Future of New Centurys subprime underwriting policies

Instructions

This discipline is Finance and Ethics related.The EVP has asked you to submit to her a memorandum of 200-250 words, articulating your recommendations for the future of New Centurys subprime underwriting policies. Do you continue writing subprime loans as a way to keep the firm profitable and to hold onto valuable employees who benefit from higher subprime commissions? Do you freeze such high risk lending, even though that may be the only way for some clients to receive credit (and may anger your EVP)?Your memo to the EVP must be 200-250 words. Your memo must have a clear, well-formulated thesis; sentence structure, grammar, punctuation, and spelling count.BACKGROUND:You have just been named the VP for residential lending at New Century Financial (the subject of the Surowiecki article). After committing to a year contract and accepting - and spending - a large signing bonus (that would have to be reimbursed if you quit), you realize that the EVP for operations has been pushing employees to make more profitable subprime loans. On one hand, subprime loans are the only way to lend that accounts for customers' credit quality and risk. On the other hand, you have a sneaking suspicion that some of your loan officers are unnecessarily putting people in subprime mortgage products because they generate higher commissions.RELATED ARTICLE:https://www.newyorker.com/magazine/2007/04/09/subprime-homesick-blues

Answer

MemorandumTo: The EVP, New Century FinancialFrom: The VPDate: 08/09/2020RE: FUTURE OF NEW CENTURYS SUBPRIME UNDERWRITING POLICIESThank you for providing me with the opportunity to offer my recommendations on the company subprime underwriting policies.The primary concern surrounding the company is the choice of continued use of the underwriting policies to customers. The concern arises in the case of benefiting employees and exposing clients on the risks of poor investments. Although clients agree that the subprime is also a source of their credit flow, they continue experiencing an exposure to the risk of failing to pay their interests. Often, clients exhibit myopic tendencies when operating in the subprime market. Discontinuing these operations would help clients against poor investments...
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