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Closing The Deal Business Ethics 1

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Excelsior College

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Running head: BUSINESS ETHICS 1

Business Ethics

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BUSINESS ETHICS 2

CLOSING THE DEAL

Introduction and situational analysis

The real estate industry is one of the most lucrative investment industries globally. The

sector has continued to grow due to increased demand, especially for residential houses and

higher prices speculation in the same. When the prices of homes go up, mortgages will also

increase causing consumers to spend more on their credit cards (Ramcharan, Rodney &Crowe

2013). Furthermore, low-interest rates on mortgages and banks who were willing to lend to

individuals to own homes contributed to spontaneous growth in the sector. However, the real

estate prices have been reducing significantly over the years meaning that those who took loans

are not able to fully pay their mortgages.

Many lenders in a bid to increase mortgages deceive borrowers with not so accurate

forecasts on various sectors such as real estates. On the other hand, borrowers want to fulfill their

dream of owning a house as a home and a future investment end up signing these mortgage

contracts. Unfortunately, due to bad economic times such as the economic recession of 2008,

fluctuating interest rates among other factors cooperate to ensure these borrowers are not able to

get returns on their investments and yet they have to make payments towards their mortgages,

which gives rise to an ethical dilemma in business. Should this borrower’s default on their

mortgages or are they obligated to make payments towards the mortgage although they are less

return on their investment? Are the borrowers bound morally by the contract not to pay and

default or should lenders accept defaulting because they deceived the borrowers into signing the

deals in the first place? For instance, take the case of Derek Fig, who purchased a house at

$340,000 in phoenix whose price has reduced to $230,000 two years later yet he still owes the

bank $318,000 in payments.

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Running head: BUSINESS ETHICS 1 Business Ethics Student’s Name Institutional affiliation Date BUSINESS ETHICS 2 CLOSING THE DEAL Introduction and situational analysis The real estate industry is one of the most lucrative investment industries globally. The sector has continued to grow due to increased demand, especially for residential houses and higher prices speculation in the same. When the prices of homes go up, mortgages will also increase causing consumers to spend more on their credit cards (Ramcharan, Rodney &Crowe 2013). Furthermore, low-interest rates on mortgages and banks who were willing to lend to individuals to own homes contributed to spontaneous growth in the sector. However, the real estate prices have been reducing significantly over the years meaning that those who took loans are not able to fully pay their mortgages. Many lenders in a bid to increase mortgages deceive borrowers with not so accurate forecasts on various sectors such as real estates. On the other hand, borrowers want to fulfill their dream of owning a house as a home and a future investment end up signing these mortgage contracts. Unfortunately, due to bad economic times such as the economic recession of 2008, fluctuating interest rates among other factors cooperate to ensure these borrowers are not able to get returns on their investments and yet they have to make payments towards their mortgages, which gives rise to an ethical dilemma in business. Should this borrower’s default ...
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Tags: Buisness Ethic