ARMethics - more about profit than their client, and now...

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Nate Christensen BTW 250 Professor John O’Conner Fall Semester The current financial crisis that the nation is suffering as we speak can be mainly blamed for one reason, sub-prime mortgages. An adjustable rate mortgage, or ARM for short, is a situation where a lender gives you a sub-prime rate for the first 3, 5, or 7 years to make a house more affordable but after that you get hit with a massive interest rate making the new payment much more than the borrower can afford. This situation has caused many foreclosures and bankruptcies in the United States and is the primary reason we are in this major dilemma. A lot of honest people trusted their lending agency or realtor to give them honest advice and a decision in the end that helped the borrower, not the lender. So the problem lies with people buying homes they ultimately couldn’t afford but with a sub-prime rate they could. There were a lot of unethical people involved in the sales who care
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Unformatted text preview: more about profit than their client, and now we’re in a huge recession which could develop into a depression. The current situation would be very easy to give a lesson of ethics based on it, mainly due to the fact that there were a lot of unethical people and choices made during the past 7 to 10 years. Many loan officers and real estate agents had dilemmas facing them, both with negative outcomes but one outcome was clearly the better choice, advise against ARM’s. Most agents were for adjustable rate mortgages because they’re bottom line went up making them more money. The lesson here is that a few unethical decisions led to our nations largest credit crisis to date. It would have been easily avoided had most people made ethical decisions and cared more for their customer and not for their money in their wallets....
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This note was uploaded on 02/25/2009 for the course BTW BTW 250 taught by Professor O'connor during the Fall '08 term at University of Illinois at Urbana–Champaign.

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