How Business Ethics Relates to Subprime Mortgage Market
By Wanda Thibodeaux, eHow Contributor

Many people have lost their homes as a result of unethical suprime mortgage practices.
The ability to have a home of your own in the United States typically depends on your ability to repay a mortgage, since most Americans don't purchase their homes outright. Because not everyone has perfect credit, a section of the mortgage industry involves subprime loans. In the wake of the mortgage and foreclosure crisis that began in 2007, the ethics of those in the industry is under scrutiny.
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Subprime Mortgage Definition
A definition of subprime mortgage is necessary to understand the relationship between the industry and ethics. Subprime mortgages are mortgage loans lenders provide only to those whose credit disqualifies them from receiving the best (prime) interest rates a lender can offer. A subprime mortgage by definition means that lenders work with those with a lesser ability to pay. Roughly 25 percent of all mortgages are subprime, according to Thomas Kostigen of the Wall Street Journal's MarketWatch website.

Fiduciary Duties and Ethical Problems
Businesses typically operate under fiduciary duties, or obligations. These fall into two broad categories of loyalty and care. These duties essentially stipulate that a businessperson should act truthfully, in a timely fashion and in the best interest of the consumer. Prior to the subprime mortgage and foreclosure meltdown, lenders ignored these fiduciary duties, engaging in unethical practices such as misleading shareholders about the diversity of mortgage portfolios and not verifying the ability of the applicant to repay (applicants notedly could withhold income data by law by