Essay on Exploring Solutions to the Housing Crisis in America

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Americans were willing to live beyond their means, and bankers were willing to finance the dream. The biggest problem with this easy money was the obvious lack of responsible financial regulation. “Stated income” allowed anyone to easily commit fraud for a home loan, and banks weren’t worried about the money they lent since the loan was ultimately backed by the government. Sub-prime borrowers were given the opportunity to get mortgages, and no money down allowed people to get a home loan without really having “skin in the game.” Second mortgages were only icing on the cake and people figured that as long as house prices kept rising, home equity could be used as an instant cash machine to live even further beyond their means. As long as …show more content…

Foreign investors, local economies that rely upon housing tax revenue, and all other invested interests have suffered and are begging for a clear solution in sight.
Solutions to alleviate the impacts of the foreclosure crisis are absolutely central to the health of our financial systems and the country’s economic stability. The foreclosure crisis is nowhere near an end as mortgages with “teaser rates” are expected to default in catastrophic numbers. The goal of foreclosure solutions must be to keep people in their homes with affordable monthly payments, while still leaving cash in their pockets to contribute to our heavily relied upon consumer based economy. Solutions do not lie in forgiving mortgage loans and billion dollar bank handouts, as this only sets a bad precedent for contract law and regulation standards by condoning financially reckless behavior. We must work with people directly and mortgage modifications must be dealt with on an individual basis.
My solution is a multi-pronged approach that also includes regulations to ensure that this kind of situation never happens again. Firstly, we must establish 50-100 year mortgages making monthly payments affordable, thereby halting foreclosures. These 50-100 year mortgages would make monthly mortgage payments less expensive than rent for a comparable living situation. Obama’s refinancing strategy should include the conversion of existing troubled mortgages into 50-100

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