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Predatory Lending in the Housing Industry. The Ethics of Predatory Lending
in the Housing Industry The real estate industry is thriving ...
... terms (required under current mortgage industry regulations) is ... 2000 the Department
of Housing and Urban ... action to combat predatory lending, while maintaining ...
... officers in the lending industry attribute to 80% of the problems brought about
by predatory lending. I also believe that the department of Housing and Planned ...
... society and the prevailing practices of industry got exposed ... its role in addressing
the housing requirements of ... Seeds of the Crisis 1. Predatory lending: It is ...
... of subprime victims, the families who were duped by predatory lenders. ... 13) Lending
and Credit ... continued to rise in America as the cost of housing increased and ...
Submitted by janetdubois on April 8, 2005
Category: Business
Words: 3074 | Pages: 13
Views: 227
Popularity Rank: 49,779
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The Ethics of Predatory Lending in the Housing Industry
The real estate industry is thriving with approximately sixty-eight percent of all Americans being homeowners. With low interest rates, 1st time home buyer down payment assistance programs, and government funded educational opportunities (i.e. the Home Ownership Center of Greater Cincinnati), the real estate and mortgage lending industries will continue to flourish. However, there are some unethical lending practices that are threatening the housing industry as a whole.
Those involved in the mortgage lending process have some duty to the borrower. They are expected to perform their specific duties in an ethical manner and have some form of direct or indirect contact with the client. Banks (Prime Market): Banks are lenders who generally handle all facets of the lending process through their own institution. They function differently from brokers in that they usually only service those clients with good credit ratings/scores of 700 or more. Mortgage Brokers (Sub-prime Market): According to HUD, the Department of Housing and Urban Development, mortgage brokers are involved in about sixty percent of all mortgage loan transactions. Brokers try to find the best loan for their clients by shopping their loan applications around to lenders who are willing to accept the clients credit package. Brokers generally service clients, known as B-C-D credit clients, with ratings/scores of 650 and below. In some instances, a major problem for borrowers is that a broker may work in the best interest of the lender as well. Furthermore, in some states they can act as brokers and lenders. Brokers can be considered dual agents. Brokers (1) originate loans using "table funding" provided by a pre-arranged buyer of the loan (2) originate loans using a line of credit from a bank/financial institution (3) originate loans using their own funds (4) bring the borrower and lender together in a...
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