Media Message
Introduction
Behavioral sciences play a central role in figuring out the likely effect of mass media and communication in the society. Different theories and approaches are used to figure this out. This study refers to the Uses and Gratifications, and Cultivation theories to consider the effect of the media article below on individuals. The uses and gratification theory argues that consumers of a given media uses this media to satisfy and fulfill specific desires and needs. On the other hand, cultivation theory holds that heavy exposure to a certain media can cause an individual to have an illusory perception of the life reality based on the most consistent and repetitive message that is given in this media (Fourie, 2011).
The Media Message
“Those cheap home loans may be built on shaky foundation” by The Independent on Tuesday 04 November 2014
The article addressed itself to the issue of introduction of a mortgage loan that is offered at an interest rate that is less than one per cent in the UK mortgage market. According to the article, HSBC, which is one of the leading banks in the United Kingdom, is planning to launch its less than one per cent mortgage loan. The article analyses the requirements that an interested borrower will be required to fulfill in order to benefit from it. Despite the low interest that the mortgage will attract, the article warns that the recalculation of the charges that comes along with this mortgage reveals that the assumingly
During this time period, homeownership typically required a 20 percent down payment (Melicher & Norton, 2014, 168). Lending institutions were very careful about whom they lent money to, and credit standards were high (Melicher & Norton, 2014, 168). Melicher & Norton (2014) called this the “save now, spend later” philosophy, and it would change in the coming years (p. 168).
The financial crisis emerged because of an excessive deregulation of business operation of financial institutions and of abusing the securitization mechanism in the absence of clearly defined rules to regulate this area in the American mortgage market (Krstić, Jemović, & Radojičić, 2013). Deregulation gives larger banks the opportunity to loosen underwriting lender guidelines and generate increase opportunity for homeownership (Kroszner & Strahan, 2013). After deregulation, banks utilized many versions of mortgage loans. Mortgage loans such as subprime and Alternative-A paper loans became available for borrowers challenged to find mortgage lenders before deregulation (Elbarouki, 2016; Palmer, 2015). The housing market has been severely affected by fluctuating interest rates and the requirement of large down payment (Follain, & Giertz, 2013). The subprime lending crisis has taken a toll on the nation’s economy since 2007. Individuals who lacked sufficient credit ratings or down payments resorted to subprime mortgages to finance their homes Defaults on subprime and other mortgages precipitated the foreclosure crisis, which contributed to the recent recession and national financial crisis (Odetunde, 2015). Subprime mortgages were appropriate for borrowers with substandard credit and Alternate-A paper loans were
The past decades have dictated our economic policies; the housing market was fed by the politicians instilling the thought that every person should be a homeowner. According to a speech by President William Clinton in 1995, he boasted about making homeownership a reality, “The goal of this strategy, to boost homeownership to 67.5 percent by the year 2000, which would take us to an all-time high”(Wooley). As a result of political ploys like this, banks and lending institutions came up with products such as the 107% financing, interest only loans, negative amortization programs which allowed loans to start at a 1% interest rate, sub-prime credit packages for those homeowners only 1 day out of bankruptcy, and the no document qualifier
The mortgage crisis we are experiencing in the United States today is already ranking as among the most serious economic events since the Great Depression of the 1930’s. Hardly a day goes by without a story in the newspaper or on the cable news stations reporting about the increase in the number of foreclosures across the United States. The effects of this crisis have spread across all financial markets, where in the end all of us are paying a price for this home mortgage crisis. When the housing market collapsed, so did the availability of credit which our economy depends upon. The home mortgage crisis, the financial crisis and overall economic crisis all need to address by the
During 2007 through 2010 there existed what we commonly refer to as the subprime mortgage crisis. Through deduction of readings by those considered esteemed in the realm of finance - such as Ben Bernanke - the crisis arose out of an earlier expansion of mortgage credit. This included extending mortgages to borrowers who previously would have had difficulty getting mortgages; this both contributed to and was facilitated by rapidly rising home prices. Pre-subprime mortgages, those looking to buy homes found it difficult to obtain mortgages if they had below average credit histories, provided small down payments or sought high-payment loans without the collateral, income, and/or credit history to match with their mortgage request. Indeed some high-risk families could obtain small-sized mortgages backed by the Federal Housing Administration (FHA), otherwise, those facing limited credit options, rented. Because of these processes, home ownership fluctuated around 65 percent, mortgage foreclosure rates were low, and home construction and house prices mainly reflected swings in mortgage interest rates and income.
The availability of affordable housing stock may, therefore, be an issue. Furthermore, there is also the thorny issue of credit availability to consider. According to the Mortgage Banker’s Credit Availability Index, access to mortgage finance reputedly became more difficult in June for the eighth successive month, despite conventional mortgage rates remaining low. Meanwhile, the strength of new home sales in the high-end segment comes against a backdrop of a growing spread between jumbo (in excess of $417K) and conventional mortgages to their widest level since March 2011. Despite continued falling mortgage rates, the behaviour of this spread suggests risk aversion prevails amongst lenders.
Mortgage products should be more easily understood by all borrowers. Furthermore, borrowers must be able to qualify for the mortgage and borrowers should have a payment that they
A generation ago, lenders held onto mortgage loans until they were repaid, and retained a relationship with the borrower and an interest in their financial wellbeing. That changed considerably at the start of the 21st century. The modern, high-risk mortgage market gained its first head of steam in the 1990s, and its origin lies primarily in a string of deregulatory policy decisions over the last three decades. High-risk lending passed through two boom periods, the first one in the late 1990’s as well as the larger, second one in the 2000’s. The first boom was marked by a surge in subprime refinance lending. The second included both subprime home purchase loans and refinance loans and they grew rapidly after 2001 (Marcuse, 2009, p.351). Together a new class of alternative or
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Since 2006, the number of foreclosures in the housing market has sparked dramatically. This is due to the fact that banks have given out subprime mortgages or interest-only loans to consumers regardless of their credit score. One of the main reasons why banks did not care about consumers’ credit history is because they resold the loans as mortgage-backed securities. This caused the loans to fall into the hands of credit rating companies that rated the loans too positive; thus, these assets were expanded and helped lead to the foreclosure crisis without hurting the banks directly. The goal was that banks lustily sought the big payoff that these mortgages could provide. The mortgages and loans let low-income consumers pay only a low rate of
During the time prior to the mortgage crisis, the economy was looking good to the mortgage brokers and lenders in the United States as well as new homeowners. After all, it is the ‘American Dream’ to own a
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
Due to such events as the subprime mortgage crisis, the auto market and Wall Street’s failure, the United States suffered a severe economic blow. Looking at the situation from an economic view, supply is supposed to equal demand. Due to the mortgage crisis and the careless attempts of some to make money, there is a superfluous amount of empty homes throughout the United States. In the subprime mortgage crisis, the nature of the failure was the inability to account for money given to individuals, who lack the appropriate requirements. In order to obtain a loan, collateral is needed. References were not being checked and poor credit history went ignored. People were obtaining loans and not paying attention to the interests rates associated. “This time around, the slack standards allowed millions of high-risk borrowers to get easy home mortgages. When this so-called subprime market collapsed beginning about a year ago, ordinary working people bore the brunt” (Gallagher, 2008). Companies were so anxious to place people in homes, that it cost them billions of dollars and
An increase in loan packaging, marketing and incentives encouraged borrowers to undertake difficult mortgages so they believed that they would be able to refinance quickly at more favourable terms. People borrowed money to buy the house and then expected the price to rise and sold so that they could pay off the debt which owed to the bank and demanded a new loan to buy another house. However, once the interest rate began to rise and house’s price dropped in 2007, refinancing became more difficult and banks could not collect their mortgages.
Mass Communication is the study of how people receive information through what is known as Mass Media to a large crowd of the population at the same time. Or they can also say that Mass Communication is a process of which a person, group of people, or an organization send and receive messages through a channel of communication to a large of unknown and heterogeneous people and organizations. You can think of a large group of unknown and heterogeneous people as either the general public. The sender of the message is usually a professional communicator that often represents an organization.