
472 Part III n Information Quality Applied to Core Business Value Circles
U.S. HOME CONSTRUCTION SUPPLY CHAIN SEVERELY DEPRESSED
BY THE SUB-PRIME MORTGAGE MELTDOWN IN 2007
Lenders that had become addicted to offering mortgages featuring low initial
rates of interest that skyrocketed after a few years or even a few months have
triggered a tsunami of mortgage defaults and home foreclosures that “set
the stage for borrowers to default in massive numbers and lenders to take a
bath.” The July 2007 foreclosure rate due to defaults was double that of the
year before.
2
This in turn has caused the homebuilding industry to face excess Supply
and lowered Demand as lenders tossed stacks of high-risk applications in the
wastebasket after seeing default rates soar.
“A number of investment firms had strongly touted ‘bundled’ mortgage
funds containing a high percentage of sub-prime loans. Now, those once-
popular funds are tanking as investors realize there is no way to place a value
on the underlying mortgages.”
3
Note This is a problem of Information Presentation Quality. There is no way
to understand the value or risk of the “investment.”
Note The Supply Chain can be affected by events not within the actual
Supply Chain processes themselves, such as weather events, work stoppages,
or political events that “affect” the Supply Chain.
Internally, each business area or workstation involved in the i ...