WK 3- Subprime Mortgages

This subprime mortgage mess was an obvious violation of the ethical principles of verasity, fairness and human dignity, as explained by Fr. Byron.

When banks began lending to subprime borrowers a few years ago, it seemed great. Suddenly, anyone could buy a house, even with little or no money down. But not all of those borrowers were good candidates for the loan.

Lenders offered interest-only loans made a lot of subprime mortgages possible. That's because homeowners were only paying the interest, and never paying down principal. The banks never disclosed the full detail of the loan to the borrowers that it will double their mortgages after certain years. The banks were only interested to sell the loan even to the people can’t afford it. The mortgage brokers were living large giving loans to anyone even people that didn’t qualify.

The banks gave high incentives to the brokers to sell the ARM program to people. That’s why we saw almost every broker was offering the ARM program to home buyers. I remember one of the agents to take riskier variable rate mortgages, saying “you can always refinance later” and also telling me “I should buy as much house as I can.” Many people fell on that trapped and eventually lost their house.

The banks and brokers never really cared about their clients if they can still be living in the house that they sold to them. For them, it was just another transaction.

In closing, I am stating what Fr. Byron reminds us that, “human dignity is not a gift or resource that we can bestow or not bestow; rather, it is intrinsic in the human condition. From it stem certain rights – the rights to life, a job, a living wage, decent housing, education, healthcare, and respect.”

http://www.stock-market-investors.com/stock-investment-risk/the-subprime-mortgage-crisis-explained.html

Byron, William J. The Power of