Look for videos or articles on the Corruption at Fannies Mae and Freddie Mac and on Countrywide Financial.
What were the results of the banking industry’s ethical decisions? Do you feel that if the banking industry would have made different ethical decisions that the Great Recession could have been avoided? Please list the links to your materials. The United States of America sued Bank of America for $1 billion in mortgage fraud against Frankie Mae and Freddie Mac.In 2008, United States World Wide economic letdown resulted from one of many reasons, the real estate market. Basically Countrywide financial was giving out mortgage loans from 2007 to 2009 without doing screen checks on whether or not the borrowers could afford them, and also making most of them out to employees of Fannies Mae and Freddie Mac. Fannies and Freddie buy mortgage loans from banks, package them into securities and sell them to investors.The idea is to free up banks to make more loans. If a loan defaults, Fannies and Freddie guarantee payments to the investors. According to the lawsuit, Fannies and Freddie don’t review the loans before they purchase them.
Instead, they rely on banks’ statements that the loans meet certain qualifications. As a result, “the hustle” began. Employees were getting bonuses for the houses they sold instead of basing their employment on their quality and turnover rate.
Instead of telling a default applicant this mortgage isn’t in your price range, the information entered into a computer was changed to show they approve for a loan that they probably couldn’t ay off, which in default Countrywide told and gave loans to Fannies Mae and Freddie Mac would say they can pay the banks for the loans if the prospect couldn’t, hint a recession and foreclosure of many homes. For example, one loan application, for a home in Miami, said that the borrower was an airline sales representative earning $1 5,500 per month, when the borrower worked for a temp agency and earned $2,666 per month. The lawsuit says that Fannies and Freddie suffered $1 billion in losses because they had to pay for Countryside’s defaulted loans. The lawsuit also complains that Bank of America is refusing to buy back mortgages “even where the loans admittedly contained material defects or even fraudulent misrepresentations. ” Bank of America’s purchase of Countrywide originally earned it plaudits from lawmakers because Bank of America was viewed as stepping in to eliminate a bad actor from the mortgage market. But the purchase, instead of padding Bank of America’s mortgage business, has drawn a drumbeat of regulatory fines, lawsuits and losses.Bank of America reported last week that while it is issuing more mortgages – $21 billion worth last quarter, up 18 percent from a year earlier – its mortgage unit is still losing money as the bank works through crisis-era problems”. I definitely agree that if the banking industry would have made different ethical decisions that the Great Recession could have been avoided.
Many citizens of the United States have dreams of creating and owning their own home. Now many people rent instead of own because the process and payment of owning a home is expensive. Business By stockiest