Subprime Loans - The Under-The-Radar Loans That Felled a Market

The problem to be investigated is the ethical challenges for both lenders and borrowers that were the result of the exponential growth in the subprime loan market. The subprime mortgage market grew from $34 billion to $401 billion between 1994 and 2004 (Jennings, 2012, p. 434). The U.S. subprime mortgage crisis, fueled by record mortgage delinquencies and home foreclosures, and the subsequent collapse of mortgage-based securities followed by collateralized debt obligations (CDO’s), led to the financial crisis in the late 2000s. This paper will explore the impact of the subprime mortgage crisis on society and will discuss the roles government, corporations and individuals played. This paper will also offer suggestions on responsible behavior to prevent a recurrence. – Good introduction

The History of Subprime Mortgages-- Good -- use one section heading for each question asked in assignments like this that have questions.

The deregulation by the Federal Government of the banking industry starting in the 1980s is identified by many experts as responsible for setting in motion the events that resulted in the subprime mortgage crisis. A collision of unintended and intended consequences – regulation, greed, uninformed consumers. Subprime loans have been around for a long time. However, they were never meant for borrowers with less than stellar credit nor as primary loans – good point. ARM, balloon payment and other non-traditional loans were meant for individuals who needed a temporary loan to bridge them while they waited for another property to sell or other transactions to clear. These individuals then paid the loan off as soon as the other transactions settled.
Deregulation initially resulted in an increase in interest rates that put many people’s dream of purchasing a home out of