My thanks go out to all who have helped me complete this study and with whom this project may have not been possible. In particular, my gratitude goes out to friends, facilitator and family for extensive and helpful comments on early drafts. I am also deeply indebted to the authors who have shared my interest and preceded me. Their works provided me with a host of information to learn from and build upon, also served as examples to emulate.
DECLARATION
I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, & this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views & not essentially which are associated with university.
Signed __________________ Date _________________
ABSTRACT
This paper explores the concept of subprime mortgage. Subprime mortgage is a kind of loan that is given to people who are not eligible for the conventional mortgage. It gained a lot of popularity during the previous decade. As the level of risks involved in this type of mortgage is very high for the lender, therefore, the lender charges a high rate of interest from the subprime borrower. It discusses various factors that have led the world towards financial crisis and the risks involved in subprime mortgage. Lastly, these risks can be managed by risk assessment strategy. There are number of ways in risk management and assessment could be carried out. The lenders should first need to understand that before providing loans, they should check the history of the borrower so that they are able to assess the risk concerned with these borrowers. These findings are carried out with the help of Qualitative methodology. The researchers interviewed different bank managers and employees of banks in of United Kingdom and in the light of their answers the research objectives were achieved. Furthermore, with help of interviews the researcher identified the causes of financial crisis and risks involved with subprime mortgage.
TABLE OF CONTENTS
ACKNOWLEDGEMENTII
DECLARATIONIII
ABSTRACTIV
CHAPTER 1: INTRODUCTION1
Research Background1
Research Aims and Objectives1
Research Questions2
Limitations and delimitations of the Research2
Conceptual Framework3
CHAPTER 2: LITERATURE REVIEW5
Mortgage Loans5
Definition of Subprime6
Subprime Mortgages6
Subprime Lending8
Characteristics of Subprime Mortgage10
Features of Various types of Loans13
Growth in Subprime Market16
The Growth of Lenders17
Subprime Mortgage Crisis18
Fraud in Mortgage19
Loan Default in Subprime Mortgage20
Loss22
Conclusion24
CHAPTER 3: METHODOLOGY25
Research Methodology25
Justification of Phenomenological Approach26
Key Terms26
Qualitative Research27
Research Rationale for Choosing the Qualitative Method27
Interviews28
Open-ended, Standardised interviews29
Fixed-response, Closed-ended Interview30
Justification of Research Tools30
Data Collection and Processing Procedures31
Interviews31
Literature Data Collection32
Participants34
Ethical Considerations34
Role of the Researcher36
Researcher Bias37
Validity37
Reliability38
Reliability/Dependability40
CHAPTER 4: DISCUSSION AND ANALYSIS41
Main causes of Financial Crisis41
Securitization45
Mortgage Backed Security45
Interest-based Loans46
Change in House Value47
Risks involved in Sub-prime Mortgage49
Conclusion53
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS54
Conclusion54
Solution towards improvised Sub-Prime Mortgage Lending57
Proper Pricing58
Responsible Lending60
Risk management and Portfolio Management practices62
Issues related to consumer protection62
REFERENCES64
APPENDIX68
CHAPTER 1: INTRODUCTION
Research Background
Issues that have been faced by the world's economy, developed over a long period. For around a decade or so, a huge amount of money was flowing into United States from foreign investors. This huge influx of money in financial institutions and banks ...