Countrywide Case Studies Samples For Students

1. Are subprime loans an unethical financial instrument, or are they ethical but misused in a way that created ethical issues?

Subprime loans are not considered to be an unethical financial instrument. However, their misuse results in both ethical and legal issues. Original goal of subprime lending is helping borrowers with low credit ratings or those who cannot maintain their repayment schedule to receive loans at a rate above prime loans.

Subprime loans appeared in 1970s, when social activists mobilized President Administration and U.S. Congress to deal with social injustices in home ownership, and provide loan opportunities to people from low-income neighborhoods (Eastburn 14). Since then lenders could charge higher rates to this kind of borrowers due to added risk, and ...

Business Ethics

In this lecture there were six case studies on ethical issues. The paper shall analyze each one of them and give recommendations thereof. The first case is that of countrywide financial. Over 9% of the loans were subprime loans which are essentially very high risk loans. Due to the unethical behavior at countrywide financial these subprime loans were repackaged as mortgage backed securities and were given high ratings. In 2008 the credit freeze resulted in 62 trillion dollars credit default. Countrywide financial sold out to bank of America for a sixth of its original value. Subprime loans had a legitimate purpose ...