from home buyers, Wall Street, mortgage brokers, mortgage underwriters, investment banks, rating agencies, investors, low mortgage interest rates, low short-term interest rates, and relaxed standards for mortgage loans. Predatory lending was just one of many factors along this transaction chain. Predatory lending consists of loaning money to consumers in the hope and expectation that they will default and the lender will be able to take the collateral (homes.) We will discuss if the government failed to protect its citizens thru public policy and what role (if any) investments in mortgage backed securities played in the market crash of 2008 as well. While economist continue to debate who or what is at fault. The market crash clearly devastated the U.S. economy. We will also discuss how such devastation is considered to be one of the worst market failures in history. The events leading up to the crash are easier to identify after a crash, the signs were in the forefront and ignored by most people, firms, banks, and the government. Together we will embark on a journey to discover what role predatory lending, mortgage backed securities, and relaxed regulations played in the housing...
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...is to say, I do not wish to do any good to my fellow men" (Conwell). Everyone wants money, only if it is to do good for your family’s future. From the rich business professional perched high in their penthouse to the lowly street peddler on the corner, everyone has a story on how and why they ended up in that position. The United States is seen as the place where everyone has the opportunity of the “American Dream”. That includes the opportunity for one's children to grow up and attain to their fullest potential in which they are capable of, and seen for what they are and not what they are born with. It is the opportunity to make individual choices without the restrictions of class, religion, race, or ethnic group. In this research paper, I will explore the different aspects of income mobility, by looking at some intragenerational and intergenerational mobility issues. Then I will also breakdown and show some of the different economic mobility indicators and how they play an important role on how income...
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...better financial option to move for a family than renting which requires a consideration of cost and options that people often neglect to factor on. Buying Vs. Renting House House is probably the largest purchase that you will have to make in your lifetime, but whether or not, it is very important to make sure you decide which option is better for your family. And making the right decision. Many people prefer the flexibility of renting, and others want to the security of owning their own homes. That is why it is very important to know the advantages and disadvantages of buying versus renting. While deciding to rent or buy housing can be difficult making a decision. This paper will discuss the pros and the cons of each and will have some good research on the personal experience and individual assessment. I believe that buying a house is a much better option. The unemployment rates have increased and therefore there have been a lot of foreclosures on houses. It can be difficult deciding on buying houses. Renting- Advantages * More fixed costs for the term of the house. * Not giving equity but not losing it either * When the lease is up, you can just move. * There is generally less work on maintaining a home or improvement. * Smaller amount of upfront cash. Renting-Disadvantages * No matter what happens with the value of the homes, you will have never gain equity. * Limited or no ability to personalize your living quarters...
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...Week I Individual Assignment University of Phoenix This paper is written in response to the University of Phoenix Eco365 class. In this paper I will define economics, microeconomics, the Law of supply and demand and I will also identify the factors that lead to changes in supply and demand. The business world is very susceptible to the nuances of consumer choices. The ability to anticipate the trends in consumer consumption patterns is vital any company who seeks to be a leader or major player in their field. Constant research and analysis is performed each year to determine or create the trends not only in who are the company’s current customers but future customers as well. This research is also used to determine what those customers want and why. To really understand trends in consumption patterns, you have to first understand the basic principles of economics. Economics Economics is the science that studies the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems (Colander). One example of economics is the new job tax credit that President Obama has proposed. This credit encourages businesses to expand their workforces and operations by offering $3,000 for each new job that a company creates and places someone in, thereby increasing production of products with the intent to lure consumers to spending more. Microeconomics Microeconomics is the study of the operations of the components...
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...Journal of Urban Economics 65 (2009) 74–90 Contents lists available at ScienceDirect Journal of Urban Economics www.elsevier.com/locate/jue Why do households without children support local public schools? Linking house price capitalization to school spending ✩ Christian A.L. Hilber a,b,∗ , Christopher Mayer c,d a London School of Economics, Department of Geography and Environment, Houghton Street, London WC2A 2AE, UK Spatial Economics Research Centre (SERC), UK Columbia Business School, Uris Hall #808, 3022 Broadway, New York, NY 10027, USA d NBER, USA b c a r t i c l e i n f o a b s t r a c t Article history: Received 19 October 2007 Revised 19 September 2008 Available online 27 September 2008 JEL classification: H4 H7 I2 R31 Keywords: Capitalization Elderly Land supply School spending While residents receive similar benefits from many local government programs, only about one-third of all households have children in public schools. We argue that capitalization of school spending into house prices can encourage even childless residents to support spending on schools. We identify a proxy for the extent of capitalization—the supply of land available for new development—and show that towns in Massachusetts with little undeveloped land have larger changes in house prices in response to a plausibly exogenous spending shock. Towns with little available land also spend more on schools. We extend these results using data from school...
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...November 05, 2013 Dr. Juan Gomez Superintendent YISD 123 Fake Street El Paso TX, 79936 Dear Dr. Gomez: Financial Literacy of El Paso (FLEP) is pleased to present this proposal for services to support the City of El Paso in achieving its goals for improving the financial literacy from youth to senior citizens by providing advocacy, research, standards and educational resources. The objective of the proposed personal high school finance class is to help high school students develop the ability to use knowledge and skills to manage financial resources effectively throughout their lifetime. In the past, high school students have been required to take an economics class which helped them get a basic understanding of the world of economics in today's world. We are now seeking to have a finance class which will not only help students get a basic understanding of finance but help students use the skills they develop to help them manage their personal finances responsibly. FLEP has partnered up with GECU, a local financial institution, to make this class possible. The class will teach students the basics of finance as well as teach students how to spend, invest, and save money effectively. The class will include setting up savings and checking accounts with GECU for the students and provide them with special support with their accounts. Our proposal requests that the FLEP personal high school finance class be a required course in the high school diploma curriculum...
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...Decision to Buy a New House Many decisions that people are making today directly relate to the economic well being, whether it is in buying a home, a car or anything that is a huge cost to a consumer. People are finding themselves in a financial difficulty to make these decisions and more so, want to buy a home but are questioning whether the marginal benefits and cost are worth it. Throughout this paper, I am going to examine the principles of economics, as well as explain my decision based on the situations of the economy. The decision to purchase a home is a long and grueling process. It is a challenge to find the right home, find and coincide with a payment plan that is going to work for one and decide if this long-term purchase is going to benefit me or hurt me in regards to my finances. One of the ten principles of economics that will directly affect my decision to purchase a home is that people face trade offs. “ Every decision involves choices and more of one good means less of another good. Income and wealth are not limitless, since there is only so much time available” (www.basiceconomics.info, p.1). This means that people are only making so much money, some more than others and will have to sacrifice certain things, such as eating out, buying less Christmas presents for your family. Maybe they will even have to give up buying a new car, based on the long-term decision one made to purchase a home. This is a trade off. A person needs to make a decision of what is...
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...“aGeinG in PLace”: the Views OF OLDer hOmeOwners On maintenance, renOVatiOn anD aDaPtatiOn Judith Davey1 New Zealand Institute for Research on Ageing Te Putahi Rangahau i te Pakeke Haere Victoria University of Wellington Abstract “Ageing in place” is favoured in policies on ageing and is the preferred option of many older people. For older homeowners, remaining at home may depend on their ability to keep their homes in good condition, safe, suitable and comfortable. This research illuminates the attitudes, opinions and preferences of some older New Zealanders with respect to their current and future housing circumstances. A considerable degree of self-sufficiency was found with respect to home maintenance, but fewer people were capable of doing their own renovation work, and there were clear gender differences. The respondents mostly shared a strong desire to remain living independently in the community for the rest of their lives. The most popular option for a new residence was a separate house, but one smaller and easier to manage than their family home. To this end, many had already moved to low-maintenance housing suited to ageing in place. Others had aspirations for such a move. Some of those who wished to remain in their long-term family homes were considering adaptations to make this possible, and some had already adapted their homes to cope with health issues. The study concludes that most of the respondents were resourceful...
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...enables access to homeownership but also to meet basic needs – a means of economic empowerment. The mortgage market in Ghana, since it is inextricably linked to a country’s economic development by strengthening financial institutions, promoting social stability and improving people’s lives, should have by now seen enormous growth, culminating in affordable houses for Ghanaians. This, however, is not the case as of now. Government role in the management of the nation’s economy in general and mortgage lending in particular has been analyzed and debated many times and undoubtedly it will continue. There is a...
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...decisions IV. What safe guards are in place V. Conclusions VI. Works cited page Introduction When most people hear the phrase “subprime lending”, the first thoughts that come to mind are the mortgage meltdown; predatory lenders, high interest mortgages for borrowers who have poor credit or low incomes. All of these thoughts may be true to a certain extent, but contrary to popular belief subprime mortgage lending has helped expand homeownership for all borrowers regardless of credit or income level in the US between 1995 and 2006 (Favro, 07). The problem is that this ethical and legal lending market took an unethical and illegal turn and has been cited as one of the contributing factors that aided in many Americans defaulting on their home loans that resulted in sending this country and many others into one of the biggest recessions since the Great Depression. It has been almost six years since the subprime meltdown and this country, the housing markets, and the economy have yet to fully recovered. In this research paper I will cover the history and original purpose of subprime lending, what lured the subprime lending market to take an unethical and illegal turn, and what safeguards have been put in place to lessen the likely hood of subprime mortgage lenders making unethical and illegal decisions in the future. Before continuing, lets look at the definitions of a few words, the first is ethical: dictionary.com defines ethical as “being in accordance with...
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...Buying Versus Renting Ashley Mawhorter 1/11/2011 Axia College of University of Phoenix Every American has dreamed of owning their own dream home, whether they are young or old. Still many Americans choose to rent apartments. Why is this? There are many more pros when individuals decide to buy a home. That is why buying a home is a better option than renting an apartment. Jumping right into the first home one sees is also not the proper way to buy a home. Much time and research needs to be done and many things taken into consideration before deciding the best decision. Do I want to have a landlord, or be the landlord? How much can I afford if I choose to buy a home? Where do I want to be located and what style home am I looking for? Are there any pros and cons to buying verse renting? How much would property taxes be yearly? These are all important questions to take into consideration, and that will be covered in paragraphs to come. First and most important is figuring out how much each individual can afford. On ginniemae.gov there are two calculators that can help to determine individual financial status. The first calculator helps individuals to determine the advantages and considerations of owning verse renting a home (http://www.ginniemae.gov). Using the calculator I have come up with an example. If I were renting a home that cost 800 dollars a month and I wanted to buy a house I found for 100,000 I would simply calculate the percentage of down payment, length of...
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...Hispanic Immigrants and Educational Achievement in The United States Lesly Cabrera City College of New York Various studies have been conducted to measure college readiness on many levels amongst many populations, and have ultimately found factors influencing such statistics (Jasinski, 2000). However, the issue of specifically the population of Hispanic immigrant youth and the lack of education achievement can be further analyzed to measure the effects of individual factors. In my research, I intend to find and list the main factors that influence my target population in regards to educational attainment. This research hopes to answer: which type of factors have the greatest impact on Hispanic immigrants that can guide or...
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...Marketing Mix Paper Within this paper the reader will find the elements of the marketing mix as it pertains to Northwood Realty Services in reference to product, place, price, and promotion. In addition, the reader will find how each of the four elements of the marketing mix effects the development of Northwood Realty Services marketing strategy and tactics. The reader will find how Northwood Realty Services implements each element of the marketing mix through marketing and research strategies. Northwood Realty Services Northwood Realty Services is a real estate agency established in 1956, serving customers in Eastern Ohio and Western Pennsylvania with 35 offices and 900 agencies within the local areas of the servicing regions (LinkedIn Corporation, 2011). Northwood Reality Services commitment to their customers is to ensure that buying and selling a home is more rapid, easier and a rewarding experience without the worries of the plugging economy. Despite the economic stance Northwood Reality Services “mission has remained constant unrivaled service, never-ending respect for customers, uncompromising integrity and ethics (Northwood Realty Services 2011, par.2).” Northwood Realty Services focuses on continuance complacency with the aim of sharing the enthusiasm, safety, reassurance and personal pride of owning a home with the new homeowners based on a trusted and confidence in a real estate agency. Northwood realty services strives on the present low interest...
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