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Mortgages in the Brink of Meltdown

In: Business and Management

Submitted By consumer
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Ethics Essay:
“The Subprime Mortgage Market Meltdown”

“What were the responsibilities of the mortgage broker to borrowers? To lenders?
To investors? How well did they fulfill their responsibilities? Why?”

The responsibilities of the mortgage brokers to the borrowers, lenders, and investors were to promote the subprime mortgages to these groups of people in order for them to take out a loan. Although they did fulfill their responsibilities of promoting and having people sign up for it, they mishandled on how people should be granted for a mortgage loan. These brokers were to desperate about earning huge amount of money due to the expanding market that they ignored the proper precaution that they should have taken when they were giving out the mortgages. The brokers were giving out loans to people that didn’t have the proper credit score nor the income to support the mortgages that they were getting. In the end, that’s what led to the home mortgage market to crash down because borrowers, investors, and lenders defaulted out of their mortgage because they weren’t able to make the monthly payments once the interest rates started to increase.

“Did some subprime lenders behave unethically? If so, how? Whose interests did the subprime lenders have a responsibility to represent? Did they adequately represent those interests? Yes, the subprime lenders did behave unethically because they weren’t paying close attention to the mortgage brokers on the activities that they were doing. The lenders were accepting to all the loan applications that the brokers were sending them and looking at the applicant information to see that they can be trusted to repay back the loan. Also, it is said that some of the facts that borrowers would put on their paperwork were misrepresented. The brokers were also part of this conduct that in some cases they were altering…...

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