Financial Crisis Related On The Subprime Mortgage Market And The U.s. Housing Market

The mortgage crisis of 2007 marked catastrophe for millions of homeowners who suffered from foreclosure and short sales. Most of the problems involving the foreclosing of families’ homes could boil down to risky borrowing and lending. Lenders were pushed to ensure families would be eligible for a loan, when in previous years the same families would have been deemed too high-risk to obtain any kind of loan. With the increase in high-risk families obtaining loans, there was a huge increase in home buyers and subsequently a rapid increase in home prices. As a result, prices peaked and then began falling just as fast as they rose. Soon after families began to default on their mortgages forcing them either into foreclosure or short sales. Who was to blame for the risky lending and borrowing that caused the mortgage meltdown? Many might blame the company Fannie Mae and Freddie Mac, but in reality the entire system of buying and selling and free market failed home owners and the housing economy.

During the early 2000 's, the United States housing market experienced growth at an unprecedented rate, leading to historical highs in home ownership. This surge in home buying was the result of multiple illusory financial circumstances which reduced the apparent risk of both lending and receiving loans. However, in 2007, when the upward trend in home values could no longer continue and began to reverse itself, homeowners found themselves owing more than the value of their properties, a trend which lent itself to increased defaults and foreclosures, further reducing the value of homes in a vicious, self-perpetuating cycle. The 2008 crash of the near-$7-billion housing industry dragged down the entire U.S. economy, and by extension, the global economy, with it, therefore having a large part in triggering the global recession of 2008-2012.

The Bank Secrecy Act requires businesses to keep records and file reports that are determined to have a high level of usefulness in criminal, tax, and regulatory matters. The documents filed by business under the Bank Secrecy Act requirements are greatly used by law enforcement agencies, both domestic and international to identify, detect and deter money laundering whether it is in extension of a criminal enterprise, terrorism, tax evasion or other illegal activity (Fritsch et al,

A decade ago the Lehman Brothers were the fourth largest investment bank in America. Dealing with Investment banking and investment management, the Lehman Brothers was one of the largest global financial service providers. Consequently, the subprime mortgage crisis left the company filing for the declaration of the chapter 11 bankruptcy protections, due to the unnecessary undertaken risk and obnoxious negligence accusations directed towards the group. Companies should utilize observational and analytical pundit functions in identifying the presence of crisis situations to avoid an economic downturn in the business (Pontell, 2014). The fraud would have prevented through stronger and better internal controls, which

The PBS Frontline Documentary, “The Untouchables” produced by Martin Smith details how those responsible for the 2008 financial crisis, caused by the failing of multiple mortgage backed securities that were fraudulently cobbled together with very lax oversight, were never criminally indicted for their actions. Part of the explanation from the Justice Department was that they were afraid that aggressively pursuing the presidents and vice-presidents of the banks involved in the fraudulent mortgage backed securities would make the banking industry even more unstable. This was something that they were very reluctant to risk, since so many banks were already beginning to close. In the documentary,

On October 24, 2012 the Unites States of America filed a lawsuit against the Bank of America Corporation for selling toxic mortgages to Fanny Mae and Freddy Mac which cost the taxpayers more than $1 billion dollars. The lawsuit sought penalties under two laws; the False Claims Act, which is normally used to target fraud against the government, and the 1989 FIRREA Law. FIRREA does not usually hold up in court, but the government is once again relying on it because of the financial crisis as a possibility for targeting civil fraud concerning financial institutions. (Viswanatha, Aruna, 2013) (Stempel, Jonathan, 2012)

The financial crisis that happened during 2007-09 was considered the worst financial crisis in the world since the great depression in the 1930s. It leads to a series of banking failures and also prolonged recession, which have affected millions of Americans and paralyzed the whole financial system. Although it was happened a long time ago, the side effects are still having implications for the economy now. This has become an enormously common topic among economists, hence it plays an extremely important role in the economy. There are many questions that were asked about the financial crisis, one of the most common question that dragged attention was ’’How did the government (Federal Reserve) contributed to the financial crisis?’’

The mortgage and financial collapse of the United States economy had a very devastating impact on thousands upon thousands of Americans. I count myself as one who also had been affected as well.

As laws and regulations continue to grow and become more complex, the need for forensic accountants is sure to continue growing as well. An example of how regulations have grown (mirroring the demand for forensic accountants) can be seen by comparing the scope and length of the Sarbanes-Oxley Act of 2002, at 66 pages, to the 849 page Dodd-Frank Wall Street Reform and Consumer Protection act of 2009.(Tucker, 2011) It is the environment created by such complex regulations and oversight committees that has hedged the need for accounting experts who can help demonstrate both the effects of individual companies on overall markets, as well as the opposite effects of market-happenings on individual firms. This complicated data, made comprehendible by a talented and effective forensic accountant, can serve as the determining factor in a case. Ultimately, this allows for

The Big Short is a movie that discusses the housing market crash in 2008. As you may know, the banks, the mortgage brokers, and the consumers were all affected by this collapse. On each level of the system, there were things that went wrong and that could have been changed that could have prevented the failure of the housing market.

Many factors such as the U.S. Sub-prime mortgage crisis, credit crunch, decline in investments, higher unemployment rates, terror attacks, and the housing bubble caused the great recession of 2007 to 2009. The resulting loss of wealth led to severe cutbacks in consumer spending. This loss, combined with the craziness of the financial market led to the collapse and business investments. As consumer spending and business investments went down massive job loss followed. The largest indicator of economic activity is the real gross domestic indicator (GDP). The recession had a loss of business and consumer confidence. Spending declined and millions of jobs were lost. This resulted in a downward shift in the GDP, and a severe increase in unemployment

On April 21, 2001, Lee Farkas, the former chairman of a private mortgage lending company, Taylor, Bean, & Whitaker (TBW), was convicted for his role in a more than $2.9 billion fraud scheme (Schoenberg, 2011). This action contributed to the failures of Colonial Bank, one of the 25 largest banks in the United States, and TBW, one of the largest privately held mortgage lending companies in the United States. According to court documents and evidence presented at the trial, Farkas and his co-conspirators engaged in a scheme that misappropriated more than $1.4 billion from Colonial Bank’s Mortgage Warehouse Lending division and

Enclosed to this memo is the report you requested, titled The Foreign Corrupt Practices Act Violation at The Bank of New York Mellon. The report presents our research result on The Bank of New York Mellon’s (BNY Mellon) violation of the Foreign Corrupt Practices Act (FCPA), including the backdrop of the unlawful event and its repercussion. We end the report with recommendations for future investors.

The U.S. subprime mortgage crisis was a set of events that led to the 2008 financial crisis, characterized by a rise in subprime mortgage defaults and foreclosures. This paper seeks to explain the causes of the U.S. subprime mortgage crisis and how this has led to a generalized credit crisis in other financial sectors that ultimately affects the real economy. In recent decades, financial industry has developed quickly and various financial innovation techniques have been abused widely, which is the main cause of this international financial crisis. In addition, deregulation, loose monetary policies of the Federal Reserve, shadow banking system also play

One of the first indications of the late 2000 financial crisis that led to downward spiral known as the “Recession” was the subprime mortgages; known as the “mortgage mess”. A few years earlier the substantial boom of the housing market led to the uprising of mortgage loans. Because interest rates were low, investors took advantage of the low rates to buy homes that they could in return ‘flip’ (reselling) and homeowners bought homes that they typically wouldn’t have been able to afford. High interest rates usually keep people from borrowing money because it limits the amount available to use for an investment. But the creation of the subprime mortgage