Countrywide Financial was cofounded by Angelo Mazilo and by the early 2000s it became the largest provider of home loans in U.S. It was also considered the main provider of home loans to minorities in U.S. because of its lower barriers regarding homeownership for low-income individuals. The company was well known for their services offered to their clients such as: loan closing, capital market, insurance and banking services.
In 2000s the main factor that contributed to the company’s reputation and growth were the higher margin for home equity and subprime loans. Countrywide Financial was one of the top providers of liar loans because of its riskier clients who had to pay higher fees and interest rates.
Subprime lending means lending to borrowers, people who would not qualify for traditional loan, at a rate higher than the prime rate. In other words the subprime loans are offered to high risk clients who do not qualify for conventional loans. For example, if a borrower has a credit score under 620 it is classified as low-income bracket. Many critics considered the subprime loans the main key to the 2008-2009 financial crisis.
Countrywide was criticized for negligence of giving out highly risky loans to people who could not afford them in order to receive quick profits and right now some homeowners are struggling under liar loans.
According to Datamonitor (2008, p. 5) s one of the company’s strengths was the “Diversified offerings” and “Strong financial performance”.
The group’s banking segment offered a diverse product portfolio and caters to a diverse client base.The banking segments operated through Countrywide bank and Countrywide Warehouse lending (CWL). Countrywide bank’s product offering included residential mortgage lo...
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...e Criminal Justice, Retrieved December 20 and available at: http://www.corporatecrimereporter.com/news/200/eileen-foster-countrywide-and-the-failure-of-corporate-criminal-justice/
U.S.Department of Labor (September 12, 2011), Retrieved December 23, 2013 and available at: http://corporatecrimereporter.com/documents/fosterosha.pdf
United States v. Countrywide Financial Corp. et al. Summary of Complaint, Retrieved December 23, 2013 and available at: http://www.justice.gov/crt/about/hce/documents/countrywide_complaint_overview.pdf, p. 1-2
Zacks (July 09, 2012) Countrywide's Fraudulent VIP Program - Analyst Blog, Retrieved December 23, 2013 and available at: http://www.investopedia.com/stock-analysis/zacks/countrywidesfraudulentvipprogram-analystblog.aspx
Unknown, Eileen Foster, Retrieved December 23, 2013 and available at: http://en.wikipedia.org/wiki/Eileen_Foster
...s are doing well and over the many years have gone up. The company has not lawsuits currently pending which is good. The company as a whole seems to be growing even when the market is down.
This case is based on Mrs. Jennifer Sharkey, who sued J.P. Morgan & Co. (JCMC), Mr. Kenny, Mr. Green, and Mrs. Lassiter, alleging breach of contract and violations of the SOX anti-retaliation statute. The facts started when Mrs. Sharkey was assigned to a Suspect Client 's account where members of JPMC expressed to her their concern regarding to this account because they suspected that the Suspect Client was involved in illegal activities. After Mrs. Sharkey’s investigation, she claimed that she informed her conclusions to superiors Mr. Kenny, Mr. Green, and Mrs. Lassiter, of the Suspect Client 's potential unlawful activities, such as: money laundering, mail fraud, bank engaged in fraud, and violations of federal securities laws. After
Leading up to the crisis of the housing market, borrowers got mortgages without understanding the terms. Banks were giving out loans to people the banks weren't sure could pay the money back. The closer to the crisis, the higher the frequency of illegitimate loans and mortgages. Because there were so many mortgages on houses that could not be paid back, millions of mortgages were foreclosed on, and the houses we...
A majority of mortgage defaults that Americans used were on subprime mortgage loans, which were high-interest-rate loans lent to people with high risk credit rates (Brue). Despite knowing the risks, the Federal government encouraged major banks to lend out these loans to buyers, in hopes, of broadening ho...
The Sub-Prime Mortgage Crisis of 2008 has been the largest financial crisis to take place since the end of the Great Depression. It was the actions of individuals and companies that caused this crisis. For although it could have been adverted, too much money was being made by too many people in place of authority to think deeply on the situation. As such, by the time actions were taken to attempt to rectify the situation, it was already too late. Trillions of dollar of tax payers’ money was spent trying to repair the situation that was caused by the breakdown of ethics and accountability in the private sector. And despite the government’s actions to attempt to contain the crisis, hundreds of thousands lives were negatively affected before, during, and after this crisis.
subprime mortgages were major factors of the collapse of the 2007-2009 economy collapse. All of America suffered from the 2008 recession.
I guess most of you’ve heard the words Subprime Crisis again and again on TV when you were a middle school student 6 years ago. You may not know what it was when you were a child.
In terms of financial performance both companies have performed well. This brief review will focus on the financial performance such as profitability, solvency and liquidity.
Countrywide’s business tactic was “Fund ‘em”. If a person does not have a job, or any assets the answer was still “Fund ‘em”. This is a practice called subprime lending which allows loan...
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
The subprime mortgage crisis is an ongoing event that is affecting buyers who purchased homes in the early 2000s. The term subprime mortgage refers to the many home loans taken out during a housing bubble occurring on the US coast, from 2000-2005. Home loans were given at a subprime rate, and have now led to extensive foreclosures on home loans, and people having to leave their homes because they can not afford the payments. The cause and effect of this crisis can be broken down into five major reasons. When subprime mortgages began to flourish, the term housing bubble came into existence.
Weld, L. G., Bergevin, P. M., & Magrath, L. (2004). Anatomy of a financial fraud. The CPA
In November 2007, the housing market in the United States started to take a downward turn. With loan defaults on the rise, the loans on Citigroup’s books were overdue for a revaluation. Due to the housing market decline and consumer spending cuts, Citigroup announced they expected to post a loss of between 6 and 11 million dollars. Citigroup’s stock plummeted. (Reference)
Subprime loans are ethical but misused in a way that created ethical issues. Subprime loans are loans made to borrowers, generally people who would not qualify for traditional loans, at a rate higher than the prime rate depending on factors like credit score, down payment, debt-to-income ratio, and payment delinquencies (Ferrell, O., Fraedrich, & Ferrell, L., 2010). Subprime loans help consumers get mortgage loans that do not qualify for a conventional mortgage loan product.
The key strategies and distinctive competencies that have led the company to success and its present position of a world leader in the Internet sales can be identified as follows.