Banks Improper Foreclosure and Mortgage Research Paper

Pages: 8 (2595 words)  ·  Style: MLA  ·  Bibliography Sources: 8  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] For example, by use of a bank check or through a debit card you can make a payment to someone else on the other side of the country or even on the other side of the world. If banks didn't exist this wouldn't really be possible without having to personally travel to make a payment. Other services they provide free of charge or for a small fee include relatively recent developments such as online banking, mobile banking, automated teller machines (ATMs), and even some technologies that allow you to deposit a check just by taking a picture of it with your phone and uploading the information to the bank. Without banks we would have to return to a barter society which is not feasible in the least.

Arguments against Financial Intermediaries

There are several criticisms that are weighed against the financial intermediaries that are prevalent in our society. However, there are few people that actual expose the complete removal of the banking system. Instead the arguments against banks are usually composed of some plan to regulate or restructure them. They are simply too valuable to eliminate completely. Banks play a central role in facilitating transactions and even the most inflexible of the banking system critics will not dispute this fact. One argument that is interesting, because of religious preferences do not allow for the issuance of interest such as Islamic societies. Instead of interest these banks charge increased amounts of fees to offset the interest payments. However, the net effect is generally similar to interest since the payments are still being made and banks can profit from them.

Some of the people who are involved with the Occupy Wall Street movements have demanded that the Glass-Steagall Act be overturned (Occupy Wall Street). The Glass-Steagall act was passed after the Great Depression in order to separate the safer commercial banking activities (mortgages, savings, etc.) and the more risky financial investment institutions (derivatives, credit default swaps, etc.). This act was repealed in 1999 under Bill Clinton and the two separate types of banks were allowed merge in to larger more powerful institution. Under the new regulations, banks can take the money from peoples' deposit accounts and use it speculative activities such as stocks, bonds, or wherever else they think they will gain the most profitability.

Ethical Violations

One of the specific ethical violations that occurred during the period investigated was known as Robo-signing scandal. Most of the big five banks, Bank of America, Wells Fargo, Citigroup and Chase had some serious acquisitions of attempting to falsifying paperwork to expedite foreclosures to courts. Many of these victims were active duty military who were unavailable to respond to banks requests. So in many cases, it seems the major banks took upon themselves to create their own documents to proceed with the foreclosures. Banks are restricted by regulations that they are supposed to honor. However, when banks become so large that they believe they can skirt the rules then this is problematic. Chase actually reached a fifty six million dollar settlement over the allegations of overhanging military members. It is likely that this only represent a portion of what the bank received by skirting the rules.

The Massachusetts attorney general also sued the five largest mortgage lenders for similar activities. The banks improperly foreclosed on troubled borrowers by relying on fraudulent legal documentation or by failing to modify loans for homeowners after promising to do so. Furthermore some banks incorrectly advised borrowers that they would receive priority treatment if people were told that they were more than 90 days delinquent on their loans. Other borrowers were misled when told that they must be more than two months' delinquent to receive a loan modification.

Conclusion

No matter what the future of banking might look like, one thing that is fairly certain -- banks will continue to exist. Without the invention of the banking system, society would likely still be on the barter system. Just imagine if you wanted to buy something had to come up with something to trade for it. The modern world just isn't possible without a system of exchange in which banks facilitate. However, that being said, the future of banking could, and most likely should, be subjected to increased regulation. Despite the fact that banks too valuable to eliminate altogether, there structure and their range of operations is definitely open to debate.

During the financial crisis, the five largest banks were overwhelmed by foreclosures. This worked to put stress on their existing departments that handled such cases. While there are many individual instances of the banks processing loans and foreclosures in incredibly unethical manners, you have to look at the larger picture to truly appreciate the phenomenon. The current banking system is unethical and unsustainable in its current form. Financial institutions have grown too large to be able to effectively service their accounts.

The sheer size of these institutions puts stress on the banks to try to process foreclosures as quickly as possible and many employees overstepped their bounds by taking unethical shortcuts in the process as well as were prone to errors. However, if the banks were not under such stress it is unlikely that the number of unethical cases would have been nearly as large. The wave of unethical actions by the banks was a result of the environment that emerged. To change this environment, it is likely that the banks will have to be split up and their powers limited so that the financial institutions can once again become a stable backbone of the economy as opposed to a rogue element that creates havoc.

Works Cited

Ball, R. "The Global Financial Crisis and the Efficient Market Hypothesis." CFA Digest (2010): 44-45. Web.

Bauman, S., M. Conover and R. Miller. "Growth vs. value and large-cap vs. small-cap stocks in international markets." Financial Analysis Journal 54.2 (1998): 75-89.

Beers, B. "End the Fed, Save the Dollar: Ron Paul." 7 September 2009. CNBC. Web. 19 March 2012.

Chen, B. And F. Kaboub. The Repeal of the Glass-Steagall Act and the Subprime Mortgage Crisis. 8 February 2012. Web. 19 March 2012.

Demyank, Y. And O. Hemert. "Understanding the Subprime Mortgage Crisis." 5 December 2008. Social Science Research Network. Web. 19 March 2012.

Deng, P. "Rethinking Efficient Market Hypothesis." 7 June 2009. Economist Online. Web. 20 March 2012.

Fama, E. "Efficient Capital Markets: A Review of Theory and Empirical Work." The Journal of Finance 25.2 (1970): 383-417. Web.

-- . "Efficient Capital Markets: II." The Journal of Finance 46.5 (1991): 1575-1617.

Morris, A.… [END OF PREVIEW]

Four Different Ordering Options:

?
Which Option Should I Choose?

1.  Buy the full, 8-page paper:  $26.88

or

2.  Buy & remove for 30 days:  $38.47

or

3.  Access all 175,000+ papers:  $41.97/mo

(Already a member?  Click to download the paper!)

or

4.  Let us write a NEW paper for you!

Ask Us to Write a New Paper
Most popular!

Bank of America SWOT Analysis SWOT


Mortgage Crisis Thesis


Mortgage Rates Term Paper


Mortgage Industry Impacts on New College Graduates Term Paper


Bank Profitability Term Paper


View 1,000+ other related papers  >>

Cite This Research Paper:

APA Format

Banks Improper Foreclosure and Mortgage.  (2012, March 20).  Retrieved February 23, 2019, from https://www.essaytown.com/subjects/paper/banks-improper-foreclosure-mortgage/1851332

MLA Format

"Banks Improper Foreclosure and Mortgage."  20 March 2012.  Web.  23 February 2019. <https://www.essaytown.com/subjects/paper/banks-improper-foreclosure-mortgage/1851332>.

Chicago Format

"Banks Improper Foreclosure and Mortgage."  Essaytown.com.  March 20, 2012.  Accessed February 23, 2019.
https://www.essaytown.com/subjects/paper/banks-improper-foreclosure-mortgage/1851332.