Resolving Sub-chief Mortgage Crisis Using Project Management Principles

Resolving Sub-chief Mortgage Crisis Using Project Management Principles


Almost everyone residing in US are aware of the current Mortgage Crisis and its impact on their daily life. While some professionals argue on how the problem got produced, there were some Senators and US President actively involved in resolving this crisis at the earliest. If we consider solving a problem as a Project, then most of the principles of Project Management as mention in PMBOK are to be considered. Understanding more in detail about the problem and its impact on the Society discloses the important players. Gathering proper information about the problem that these players are facing is nothing but gathering requirements from the End-Users. These requirements now play a vital role in getting this problem resolved.


Mortgage Loans are provided in general to those who have good income levels or make a reasonable down-payment or have a good credit history for repaying their loan amounts in a timely manner or people who have good employment position. These restrictions were enforced in the market to the extent possible. As an exception, few lenders offered special loans to those who do not qualify these stringent requirements. These lenders are the Sub-chief Lenders. They offered a loan plan that makes the borrower to pay small amount during the motive period. One of the main ideas is to give the borrower an opportunity to correct their Credit Worthiness so that traditional loans will be obtainable for them before the expiry of the motive period. Unfortunately this opportunity provided by the Market and Regulators were misused which rule to rise in these loans drastically. To continue their niche in the Market, lenders over-looked some of the basic principles of lending[1]. Federal government reduced the interest-rates during 2001 and 2003 to raise the economy. Once the Federal save started to raise their interest-rates, hypothetically the mortgage lending rates are to be increased proportionately. In contrast, the mortgage lending rates remained same or further lowered in some situations[2]. Once the housing bubble busted, everyone realized how thorough they were in this mess.

With so many Foreclosures in the housing market, the Federal Government and some Senators came forward with certain legislative bills as a resolution. Foreclosure Prevention Act 2008[3] sponsored by Senator John Kerry, Home Mortgage and Equity Savings (HOMES) Act[4] by Senator Arlen Specter are some to be mentioned. The Administration reached out an agreement with the industry to freeze interest-rates for certain sub chief mortgages for five years [5]. already a bill got passed in the Senate to help businesses with Tax-Breaks [6].


Step 1: — Gathering the Requirements

With the assumption that solving a problem is a Project of its own, then the first step is to clarify the problem in detail. This is nothing but gathering requirements from the End-Users. Incomplete Requirements and without of User Involvement ranks the top causes for IT Project Failures as per the Chaos Report, 1999.

For this Sub-chief Mortgage Crisis, the meaningful players for gathering the requirements are:

a) Borrowers

b) Lenders

c) Mortgage Brokers

d) Legal Advisors

e) Federal Regulators

f) Federal save

g) US Senate/House Members

h) US President & its Administration

Step 2: — Defining the Scope of the Project & Developing a Plan

Once the requirements are clear the next step is to define the Scope. Project Scope is the chief for the success of the project. As explained in PMBOK[7], during this phase all the work required is included, and a clear and precise definition of what the project is supposed to accomplish.

Under these assumptions, the Project Scope would be to help the borrowers to avoid from being homeless and at the same time help the lenders to get their money repaid at the best possible level. There is a fine thin line drawn between these two responsibilities. Like every Project, this one too has certain risks associated with the task accomplishments.

The Project Scope Statement can be a Legislative Bill for argue in Senate or Hill.

This Project Scope Statement should include:

  • Project Objectives: This include the total amount that the Feds are willing to assist, the time of action and procedures that are being used to spread the amounts and the auditing methods used to avoid any sort of mismanagement that might rule to fraud.
  • Project Deliverables: A detailed description of how the needy borrowers/lenders are getting the help from the Federal save. The deliverables may include things such as data about how many low-income & middle-income families are bailing out, data about the losses that lenders are facing due to this crisis, data about the ripple effects in the Nation’s economy etc.
  • Project Organization: At this point, Feds need to decide who will be the chief responsible person for implementing this Project. The members of this Project Team will be the Officials from Federal save and the Stakeholders being the Mortgage Lenders/Borrowers.
  • Project Milestones: At this point, the Feds clarify the Milestones during the Project Lifecycle. At the end of every meaningful development, the Project Manager or the chief Responsible Federal Official has to validate the position of the Project and take necessary steps (if required) to correct any distractions/diversions in the project path.
  • Project Cost Estimation: While defining the deliverables, the total cost of the project estimated or calculated must be identified.
  • Creating Work-Breakdown Structure: This is the crucial part of this Project Phase. Identifying the meaningful players and preparing the WBS will help the Feds to explain how the crisis will be handled at various levels.
  • Project Assumptions and Constraints: While presenting the Bill, the authors must produce the assumptions that they had and the Constraints that they can visualize.

Step 3: — Executing the Project Plan

With the cooperation of the required Stake-holders, Federal save can start implementing the Project as follows:

1. clarify all the Applicants who are at the brim of the Mortgage Crisis. The Lenders for these Applicants are further summarized. The finalist contains the list of Lenders and the total amounts that the Federal save is going to reimburse. A secondary list provides the list of all Applicants and their respective information and the mortgage assistance amount.

2. Once the Federal save repays the appropriate amount for respective lenders, it can be assumed that the First meaningful development is achieved. Before initiating the Second meaningful development, respective Federal Officials can audit the time of action followed. A Change Management in the Execution course of action can be initiated if required.

Repeating the above two steps until all identified applicants were assisted results in the completion of the execution phase.

Step 4: — Handling the Project Risks

Like every other Project, there are certain risks involved during in this Project too.

The dominant risks involved during planning phase are: · Data Source: The Source that the Feds used to clarify the applicants who are the chief targets of this crisis.· Data Integrity: The integrity of the data that is provided by the Source.· Data Analyzing: Using the data obtainable, analyzing it to clarify whether the applicant falls in Current meaningful development Category or the next is one of the crucial risk which requires proper procedures. .

During the execution phase, proper protocols are required so that the applicant do not sell the house while the Feds are in the time of action of repaying the appropriate assistance to the applicant’s lender. Overlooking this scenario may rule to improper dispensing of the financial assistance and may make difficulty the deserved applicant’s chances during the next meaningful development.

Step 5: — Performing the Project Closure

Once all the eligible applicants received appropriate Mortgage help and the lenders accounts were audited, the Project can be officially defined for CLOSURE.

Step 6: — Identifying the Lessons learnt

Every Project goes by certain hurdles during its life-cycle. It’s the ability of the Project Team to conquer these hurdles, focusing on the Project’s Final Output, keeps the Project moving forward. Once the dust gets settled, the team can then get together and clarify all the hurdles that they came across and how they could tackle it. It’s the responsibility of the Senior Management to summarize these and spread to the Middle & Junior Management as Lessons Learned during the Project’s Life Cycle.


Treating the issue of Sub-chief Mortgage Crisis as a Project makes it much transparent and easy to manage.

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