Business Ethics Case Analysis: The 2008 Financial Crisis
Business Ethics Case Analysis
Lance Caldwell
Excelsior College
Business Ethics Case Analysis
Introduction
The residential real estate market consistently fluctuates and as such, can create ethical concerns for those involved. The recession which followed the 2008 financial crisis resulted in a plethora amount of borrowers losing their homes to foreclosure (Shaw, 2012). This case study involves a decision to walk away from a mortgage, after learning about unethical lending practices, which has been recommended by financial advisors. It is argued that, due to unethical lending practices, borrowers are permitted to terminate their mortgage obligation; however, it is countered with the notion that …show more content…
The real estate market is of no exception. Organizational norms have a significant impact on how a business operates to meet its goals. These norms are a shared acceptance of rules, regulations, expectations, etc. (Shaw, 2012). It is generally accepted by many organizations to take advantage of market conditions to best meet or exceed profit margins. If borrowers understand the lending parameters set forth and make the conscious decision to enter a contract, then they should be obligated to uphold their contractual agreement. The concern with this argument is the comprehension element. Lenders may present their terms in such a way as to mislead (either intentionally or unintentionally) the borrower, such as the case with Sandra Berrios of Richmond, Virginia who misunderstood her lending terms which resulted in her ultimately losing her home (Kumar, 2009). This example is just one of several thousand in the United States. A report from the Coalition of Responsible Lending indicates that predatory lending costs the United States approximately $9.1 billion annually (Goldman, n.d.). This alarming cost burden raises serious concern regarding the ethical behavior displayed by lenders. Why do lenders engage in such practice, if such a burden …show more content…
F. (2012). Being real about the ethics of the fiduciary: What 's wrong with self-interest?. Journal of Financial Service Professionals, 66(3), 19-21. Retrieved from http://eds.a.ebscohost.com.vlib.excelsior.edu/eds/pdfviewer/pdfviewer?vid=8&sid=730ce650-af9d-41b3-ac40-419d123b8ef0%40sessionmgr4003&hid=4113
Goldman, M. C. (n.d.). Predatory lenders facing scrutiny. ABCNews Business. Retrieved from http://abcnews.go.com/Business/story?id=87906
Kumar, A. (2009) Trying to stem foreclosures, Virginia legislators crack down on unethical mortgage brokers. The Washington Post. Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2009/03/04/AR2009030403430.html
Shaw, W. (2012). Business ethics (8th ed.). Boston, MA: Wadsworth Cengage Learning.
Valentine, S. (2009). Ethics training, ethical context, and sales and marketing professionals ' satisfaction with supervisors and coworkers. Journal of Personal Selling & Sales Management, 29(3), 227-242. Retrieved from http://eds.b.ebscohost.com.vlib.excelsior.edu/eds/pdfviewer/pdfviewer?sid=3966067e-7273-461f-9aa0-9c93ba6d0592%40sessionmgr112&vid=5&hid=115
Zajic, E. C., (2000). Predatory lending practices: Finding solutions. American Land Title Association. Retrieved from
Lance Caldwell
Excelsior College
Business Ethics Case Analysis
Introduction
The residential real estate market consistently fluctuates and as such, can create ethical concerns for those involved. The recession which followed the 2008 financial crisis resulted in a plethora amount of borrowers losing their homes to foreclosure (Shaw, 2012). This case study involves a decision to walk away from a mortgage, after learning about unethical lending practices, which has been recommended by financial advisors. It is argued that, due to unethical lending practices, borrowers are permitted to terminate their mortgage obligation; however, it is countered with the notion that …show more content…
The real estate market is of no exception. Organizational norms have a significant impact on how a business operates to meet its goals. These norms are a shared acceptance of rules, regulations, expectations, etc. (Shaw, 2012). It is generally accepted by many organizations to take advantage of market conditions to best meet or exceed profit margins. If borrowers understand the lending parameters set forth and make the conscious decision to enter a contract, then they should be obligated to uphold their contractual agreement. The concern with this argument is the comprehension element. Lenders may present their terms in such a way as to mislead (either intentionally or unintentionally) the borrower, such as the case with Sandra Berrios of Richmond, Virginia who misunderstood her lending terms which resulted in her ultimately losing her home (Kumar, 2009). This example is just one of several thousand in the United States. A report from the Coalition of Responsible Lending indicates that predatory lending costs the United States approximately $9.1 billion annually (Goldman, n.d.). This alarming cost burden raises serious concern regarding the ethical behavior displayed by lenders. Why do lenders engage in such practice, if such a burden …show more content…
F. (2012). Being real about the ethics of the fiduciary: What 's wrong with self-interest?. Journal of Financial Service Professionals, 66(3), 19-21. Retrieved from http://eds.a.ebscohost.com.vlib.excelsior.edu/eds/pdfviewer/pdfviewer?vid=8&sid=730ce650-af9d-41b3-ac40-419d123b8ef0%40sessionmgr4003&hid=4113
Goldman, M. C. (n.d.). Predatory lenders facing scrutiny. ABCNews Business. Retrieved from http://abcnews.go.com/Business/story?id=87906
Kumar, A. (2009) Trying to stem foreclosures, Virginia legislators crack down on unethical mortgage brokers. The Washington Post. Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2009/03/04/AR2009030403430.html
Shaw, W. (2012). Business ethics (8th ed.). Boston, MA: Wadsworth Cengage Learning.
Valentine, S. (2009). Ethics training, ethical context, and sales and marketing professionals ' satisfaction with supervisors and coworkers. Journal of Personal Selling & Sales Management, 29(3), 227-242. Retrieved from http://eds.b.ebscohost.com.vlib.excelsior.edu/eds/pdfviewer/pdfviewer?sid=3966067e-7273-461f-9aa0-9c93ba6d0592%40sessionmgr112&vid=5&hid=115
Zajic, E. C., (2000). Predatory lending practices: Finding solutions. American Land Title Association. Retrieved from