Question content area Part 1 Prior to 2008, mortgage lenders
required a house inspection to assess...
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Economics
Question content area Part 1 Prior to 2008, mortgage lenders
required a house inspection to assess its value, and often used
the same one or two inspection companies in the same geographical
market. Following the collapse of the housing market in 2008,
mortgage lenders required a house inspection, but this was
arranged through a third party. How does this illustrate a conflict
of interest similar to the role that credit-rating agencies played
in the global financial crisis? A. Inspection companies may have
provided overly optimistic assessments of home values to ensure
continued work in the future. B. Mortgage lenders may have wanted
to increase home sales without assuming the additional costs to add
more inspection companies. C. Fees for home inspections may have
been unreasonably high to ensure high profits for the inspection
company. D. This situation does not illustrate any conflict of
interest, as the services provided by credit-ratings agencies and
home inspection companies are unrelated.
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