Subprimemortgagecrisis?Countrywide Financial: The Subprime Meltdown 1. Are subprime loans an Unethical financial instrument, or are they ethical but misused? In my opinion subprime loans are ethical is some ways but are frequently misused. One way subprime loans were misused was when the economy began to slow down, people were working more but earning less, however subprime lending continued to lend to risky borrowers. Also subprime lenders allowed real estate appraisers to inflate the value of the homes to insure that the loans would go through. 2.
Discuss the ethical issue that caused the downfall of Countrywide Financial. One of the ethical issues that caused the downfall of countrywide was allegations of Countrywide increasing its profits by offering subprime loans to people who qualified for regular loans. Also Countrywide allowed liar loans. Liar loans are loans that required no proof of borrower’s income or assets; allowing consumers to purchase homes while having little or no assets.
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Many of the homeowners with the lair loans couldn’t pay their mortgages and they were not able to refinances their homes.
How should Bank of America deal with potential ethical and legal misconduct discovered at countrywide? In my opinion Bank of America should deal with potential ethical and legal misconduct by settling all lawsuits that have been filed against the company for their predatory loan practices against homeowners. Also Bank of America should start managing Countrywide’s debt buy helping those homeowners reduce their interest rates. This could help those borrowers afford their loans and the foreclosure rate could get lower.