Ethical dilemma :

A different perspective
Page :5556

Honest Teams member :

Nur Hidayah Ibrahim
Nurul Atikah Lokman
Siti Amirah Shaudi
Hallan Hashim
Mohd Khairul Hisyam Che Yahaya

Foreclosures, Predatory
Lending & the Ethical Dilemma

INTRODUCTION
Mortgage company dealing with many
foreclosures. Houses are worth 3040% less then what they paid. They
can still afford the mortgage, but is it
worth it?
All staff meeting to discuss problem.
Senior leaders remind everyone that
a mortgage is a legal contract. Multi
billion dollar bailouts leave people as
victims. Media coverage is negative
to banks. Mortgage holders are

QUESTION 1 :
Which ethics theories are
being applied here?

Universal Ethics

QUESTION 2 :
If homeowners made poor financial
decisions taking too much equity
out of their houses or buying at the
wrong time - Do the predatory
lending practices of the bank and
mortgage companies justify
walking away from those
mortgages?

This is because it is a legal binding

contract between

the Mortgage Service Company act

within their capacity and their own
policy.

However to be more ethical or fair

to the homeowner, the Mortgage
Service
Company
could
give
recommendation
to
the
homeowner.

 Short sales
Loan modifcation
Deed-in-lieu of foreclosure
Seek for Housing Developer
attention

Proposed
alternativ
es

Enquiries

Discuss

Listen + Explain

OPTION TO AVOID FORECLOSURE

1. SHORT SALES
The lender allows you to sell the house for less
than the outstanding loan amount, takes the
proceeds and forgives any remaining debt
2. LOAN MODIFICATION
Bank will help borrowers get their mortgages
adjusted
3. DEED-IN-LIEU OF FORECLOSURE
Be able to voluntarily "give back" your
property to the lender

QUESTION 3 :
Are homeowners really throwing
good money after bad in making
payments on mortgages for homes
that are worth much less than the
mortgage?

YES.
It is because buyers are expect to get
good return on their investment
rather than losses.

OPTION TO KEEP THE

HOUSE
A process of obtaining a
REFINANC
ING
PROGRAM

new mortgage
Reduce monthly payments,
lower the interest rates, take
cash out of the existing home
for large purchases or change
mortgage companies.

OPTION
TO SAVE
THE
HOUSE
FORBEARA
NCE

Temporary postponement of
mortgage payments in lieu of
forcing a property to
foreclosure.

MORTGAGE
RELIEF
PROGRAM

Short term interest-free loan to

help up their loan repayment
after unavoidable decease in the
income

QUESTION 4:
o Would you walk away from your
mortgage in this situations? How would
you justify that decision?
Price of the property fallen? Will you just
walk away?
Before you walk away, you need to analyze
the risk and option available for the problem

CONSEQUENCES OF FORECLOSURE

1. IMPAIRED THE CREDIT

Effect your credit score
2. MOVING COST
Utilities, deposits, moving trucks, and other expenses
3. DIFFICULT TO GET NEW MORTGAGE
Impact of the ability of homeowner to get new
mortgage
4. OTHER CONSEQUENCES
Tax liabilities

CONCLUSION
Make sure homeowners understand
all of the options and consequences
before decided to walk away from
mortgage payment

THANK YOU