Group Assignment.SolvingtheM ortgageCrisis

Group Assignment.SolvingtheM ortgageCrisis - Solving 1...

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Solving 1 Running Head: SOLVING THE MORTGAGE CRISIS Solving the Mortgage Crisis University of Maryland University College
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Solving 2 Solving the Mortgage Crisis Executive Summary During the housing bubble years, banking and mortgage corporations exploited consumers by using unethical lending practices in pursuance of monetary profits. At present, the banking and mortgage industry is suffering from the repercussions of its unethical lending practices, a result of financial social capital networks including the relationships between bankers and lenders; lenders and top executives at mortgage companies; bankers and top executives; federal government and lenders. Consequently, the social capital of the banking and mortgage industry is in desperate need of rejuvenation. For the purpose of this paper, social capitalism is defined as the premeditated, conscious actions taken by individuals and organizations through networks in order to obtain resources to gain profit and wealth (Portes, 1998, pp. 3-4). Today, financial organizations and the federal government are desperately trying to save the financial system that has undergirded the U.S. economy since the great depression. In order to rebuild the reputation of the federal government and financial organizations in the U.S., a new paradigm is required to assure these organizations operate on “honesty, fairness, and doing the right thing” (Daft, 2007, p. 377). The following subsections of this paper will outline the ramifications of the mortgage ‘bubble’ busting, in addition to the crucial elements needed to remedy the current mortgage crisis. Identification and Analysis of the Problem The five stakeholders involved in the mortgage ‘bubble’ include the U.S. Government, top executives of mortgage companies, lenders, homeowners (buyers), and community leaders. These stakeholders have contributed to the mortgage crisis by using their social capital
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Solving 3 connections to move away from established policies and best practices. An example of this activity is homeowners who conspired with their lenders to prepare and submit false financial statements to mortgage companies. Another contributing factor was the unethical behavior of “misinformation and manipulation” by all stakeholders (U.S. Department of Housing and Urban Development [HUD], 2000, p. 17). Identification of Stakeholders/Organizations The role of each member of an organization is to execute the mission of the organization. The profile of the stakeholders/organizations, the role each organization played in the mortgage crisis, and the stakeholders’ social capital network, is summarized below in Table 1. Table 1 Stakeholder’s Profile Stakeholder’s Profile Stakeholder # 1: Government-HUD Mission : To “Increase homeownership, support community development, increase access to affordable housing free from discrimination, embrace high standards of ethics, and management and accountability and forge new partnerships” (HUD, 2003, p. 2).
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This note was uploaded on 09/22/2008 for the course MGMT 630 taught by Professor Aw during the Spring '08 term at University of Maryland Baltimore.

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Group Assignment.SolvingtheM ortgageCrisis - Solving 1...

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