University of Phoenix/ MGT344 Organizational Ethics Issue Resolution Paper
Michele Ortiz
May 6, 2008/ Week #5
In today’s business world, ethics has become more of an area of concern. There has been more emphasis on the issue of business ethics, due to the changes of companies becoming more diverse in order to establish different markets. One company that has become more diversified lately is Countrywide Mortgage Loans and has had some organizational concerns dealing with the recent mortgage loan crisis. Countrywide was just one of the companies that made a lot of money selling mortgages to people who under regular circumstances would not qualify for the home that they purchased. As a result of the presidents proposal to increase minority home ownership, the president lowered interest rates and Countrywide sold initially low rate interest on many first time home buyers, and closed on special government stimulated first time buyer programs knowing that the interest rates would increase as time projected and if the loan defaulted the home owner would probably be unable to pay the high interest . When these customers defaulted on the loan, the interest would double which would make it almost impossible to get the mortgage payments back on track. Countrywide was not ethical in a sense because they actually advertised to be a leading lender for minorities, and first time home buyers. This company sold terms to people who happened to be predominately minorities, and the company knew these customers could not afford to take such a large risk on a home with a variable interest on such limited capital.
In this controversial organizational practice there are several stakeholders. One stakeholder is the new home owner who is now in jeopardy of having their home foreclosed due to them not being educated on the difference between a fixed interest rate and a variable rate mortgage. A second stakeholder is the mortgage holder or bank because they also take a... [continues]
Michele Ortiz
May 6, 2008/ Week #5
In today’s business world, ethics has become more of an area of concern. There has been more emphasis on the issue of business ethics, due to the changes of companies becoming more diverse in order to establish different markets. One company that has become more diversified lately is Countrywide Mortgage Loans and has had some organizational concerns dealing with the recent mortgage loan crisis. Countrywide was just one of the companies that made a lot of money selling mortgages to people who under regular circumstances would not qualify for the home that they purchased. As a result of the presidents proposal to increase minority home ownership, the president lowered interest rates and Countrywide sold initially low rate interest on many first time home buyers, and closed on special government stimulated first time buyer programs knowing that the interest rates would increase as time projected and if the loan defaulted the home owner would probably be unable to pay the high interest . When these customers defaulted on the loan, the interest would double which would make it almost impossible to get the mortgage payments back on track. Countrywide was not ethical in a sense because they actually advertised to be a leading lender for minorities, and first time home buyers. This company sold terms to people who happened to be predominately minorities, and the company knew these customers could not afford to take such a large risk on a home with a variable interest on such limited capital.
In this controversial organizational practice there are several stakeholders. One stakeholder is the new home owner who is now in jeopardy of having their home foreclosed due to them not being educated on the difference between a fixed interest rate and a variable rate mortgage. A second stakeholder is the mortgage holder or bank because they also take a... [continues]
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