...Ethical and Legal issues concerning sub-prime mortgage lenders Outline I. Introduction II. Subprime History III. What lead to subprime lenders making unethical and illegal 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...
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...HSBC’s Mortgage Lending Decisions and the Big Melt It isn’t often that the American financial system, and its world counterpart, has a near- death experience. The last time was the 1930s. Beginning in 2007 and extending through 2009, American and global financial systems failed, melted down, and were rescued only by concerted central bank interventions in all the major industrial countries. The United States directly invested about 1 trillion dollars in U. S. financial institutions, and guaran-teed an estimated $ 14 trillion dollars in private debt. The complete history of this period has not been written. Many causes, involving many different actors, have been identified. Some have likened the big melt to a “ perfect storm” where a number of storm systems just happened to combine to form a much larger, lethal storm. But one cause was the failure of decision- making models, both the model builders and the financial man-agers who relied on those models. One of the major players in this crisis was HSBC Holdings PLC, the third largest bank in the world based on market value, and the largest bank in Europe. In the financial meltdown of 2008— 2009, HSBC joined the other major money center banks in a collective failure. HSBC weathered the turmoil in the financial markets better than most of its rivals, mainly because it had profited from continuing growth in Asia, where it generates about 65 percent of its pretax profit. But the company’s stock prices have fallen by half from their...
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...investment into businesses and infrastructure. E2–2 You are the chief financial officer (CFO) of Gaga Enterprises, an edgy fashion design firm. Your firm needs $10 million to expand production. How do you think the process of raising this money will vary if you raise it with the help of a financial institution versus raising it directly in the financial markets? As a CFO if I raise the money with the help of a financial institution I will be in a better position to get loan rates that are lower and cheaper with possibly better terms than if I raised it in the financial markets. E2–3 For what kinds of needs do you a think firm would issue securities in the money market versus the capital market? If a firm is investing in itself and would like to have a situation where they need money for a short period of time they will issue securities. Some of those...
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...2012 new mortgages and mortgage refinancing. It outlines the success they had in each quarter and discusses the factors that affected this growth and speculates on whether or not the success can be maintained. I think the reporting of the story was clear and accurate. It shares that Wells Fargo was able to refinance a record number of loans and increase their earning 19 percent from 2011. I previously have worked for Wells Fargo; I see that the facts listed in this story appear to be accurate; it does not appear anything was fabricated or left out. The story provides quotes from Timothy J. Sloan, the chief financial officer of Wells Fargo, I think it was a nice touch; it is good to hear things from the source. I do not see that any questionable assumptions were implicit in this story. I do, however, feel that all aspects of this story were addressed, they outlined the success as well as the fact that it may be hard to maintain. They discussed the success of Wells Fargo, but also highlighted the settlement they were required to make to address their part in the mortgage crisis of 2008. This story does outline the mortgage program within Wells Fargo very well. I recall how aggressive Wells Fargo requires their associates to be, I do not miss talking people into refinancing – not one bit. It is important to make distinctions when undertaking a critical evaluation because you must be able to look at an issue objectively. If you cannot consider all sides of an issue and keep...
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...Evelyn Gramajo March 29, 2016 Financial Issue Paper Banks across the United States are making a bold marketing effort to encourage homeowners to take cash out of their homes, an unusual move not seen since the housing bust, according to Wall Street Journal. Some of the lenders that Wall Street Journal mentioned are pushing more toward HELOC lending are: J.P Morgan Chase and Co., PNC Financial Services Group Inc., and TD Bank. The three largest HELOC lenders that are mentioned are Bank of America Corp., Wells Fargo and Co., and J.P Morgan. This article intrigued me because I am currently looking to purchase a home, however my sights are on a small home for my child and I. Even though I am looking for something small, I believe it is important to comprehend the significant topics of the article. The key points related to the financial issue are Cash out Refinance, Home Equity Loan, Home Equity Line of Credit (HELOC), Credit Scores, and Interest Rates (Variable and Fixed). "As the broader mortgage market remains in the doldrums, banks are again touting home-equity lines of credit, which allow homeowners to draw down the equity in their home as they need the cash, as well as cash-out refinances, which involve taking cash out of a home while refinancing and ending up with a larger mortgage balance," (Andriotis, 2016). The reason TD Bank, and most likely other banks do this is because they know why people want to cash out of their homes. People cash out for various reasons, the...
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...expect to pay off in the next year. Part A of the report discusses long-term debt including bonds payable, notes payable, mortgage notes payable, and capital leases. In part B, there are journal entry to restructure debt (land) and a computation of pension plan. Part A includes bonds payable, notes payable, mortgage notes payable, and capital leases. Bonds payable Bonds represent an obligation to repay principle at a time in the future and interest, usually on a semi-annual. Bonds are issued to different investors who may sell their bonds to other investors prior to their maturity. Many different types of bonds are available to investors such as secured bonds (mortgage bonds, collateral trust bonds), unsecured bonds (debenture bonds), serial bonds, convertible bonds, and callable bonds. The bond’s price is based on the market’s assessment of risk associated with the company that sells the bonds. Bonds are issues on an interest payment date at face value, the company accrued no interest, no premium or discount exists. The company records the cash proceeds and the face value of the bonds. Bonds issued with a coupon interest rate higher than the market interest are considered to be offered at a premium. In contrast, bonds are issued at a discount when the coupon interest rate is below the market interest rate. For example, the company issues bonds $500,000 at par value, 10 years, interest rate 10% payable at semiannually on Jan 01 and July 01 Bonds are issued at...
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...Organizations must strive to generate ways to maintain a competitive advantage in today’s ever changing society. The key to the success of any business involves innovation. Methods of innovation are critical for manufacturing goods and services to consumers. In an effort to become more profitable and keep a competitive edge, organizations must provide high quality products and services while keeping its operating expenses low. Therefore, the business must integrate innovation, design, and creativity into their business models to meet their objectives of offering quality products and services. This paper is intended to evaluate the impact of innovation, design, and creativity will have on the strategy of two businesses-the Shared Appreciation Mortgage Company and the Lotus Elise Company while considering their processes, products and services of both organizations. The Lotus Elise The development of the Lotus Seven was launched by Colin Chapman. Chapman had an idea of offering to the public a sports care with the qualities of a race car at an affordable price. The performance of the Lotus Seven would provide a unique driving experience that had light weight construction like a race car but not the use of a powerful and heavy engine. To achieve this goal, Chapman strategy was to “combine elements of knowledge, information, and creativity” to the Lotus Seven. (Stamm, 2008, Chapter Chapter 11, Collaborating-Innovation in Manufacturing). The processes of the Lotus Seven were simple,...
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...Argued - October 2, 2009 AD3d REINALDO E. RIVERA, J.P. RANDALL T. ENG CHERYL E. CHAMBERS L. PRISCILLA HALL, JJ. 2008-04626 Emigrant Mortgage Company, Inc., respondent, v Gregory Karpinski, appellant. (Index No. 12722/07) DECISION & ORDER ON MOTION Motion by the plaintiff, Emigrant Mortgage Company, Inc., for leave to reargue an appeal from an order of the Supreme Court, Kings County, dated April 16, 2008, which was determined by decision and order of this Court dated November 24, 2009. Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is ORDERED that the motion is granted, and upon reargument, the decision and order of this Court dated November 24, 2009 (Emigrant Mortgage Company, Inc., v Karpinksi, 67 AD3d 958), is recalled and vacated, and the following decision and order is substituted therefor: Gregory Karpinski, Palm Coast, Florida, appellant pro se. Borchert, Genovesi, LaSpina & Landicino, P.C., Whitestone, N.Y. (Helmut Borchert and Mark J. Krueger of counsel), for respondent. In an action to foreclose a mortgage, the defendant, Gregory Karpinski, appeals, as limited by his brief, from so much of an order of the Supreme Court, Kings County (Saitta, J.), dated April 16, 2008, as granted those branches of the plaintiff's motion which were for summary judgment September 28, 2010 EMIGRANT MORTGAGE COMPANY, INC. v KARPINSKI Page 1. dismissing the first and fifth counterclaims asserted by him and so much of the second and third...
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...out a person property who left no will. Mortgage: Transfer or pledge or real estate as security for the payment of a debt. Motrgagee: Lender in a mortgage loan transaction Mortgagor: Borrower who transfer their property as security for a loan; the holder of a mortgage. Will: Document directing the disposal of ones property after death. Witness: To write ones name to a deed, last will or other documents for the purpose of declaring its authenticity and proving its execution. Binder: Agreement secured by a deposit in which someone offers to buy real estate. Vested: Person who has a right to use portion of a fund. Ex: retirement fund. Verify: To confirm Venue: A court with jurisdiction; or location where a notarial act takes place Note rate: Interest rate on a promissory note Guarantor: Person who makes a promise to be responsible for the debt of another if they fail to pay their on time. Contingency: Condition that must be met before a contract is legally binded. Quiet title: declares a person is the legal owner of a real property dispute. Quit claim: Grantor disclaims any interest in real estate property. Quash: To make void or vacate. Committing forgery is guilty of a Class D Felony. Warranty deed: Used in most mortgage contracts. Notary’s surety bond: filed to protect the state. Wild: Improperly recorded deed Encumbrance: Anything that affects title to property such as a mortgage, lease etc… Knowingly issue a false certificate is a class E felony. ...
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...Rights and Duties of Parties Prior to Foreclosure Theories of Mortgages 1) Title Theory of Mortgages: a. Mortgagee holds legal title to land until the debt is satisfied. Equitable title remains in borrower. When mortgage is paid off, lender loses legal title. b. Significance: With legal title, lender has superior claim to the rents over anybody else’s interest that arises later. The lender has the right to take possession upon foreclosure, and doesn’t need ancillary remedies. 2) Lien Theory of Mortgages (restatement) a. Mortgagee retains legal and equitable title to the land when a mortgage is executed. Lender has a lien. The lender has no claim on possession or rents (unless the borrower mortgaged the rents). 3) Intermediate Theory a. Lien theory until default and title theory thereafter. As a practical matter, these states are really title theory states because nothing happens until default anyways in a title theory state. Ancillary Remedies (available to lender before foreclosure) 1) Mortgagee taking possession a. Takes possession & manages property; includes collecting rents & profits b. Lender must use legal process & cannot use self-help, even if so stated in mortgage or contract. c. Not available in lien theory states, unless: i. MR abandons property (public policy) ii. Consent of MR iii. Result of Good faith invalid foreclosure ...
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...Competitive Strategies and Government Policies Paper Maryna Lambropoulos, Trenton Acrey, Jose Esquivel & Jorge Benitez ECO/365 January 7, 2015 Matthew Mulyanto Competitive Strategies and Government Strategies Paper Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified financial services company with $1.6 trillion in assets. Founded in 1852, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, approx. 12,500 ATMs, online banking and asset management at wellsfargo.com, and mobile apps for mobile devices so you can access your accounts on the go. With headquarters located in San Francisco, Wells Fargo has more than 265,000 team members in 36 countries across our approximately 90 businesses. At the end of the third quarter 2014, Wells Fargo ranked fourth in assets among United States banks and was the world’s most valuable bank by market capitalization. In 2013, Euromoney named Wells Fargo “Best Bank” in its Global Awards for Excellence, the first time a United States based bank has won the top award. Wells Fargo Bank is one of the largest banks in the United States. Prior to 2008 through 2010, WFB had many United States based competitors, but that number has decreased due to bank failures and mergers. The number of United States Banks fell by 12% between December 2006 and December 2010. During that same period, U.S. deposits held by the 10 largest banks rose from...
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...either a wheelchair or her bed. Because of this the defendants no longer find it possible to move to Virginia as they had wished. The plaintiffs argue that specific judgment should be awarded since a valid real estate contract exists. They also argue that since the defendants have delayed their performance under the contract the plaintiffs should be awarded monetary damages resulting from attorney’s fees and higher financing costs for the delay in obtaining a second mortgage commitment. The defendants argue that mortgage rates are still favorable and that their finances are tight and should not be held responsible for an increase in mortgage rates that have not actually risen. Issue: Should specific performance be granted to complete the contract and force the defendants out of their house even though it would cause the defendants hardship? Should the defendants be held liable for attorney fees and higher mortgage rates since their breach of the contract delayed the time it took the plaintiffs to get a second mortgage commitment? Decision: No. The state trial court denied the plaintiffs request for specific performance. Yes. The state trial court found that the defendants should be...
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...Professor English 111 30 September 2010 Paper 1 In the play Merchant of Venice, Bassanio asks Antonio for a loan in order to become a contender among other wealthy suitors for Portia’s heart. Throughout the years Bassanio has requested large sums of money from Antonio; however he has never repaid most of it. Even so, he doesn’t even pause to ask for yet another loan. Due to Antonio’s secret underlying romantic feelings for Bassanio, he secures a loan with the collateral being his own life. I found this issue in the play to be one of great familiarity to a situation that has been present in my life for almost five years now. In order to describe the situation with some anonymity, I’m going to refer to sibling of my parent as Shelly and use the term “parent” for gender inclusivity purposes. As a child growing up, I always referred to Shelly as my fun aunt. She always wore trendy clothes, had a young, pretty appearance, drove a cool car, and knew how to have fun. From my parent’s side of the family, stories of Shelly growing up always revolved around a theme of Shelly being the most spoiled out of six children. Shelly was the youngest of all of the girls. If Shelly wanted it, she would either get it automatically or throw a fit until she got it. During my teenage years there were many instances that arose where Shelly needed to borrow money from my parent. In one instance that I can recall vividly, Shelly’s car was being repossessed. She called my parent in tears and panicked...
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...volume of mortgages in foreclosure or foreclosed with $3,216 million. In addition, it has $4,147 in mortgages past due. The second strength of Sun Trust is that the diversity policies and procedures that foster inclusiveness are critical to sustaining a strong competitive advantage. According to James M. Wells, III who is the SunTrust Chairman and CEO, diversity is an important issue to their clients and our teammates. Demographic trends clearly link long-term corporate success to an ability to operate in increasingly diverse markets. Diversity policies and procedures that foster inclusiveness are critical to sustaining a strong competitive advantage. He is challenging all SunTrust teammates to continue their success in ensuring an inclusive environment. In addition, SunTrust Banks, Inc. is also a diversified financial services holding company. SunTrust offers a wide range of financial services to retail, business and institutional clients. The company, through its principal subsidiary, SunTrust Bank, offers deposit, credit, trust, investment services, mortgage banking and brokerage services. In addition, the company provides investment banking, asset management, securities brokerage, equipment leasing and capital market services. It also offers its clients access to online banking, including automated telephone banking. SunTrust categorizes its business operations into six business segments, namely, Retail Banking, Diversified Commercial Banking, CRE, CIB, Mortgage, and W&IM...
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...foreclosure has already affected millions of Americans, and the fear of losing one's home looms over millions more. President Obama's "Making Home Affordable" program has been a step in the right direction insofar as it encourages homeowners to work with their lenders to modify their mortgage loans. These modifications have helped borrowers by allowing them to keep their homes, and they have helped lenders by allowing them to receive more money than they would typically receive in the auctions sale which almost always inevitably follows a foreclosure. However, there is more that can and should be done in order to help a larger portion of homeowners, especially those facing immanent foreclosure as a result of having less equity in their homes than the amount owed on their mortgage loans (i.e. homeowners with "underwater mortgages"). Solving the Foreclosure Crisis: Amending §1322(b)(2) In order to solve the present foreclosure crisis, I recommend that Congress amend the bankruptcy code to allow debtors to modify a secured claim on the debtor’s principal residence, i.e. his or her home, to reflect the present market value of the home rather than the projected value of the home when the debtor signed the mortgage. Under Chapter 13 of the bankruptcy code, a debtor may file bankruptcy and keep assets so long as he or she comes up with a plan to repay his or her creditors. This plan prioritizes secured creditors over unsecured creditors, and under the plan, debts may be modified to reflect...
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