Here is the original discussion post please see attached teacher response and student response. There are 2 teacher response and 3 student responses that I need to respond to.
Discussion Topics
Chapter 11: Mortgage Loans
Chapter 11’s primary focus is the financial aspects of the real estate transaction. And, as we are painfully aware, the mortgage industry and its related lending practices led to an exceptionally serious and damaging economic crisis (2008-2009) in the banking industry and subsequently in the housing industry that had a huge ripple effect throughout the US Economy.
This chapter highlights the fact that the vast majority of mortgage loans are 30 year, fixed rate loans. Discuss the pros and cons of a 30 year, fixed rate loan. In addition, should Congress and state legislatures more closely monitor and regulate the mortgage industry in light of the mortgage collapse? Has the mortgage industry recovered enough to not require further government oversight?
Chapter 12: Truth-in-Lending
While the basic theme of Chapter 12 discusses the role of the federal government in the areas of Truth in Lending, Regulation Z and consumer protection, I would like you to consider additional actions during the past 12 years take by the federal government to ease the mortgage crisis of the 2006-2008. Therefore you will have a choice of 2 threads for Chapter 12. Please focus on only one thread:
OPTION ONE: The Truth-in-Lending (TIL) (10969), Regulation Z and the Truth-in-Lending Simplification and Reform Act are considered by many to be the most important pieces of federal legislation passed to protect the consumer. Do you agree with this statement?
Your answer MUST be justified by explaining at least two of the major components of the TIL Act, Regulation Z and the Truth-in-Lending Simplification and Reform Act.
OPTION TWO: During the last half of 2009 and the first half of 2010, the federal government undertook a number of initiatives designed to protect the homeowners who were under the threat of foreclosure (including Home Mortgage Modification Program, the Second Lien Modification Program, and the Home Affordable Refinance Program) and programs to encourage home purchase (the two phases of the tax rebate program for new homeowners).
What are your considered thoughts on these programs and were the actions of the federal government appropriate? After more than 8 years, have the federal and state programs proven to be a successful or failure?
Your analysis and your opinion on this topic MUST be backed up with hard financial data from independent sources. Examples would include the Congressional Budget Office, the Wall Street Journal, the National Association of Realtors, etc. You must not use any source that is partisan in nature, such as, www.whitehouse.gov (Links to an external site.) or any site that has obvious political agenda.
Chapter 13: Fannie Mae and Freddie Mac (Mandatory)
Many economists link the 2008-2009 mortgage crisis and housing market slump to Fannie Mae and Freddie Mac lending practices that started in the mid 2000s. Others linked the crisis to inadequate oversight by federal regulators. And, still others attempted to connect this crisis to federal legislation passed under the Clinton Administration that aggressively promoted low income loans. Furthermore, there has been increasing level of political debate that Fannie and Freddie should be abolished. What is your opinion: should Fannie and Freddie be abolished? Justify your comments.
Chapter 14: ARMs and other Creative Mortgages
During the 5 years or so prior to the mortgage collapse of 2006-2008, the mortgage industry, in partial response to escalating housing prices, developed a number of financing instruments (3 and 5 year renewable ARMs, 80/20 loans, stated income loans, NINJA loans) that enabled home buyers to purchase a home with initial low down payment and low early years monthly payments. The 2008-2009 mortgage crises proved that strategy to be foolhardy and clearly put the US Economy at serious risk of collapse. Overly creative mortgages have proven the adage of “no free lunch”. Do you agree or disagree? Justify. Should there be limitations placed by Congress and state legislatures on the use of ARMs and other creative mortgage schemes?
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