Caldwell M1A1
Topics: Predatory lending, Ethics / Pages: 3 (862 words) / Published: May 28th, 2015

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 those who willingly and knowingly enter a contract are obligated to fulfill that contractual agreement, despite possible future hardship ramifications. This ethical dilemma is explored from both perspectives and a possible solution is suggested.

Background and Significance As with just about any business, the sole purpose for its existence is profit. 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



References: Duska, R. 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 http://www.alta.org/publications/titlenews/00/0004_01.cfm

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