| ABSTRACT: | | | | - Project Deliverables: A detailed description of how |
| Almost everyone residing in US are aware of the | | | | the needy borrowers/lenders are getting the help |
| current Mortgage Crisis and its impact on their daily | | | | from the Federal Reserve. The deliverables may |
| life. While some professionals debate on how the | | | | include things such as data about how many |
| problem got created, there were some Senators and | | | | low-income & middle-income families are bailing |
| US President actively involved in resolving this crisis at | | | | out, data about the losses that lenders are facing |
| the earliest. If we consider solving a problem as a | | | | due to this crisis, data about the ripple effects in the |
| Project, then most of the principles of Project | | | | Nation's economy etc. |
| Management as mention in PMBOK are to be | | | | - Project Organization: At this point, Feds need to |
| considered. Understanding more in detail about the | | | | decide who will be the prime responsible person for |
| problem and its impact on the Society reveals the | | | | implementing this Project. The members of this |
| important players. Gathering proper information about | | | | Project Team will be the Officials from Federal |
| the problem that these players are facing is nothing | | | | Reserve and the Stakeholders being the Mortgage |
| but gathering requirements from the End-Users. | | | | Lenders/Borrowers. |
| These requirements now play a vital role in getting | | | | - Project Milestones: At this point, the Feds identify |
| this problem resolved. | | | | the Milestones during the Project Lifecycle. At the |
| ABOUT THE PROBLEM: | | | | end of every milestone, the Project Manager or the |
| Mortgage Loans are provided in general to those | | | | Prime Responsible Federal Official has to validate the |
| who have good income levels or make a reasonable | | | | status of the Project and take necessary steps (if |
| down-payment or have a good credit history for | | | | required) to correct any distractions/diversions in the |
| repaying their loan amounts in a timely manner or | | | | project path. |
| people who have good employment status. These | | | | - Project Cost Estimation: While defining the |
| restrictions were enforced in the market to the | | | | deliverables, the total cost of the project estimated |
| extent possible. As an exception, few lenders | | | | or calculated must be identified. |
| offered special loans to those who do not qualify | | | | - Creating Work-Breakdown Structure: This is the |
| these stringent requirements. These lenders are the | | | | crucial part of this Project Phase. Identifying the key |
| Sub-Prime Lenders. They offered a loan plan that | | | | players and preparing the WBS will help the Feds to |
| makes the borrower to pay small amount during the | | | | explain how the crisis will be handled at various levels. |
| incentive period. One of the main ideas is to give the | | | | - Project Assumptions and Constraints: While |
| borrower an opportunity to correct their Credit | | | | presenting the Bill, the authors must produce the |
| Worthiness so that traditional loans will be available | | | | assumptions that they had and the Constraints that |
| for them before the expiry of the incentive period. | | | | they can visualize. |
| Unfortunately this opportunity provided by the | | | | Step 3: -- Executing the Project Plan |
| Market and Regulators were misused which lead to | | | | With the cooperation of the required Stake-holders, |
| rise in these loans drastically. To maintain their niche in | | | | Federal Reserve can start implementing the Project |
| the Market, lenders over-looked some of the basic | | | | as follows: |
| principles of lending[1]. Federal government reduced | | | | 1. Identify all the Applicants who are at the brim of |
| the interest-rates during 2001 and 2003 to boost the | | | | the Mortgage Crisis. The Lenders for these Applicants |
| economy. Once the Federal Reserve started to raise | | | | are further summarized. The finalist contains the list |
| their interest-rates, hypothetically the mortgage | | | | of Lenders and the total amounts that the Federal |
| lending rates are to be increased proportionately. In | | | | Reserve is going to reimburse. A secondary list |
| contrast, the mortgage lending rates remained same | | | | provides the list of all Applicants and their respective |
| or further lowered in some cases[2]. Once the | | | | information and the mortgage assistance amount. |
| housing bubble busted, everyone realized how deep | | | | 2. Once the Federal Reserve repays the appropriate |
| they were in this mess. | | | | amount for respective lenders, it can be assumed |
| With so many Foreclosures in the housing market, | | | | that the First Milestone is achieved. Before initiating |
| the Federal Government and some Senators came | | | | the Second Milestone, respective Federal Officials can |
| forward with certain legislative bills as a resolution. | | | | audit the process followed. A Change Management in |
| Foreclosure Prevention Act 2008[3] sponsored by | | | | the Execution Process can be initiated if required. |
| Senator John Kerry, Home Mortgage and Equity | | | | Repeating the above two steps until all identified |
| Savings (HOMES) Act[4] by Senator Arlen Specter | | | | applicants were assisted results in the completion of |
| are some to be mentioned. The Administration | | | | the execution phase. |
| reached out an agreement with the industry to | | | | Step 4: -- Handling the Project Risks |
| freeze interest-rates for certain sub prime mortgages | | | | Like every other Project, there are certain risks |
| for five years [5]. Even a bill got passed in the | | | | involved during in this Project too. |
| Senate to help businesses with Tax-Breaks [6]. | | | | The primary risks involved during planning phase are: |
| RESOLVING THE ISSUE: | | | | · Data Source: The Source that the Feds |
| Step 1: -- Gathering the Requirements | | | | used to identify the applicants who are the prime |
| With the assumption that solving a problem is a | | | | targets of this crisis.· Data Integrity: The |
| Project of its own, then the first step is to identify | | | | integrity of the data that is provided by the |
| the problem in detail. This is nothing but gathering | | | | Source.· Data Analyzing: Using the data |
| requirements from the End-Users. Incomplete | | | | available, analyzing it to identify whether the applicant |
| Requirements and Lack of User Involvement ranks | | | | falls in Current Milestone Category or the next is one |
| the top causes for IT Project Failures as per the | | | | of the crucial risk which requires proper procedures. . |
| Chaos Report, 1999. | | | | During the execution phase, proper protocols are |
| For this Sub-Prime Mortgage Crisis, the key players | | | | required so that the applicant do not sell the house |
| for gathering the requirements are:a) Borrowersb) | | | | while the Feds are in the process of repaying the |
| Lendersc) Mortgage Brokersd) Legal Advisorse) | | | | appropriate assistance to the applicant's lender. |
| Federal Regulatorsf) Federal Reserveg) US Senate | | | | Overlooking this scenario may lead to improper |
| House Membersh) US President & its | | | | distribution of the financial assistance and may |
| Administration | | | | hamper the deserved applicant's chances during the |
| Step 2: -- Defining the Scope of the Project & | | | | next milestone. |
| Developing a Plan | | | | Step 5: -- Performing the Project Closure |
| Once the requirements are clear the next step is to | | | | Once all the eligible applicants received appropriate |
| define the Scope. Project Scope is the core for the | | | | Mortgage help and the lenders accounts were |
| success of the project. As explained in PMBOK[7], | | | | audited, the Project can be officially defined for |
| during this phase all the work required is included, and | | | | CLOSURE. |
| a clear and precise definition of what the project is | | | | Step 6: -- Identifying the Lessons learnt |
| supposed to accomplish. | | | | Every Project goes through certain hurdles during its |
| Under these assumptions, the Project Scope would | | | | life-cycle. It's the ability of the Project Team to |
| be to help the borrowers to avoid from being | | | | overcome these hurdles, focusing on the Project's |
| homeless and at the same time help the lenders to | | | | Final Output, keeps the Project moving forward. |
| get their money repaid at the best possible level. | | | | Once the dust gets settled, the team can then get |
| There is a fine thin line drawn between these two | | | | together and identify all the hurdles that they came |
| tasks. Like every Project, this one too has certain | | | | across and how they could tackle it. It's the |
| risks associated with the task accomplishments. | | | | responsibility of the Senior Management to |
| The Project Scope Statement can be a Legislative Bill | | | | summarize these and distribute to the Middle & |
| for debate in Senate or Hill. | | | | Junior Management as Lessons Learned during the |
| This Project Scope Statement should include: | | | | Project's Life Cycle. |
| - Project Objectives: This include the total amount | | | | CONCLUSION: |
| that the Feds are willing to assist, the process and | | | | Treating the issue of Sub-Prime Mortgage Crisis as a |
| procedures that are being used to distribute the | | | | Project makes it much transparent and easy to |
| amounts and the auditing methods used to avoid any | | | | manage. |
| sort of mismanagement that might lead to fraud. | | | | |