Formation of the Mortgage Crisis Analytical Essay by Nicky

Formation of the Mortgage Crisis
An analytical paper that discusses the mortgage crisis.
# 149053 | 1,251 words | 6 sources | MLA | 2011 | US
Published on Nov 22, 2011 in Economics (National) , Hot Topics (General)


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Description:

This is an analytical paper that deconstructs the mortgage crisis. Opening with a brief snapshot on the circumstances and players in the process, the paper continues on to look at the methods and issues that brought about the crisis. Breaking each part of the crisis into small sections, the paper analyzes such causes as lack of proper underwriting procedures, high house prices, an unequal loan to-value ratio and more. The paper's conclusion that the attitude and behavior of common consumers are partially to blame for the current mortgage crisis.

Outline:
Underwriting Guidelines
Loan-to-Value Ratio
Fico Score
Political influence and Laws
High House Prices
Attitudes of the Common People

From the Paper:

"The loan-to-value ratio is another risk evaluation tool for lenders when setting a limit on how much a borrower can borrow according to a appraisal report. To avoid the risk of default, lenders usually set the loan-to-value ratio to 80% or lower for decisions on huge loans (Ling, 2006). If a borrower would like to purchase a $500,000 property, the borrower needs to put down 20 % or $100,000 as a down payment and the remaining $400,000 which is the 80% loan-to-value ratio can be financed. However, lenders started promoting a 100% loan-to-value ratio, also known as 100% financing, which means a person does not need to make any down payment for a property. This practice was one of the major causes of the mortgage crisis."

Sample of Sources Used:

  • "CalHFA - Underwriting Guidelines." CalHFA - First-time Homebuyers. 01 May 2009 <http://www.calhfa.ca.gov/homeownership/insurance/underwriting.htm>.
  • Goodman, Laurie S., Zimmerman, Thomas A., Lucas, Douglas J.and Fabozzi, Frank J.. Subprime Mortgage Credit Derivatives (Frank J. Fabozzi Series). New York: Wiley, 2008.
  • "HUD - Federal Housing Administration." Homes and Communities - U.S. Department of Housing and Urban Development (HUD). 30 Mar. 2009 <http://www.hud.gov/offices/hsg/fhahistory.cfm>.
  • Ling, David C., and Wayne Archer. Real Estate Principles A Value Approach. 2nd ed. New York: McGraw-Hill/Irwin, 2006. Pg250, 18:84
  • "Move Over, Subprime." Economist 390.8617 (07 Feb. 2009): 63-64. Academic Search Premier. EBSCO. Gelman Library, Washington, DC. 28 March. 2009 <http://proxygw.wrlc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=36425859&site=ehost-live>.

Cite this Analytical Essay:

APA Format

Formation of the Mortgage Crisis (2011, November 22) Retrieved October 02, 2022, from https://www.academon.com/analytical-essay/formation-of-the-mortgage-crisis-149053/

MLA Format

"Formation of the Mortgage Crisis" 22 November 2011. Web. 02 October. 2022. <https://www.academon.com/analytical-essay/formation-of-the-mortgage-crisis-149053/>

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