Insurance & Mortgage Lending
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Insurance is a mechanism for reducing financial risk and spreading financial loss; it is a major social institution that is essential to the functioning of virtually any type of modern economy. In terms of economic importance, particularly in capitalist-oriented economies, the mortgage-lending process is another major social institution, ensuring that individuals and businesses with limited financial resources can aspire to, and acquire, property for the purpose of domicile or enterprise. Insurance and mortgage-lending engage a society on two levels: the economic and, by extension, the social spheres of activity. In so becoming such broad-based participants in the community, they step into that grey area of activity where business and social goals co-exist - sometimes in cooperation, sometimes in conflict. In a classless society such as the United States purports to be, it is in the area of racial and ethnic discrimination that most conflicts between business goals and social goals come to a head. This paper will examine one of the discrimination issues involving insurance and mortgage-lending: "redlining." The purpose of this paper will not be to take sides. Rather, by breaking down the issue of redlining into separate areas of consideration, it is hoped that a better understanding of the matter will ensue. There will be four areas of consideration: Business, Public Policy, Legal, and Ethical. As with the activities of insurance and mortgage-lending themselves,
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neighborhood profiles have better or worse chances of defaulting and devaluing in the future.
As with insurance, there are two factors of legislative interference in the mortgage banking industry that equivocate the capitalist equation: regulation and subsidy. Mortgage-lending institutions, primarily Savings and Loans, are required by federal laws enacted since the 1930s to carry certain amounts of insurance and portfolio safeguards that will protect their investors (i.e., the depositors) from the institution's managerial default. In order to meet those legislated requirements, mortgage-lenders are theoretically constrained from "lifting the rules" and handing out money willy-nilly. By the same token, however, state and federal legislatures have offered various incentives to lending institutions to take on high-risk mortgages, incentives that amount to subsidy. These factors will be discussed later in this paper.
The disinterested observer should be noting at this point that nowhere has the word "redlining" been yet employed. That is because, from a purely business perspective, the term implies a fixed geographical reference that is contrary to sound business practice. This is not to say that certain geographical areas wi
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Some common words found in the essay are:
Lawrence Welk, Wealth Nations, Denver Omaha, De George, Public Policy, Savings Loans, Concluding Observations, , Redlining Issue, Supreme Court, 14th amendment, public policy, anti-discrimination legislation, woolley 1993, business practice, england 1993, van loon 1981, proposition 14, loon 1981, mortgage banking, 1993 76, woolley 1993 76, lekachman van loon, england 1993 52, freedom choice property,
Approximate Word count = 5850
Approximate Pages = 23 (250 words per page)
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