The Mortgage Broker And Loan Companies

976 WordsNov 9, 20154 Pages
When looking at the mortgage brokers and loan companies through consequentialism, the reader would look at the results, outcomes, and consequences. Utilitarianism is a form of consequentialism and is a type of subjective and individualist ethics, this therefore allows for preferences that may do good or bad to others, the society, or the environment. The mortgage brokers and loan company’s consequences were not beneficial for the United States economy, housing, job market, and the American people. The broker’s income was generated by placing a mortgage with a lender. When the mortgage was placed, the broker had no responsibility for it, and it didn’t share any of the risk if the borrower should default on the loan. Eric Halperin, Director, Center for Responsible Lending, said “ Bankers made more money if they put you in a subprime loan and incentives that the financial institutions offered to their mortgage brokers were based on selling the most profitable products, which were predatory loans.” This therefore was in the broker’s best interest to find a loan for the borrowers to increase his/her income. It however was not in the best interests of the borrowers, investors, the American taxpayer, the economy, and the housing bubble. The compensation of mortgage brokers in the United States being based on the volume of loans, not solvency; was the first step in the initial snowball effect that ended up causing the worst financial crisis in United States history since the

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