Step 1 – Watch “The Big Short.” You can find it on Amazon if nothing else. It has Christian Bale, Brad Pitt, Steve Carell and Ryan Gosling in it, just in case you get it mixed up with some other movie.Pay attention to the following scenes:1. Opening scene – Lewis Raneiri2. Margo Robbie in a bubble bath3. Jared Vennett (Ryan Gosling) Making his sales pitch to Steve Carell4. Steve Carell riding in a car with the real estate agent.5. Steve Carell talking to the 2 mortgage brokers (gelled hair guys talking about making loans)6. Steve Carell talking to the “adult entertainer.”Step 2For this entire assignment, DISREGARD everything in the movie dealing with investments. That is for an entirely different class. So, anything about “credit default swaps,” or “shorting the market,” disregard all of that. Focus only on the real estate industry, meaning home sales, mortgage lending, financing, consumers, FICO Scores, “loan to value” ratio (“LTV”), “bubble,” ARMs, teaser rates, fixed rate mortgages, multiple properties, standardizations, secondary mortgage market, etc.This assignment is due by EMAIL to my work TIGERMAIL address cat0076@auburn.edu by 5:00pm, central daylight time, Friday, December 13, 2019. It can’t come any later because I have to turn in grades. Use Microsoft Word, or PDF. Either is fine with me. Just make sure I can identify who it is for.First Page (One FULL Page):For each of the below characters, a.) Identify their role in the real estate industry, ie. real estate broker, consumer, mortgage lender, etc; b.) Identify their function in the real estate industry, ie. what does their “role” do.; c.) Identify what people in this “role” did that contributed to the crash; and, d.) Identify what people in that role could have done to prevent the crash.The “adult entertainer” who told Steve Carell that she owned 5 houses and a condo.The two guys in Miami that discussed loan approvals with Steve Carell and his investment company (they introduced Steve Carell to the “adult entertainer”). If you have trouble identifying them, the one guy stated “She better like me, I sent that b***h to Cabo.” And the other guy made the statement that “I used to be a bartender, now I own a boat.”The “bank” (its NOT NAMED), that the one Miami guy dressed in all black identified that he worked for that offered “NINJA loans = no income, no job.” You can just imagine that is Bank of America, or BB&T or name any other bank or financial institution. Hint, they loan money for consumer to buy property.Second Page (One FULL Page):First, tell me how and why the bonds (he identified them as “private label MBS”) that Lewis Raneiri invented were much more stable that the bonds (MBSs) that collapsed during the crash (refer to the Margo Robbie scene). Focus on the difference in the TYPE of mortgages that were held in Raneiri’s original invention, versus the type of mortgages that were in them in the collapse. Also consider the breakdowns in safeguards for loan approvals (think about the scene with the 2 Miami guys and how they got people approved for loans). Lastly, consider how the ARM (adjustable rate mortgage) and “teaser rate” played into the collapse.Second, tell me what can be done to prevent the collapse from happening again by making sure the mortgages that are included in the bonds are more stable and reliable from default by the borrower (homeowner). Think about Chapter 16, the secondary mortgage market and standardizations.Third Page (One FULL Page)In your opinion, who holds the most responsibility for the crash? Choose one and explain your opinion?Consumers because they got into obligations (bought houses, borrowed money) that they ultimately could not afford?Banks/Mortgage Lenders because they loaned money to consumers that could not afford those houses/loans without following safeguards to find out whether they could or not, and/or loaned money to consumers that they actually KNEW could not ultimately afford those houses/loans.It could not have happened with just one or the other.
