CONSUMER AND MORTGAGE LENDING

Consumer and Mortgage Lending

Abstract

The purpose of this paper is to critically reconsider the mortgage lending value (MLV) and to acclimatize it in alignment to find a new concept that could assist as the cornerstone for an internationally acknowledged standard for valuations for lending purposes.

Table of Contents

CHAPTER 1: INTRODUCTION1

Introduction Overview1

Research Statement2

Research Aims and Objectives3

Nature of the Study4

Significance of the Study4

CHAPTER 2: LITERATURE REVIEW6

Introduction6

Literature on consumer mortgage choice11

Introduction to the HSBC Case14

HSBC: The Bearish Case14

General business, economic, political and market conditions14

Federal and state regulation15

Competition15

Operational risks16

Liquidity17

Summary to the HSBC Case17

Citi Group Case20

Re-Default Rates21

Foreclosures22

Capital market regulations and executive compensations22

Growth of credit default swaps24

Flawed economic models and borrowing rating28

High financial leverage and bank run30

Stock market volatility31

CHAPTER 3: METHODOLOGY36

Methodological approach36

Choice of variables36

DATA COLLECTION:37

Survey instrument37

Example of conjoint instrument item37

Philosopy Methods38

Choice Justification38

Reliability and Limitation38

Design/methodology/Sampling39

Findings40

Ethical Issues41

CHAPTER 04: DISCUSSION AND ANALYSIS42

Consumer lending and mortgage lending's within the banks portfolio42

Factors that have influenced the operations to consumer and mortgage lendings42

Critical success factors for the concept of MLV43

Problems faced by banks and other lending institutions, enagaged in consumer lending mortgages44

Rationale need for risk assessment particularly credit risk and lose provisions44

Did these banks dealt with capital adequacy in according with the regulatory body monitoring system46

Work attempted for the study inquiry, objective46

Outcome for the study inquiry, objective, objective.47

Ability to deal with study problem47

CHAPTER 05: CONCLUSION49

REFERENCES51

CHAPTER 1: INTRODUCTION

Introduction Overview

Recent outbreaks of financial crises and the tendency of financial liberalization have stimulated much concern in revising the connection between the two. One anxious topic is the impact of intensified affray that arises from eliminating bank entry restrictions. Most of the theoretical publications concludes that affray rises banks' credit risk. A widespread contention is that affray drives down lend rates and bank profits, reducing banks' incentives to computer display loan applicants, leading to alleviated lending criteria and expanded bank failures. It is furthermore contended that affray decreases banks' screening proficiency by worsening the pool of loan applicants. In compare, contend that loan screening assists alleviate comparable force, and therefore intenser affray can stimulate screening activities. Likewise, (Chen 05) considers a bank's alternative between loan screening and collateral obligations, and concludes that it is more probable to select the previous other than depend on the last cited when opposite comparable force from a promise entrant.

Empirically, outcomes in the associated publications are no less mixed. (Gruben et al. 02) find clues of a affirmative connection between financial liberalization and financial crises. (Gropp and Vesala 04) resolve that financial liberalization tends to smaller bank asset quality. However, and find advanced bank performance after banking deregulation in the Untied States, and Turkey, respectively; and (Caminal and Matutes 02) manage not find a clear connection between market power and bank failures.

Since 2001, there has been an upward trend in swinging of housing market while the falling of interest rates and the rising availability of mortgages combined with rising housing prices. The Federal Reserve (Fed) has direct control over two types of interest rate. The first, called the discount rate, is a rate charged by the Fed to banks for borrowing ...