Lending and The Mortgage Crisis

Paper Summary:

The paper explains the concept of credit extension and the original, responsible mortgage lending practices. The paper then explains the evolution of irresponsible mortgage lending practices and how this has led to the current mortgage crisis. The paper suggests solutions for the future health of the American economy, that include tighter legislation, the capping of payments and public education.

Outline:
Introduction - Responsible Lending Practices
Evolution of Irresponsible Lending Practices
The 21st Century American Mortgage Crisis
Implementing Solutions for the Future Health of the American Economy

From the Paper:

"During the second half of the 20th century American consumers began to rely on the mechanism of purchasing on credit extended by banks and other lending institutions. During the next fifty years credit purchases became the norm even for ordinary purchases rather than just for major purchases such as real estate and new motor vehicles. In general, the concept of buying on credit was intended to enable major purchase for consumers whose financial situation and income were strong enough to ensure timely repayment as per a schedule outlined in the credit agreement."

Sample of Sources Used:

• Halbert, T., Ingulli, E. (2000) Law & Ethics in the Business Environment. Cincinnati: West Legal Studies.
• Lowenstein, R. (2007) Subprime Time: How Did Home Ownership Become So Rickety? New York Times Magazine; Sept. 2/07. Retrieved July 8, 2008, from The New York Times online website, at: http://www.nytimes.com/2007/09/02/magazine/02wwln-lede- t.html?_r=1&oref=slogin&pagewanted=print
• Markels, A. (2007) Spring Fever: Just How Sick Is the Housing Market. U.S. News & World Report. Vol.142 No. 11 (33-36)
• Markels, A.(2007) Yes, Housing Will get Worse. But How Bad?U.S. News & World Report. Vol.143 No. 7 (46-48)

More papers on Lending and The Mortgage Crisis:

• Research Paper # 110791 : "Sub-prime Mortgage Crisis"
• Analytical Essay # 119403 : "The Financial Crisis"
• Analytical Essay # 128110 : "Business Ethics in the Banking Industry"

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