How To Solve The Current Finacial Crisis Essay

The current financial crisis, which had its roots from subprime mortgage crisis, began to increase dramatically in September of 2008. There have been significant economic disorders in United States alone. Major banks and financial organizations around the world are going bankrupt and writing down billion dollars. Housing markets are falling not just in United States but all around the world. This crisis is truly global and it is spreading like fire. Because of these economic crises, the US Congress came up with a $700 billion bailout plan to buy troubled assets from financial institutions who are struggling financially. Nevertheless, another bailout was proposed and it's the homeowner bailout. It is known that the foreclosure

Foreclosure in America has been a rising and prominent problem recently, and has destroyed many Americans hopes and dreams. Over 2.3 million homes were foreclosed in 2008, and an estimated four million homes will be foreclosed by the end of this year. Despite the efforts of many banks and lending companies, over half of homes will foreclose that have received their help. I believe that we have only started in the right direction in solving the foreclosure crisis. Giving money and lowering mortgage rates will help, but I believe we should find out why Americans are in this situation in the first place. We are being too stereotypical when we think the only reason someone is foreclosing is because of irresponsible payments or buying a home

Foreclosure is a dreadful aspect of home-owning. The American foreclosure crisis, and its subsequent economic recession, was caused by lateral misguidance on part of private banks, the federal government, and by the millions of people who purchased their homes on credit. Over 900,000 foreclosures have occurred in California alone, making its foreclosure rate the largest and most formidable; as a result of the housing downturn, private banks like JP Morgan and Wells Fargo succumbed to bankruptcy, as the toxic assets they possessed lie curdled and menacing. Stocks tumbled as confidence in our financial system crashed; millions of people lost their jobs in the course of one petrifying year. The lending process was halted, effectively stalling

The sounds of elation by all sides of the business are what everyone involved in the post housing market crash is saying these days. The age of the foreclosure and short sale (“when a house on the market is worth less than the seller still owes for it”) is slowly coming to an end as buyers and lenders are more aware of the changing factors in today’s real estate market (Momberger). The previous method that lenders used helped cause the housing crash and a higher level of home loan defaults. Before the housing crash many buyers entered their housing purchase having some debt and often would refinance to pay off debts and use the increasing value of the house they purchased to pay them off. The new ways of qualifying buyers and assessing a homes

As the foreclosure crisis in the United States continues to spiral, increasing attention is being given to novel and creative solutions for reducing the risk of mortgage default. The Obama administration has proposed several government-backed programs to help homeowners stay in their homes, and private lenders have tried various approaches to stabilize the economic situation. To date, none of the enacted efforts has substantially improved the crisis, and as such the number of homeowners filing for bankruptcy and entering foreclosure continues to mount.

Foreclosure is one over arching problem facing the United States of America today with no one perfect solution. Each person in the US suffering from foreclosure has a unique circumstance and situation that has led them to the economic turmoil they face, and that uniqueness therefore requires any solution to the overall issue of foreclosure to be versatile to a plethora of situations. There is not one faultless way to resolve the crisis, but with a combination of different measures, the foreclosure crisis can be slowed.

This initiative would relieve immediate market pressure and lower bankruptcy and foreclosure with a viable alternative plan available for homeowners struggling with unmanageable mortgage payments. Even though creditors receive less than originally agreed upon in the mortgage, they will still recoup much of the sum which otherwise would not happen in cases of bankruptcy and foreclosure. The loss through restructured mortgages is mollified by the government’s 40% tax credit as homeowners are able to keep their property and more easily maintain their mortgage payments.

One way to solve the foreclosure crisis is to actually foreclose on every homeowner’s home loan, including the homeowners in bankruptcy, pre-foreclosure and post-foreclosure. The credit report of these homeowners should read as a recession in 2009 and it should not lower their credit scores. The banks should then match the previous interest rates to the interest rates of today and appraise each home and property at the value that it was assigned by its local tax assessor.

Overall this should be a good plan for solving the current foreclosure crisis, however there is one problem that seems like it will only get worse as time goes on: commercial lenders. These businesses, despite being offered incentives probably will not be too keen on helping out the suffering working class. Their business is to make money, and although there are going to be incentives given by the government, they come with a cost to the companies: sacrificing the way that they do business. In order for these companies to qualify for the

Bold action is needed to address this serious issue. I suggest a “real estate pause” for a temporary amount of time, similar to what Roosevelt did with the “bank holiday” during the Great Depression. The root of the foreclosure problem is that people who should be living in homes valued at $200,000 or lower are living in over $500,000 homes with “house poor” mortgages. Many Americans like to live above their

Due to the recession that our economy has recently experienced, American consumers are currently undertaking serious financial problems. Such difficulties are obvious in real estate, with homeowners having to deal with a major foreclosure crisis. According to studies by the Mortgage Bankers Association, one out of every 200 homes will eventually be foreclosed, and 250,000 families enter into foreclosure every three months. Although the worst times are still in our future, with help from the United States government, we as citizens will eventually overcome the horrendous situation of America’s current real estate market.

The new government program could instead purchase the already foreclosed homes, and sell them back at market value. The government program would most likely be selling these houses at a loss because the market value for the foreclosed houses will be lower than the price the lender is trying to sell the house at. If the houses were sold at market value, then more buyers would be given an incentive to purchase a house, since the market value will be lower at first. Once the supply of houses on the market decreases, the market value will increase; this will eventually lead to a more stable housing market.

The United States economy has been in trouble for the past couple of years. The foreclosure crisis is a condition that began due to the inability of homeowners to pay their mortgages. Foreclosure is a legal proceeding whereby a lender obtains a legal termination of a debtor’s right to redemption. The foreclosure rates have been increasing for a considerable period and certain steps have been put into place to solve the problem. While the government, financial institutions and the general public are highly aware of the crisis, the steps taken to combat the problem are still not sufficient as the foreclosure rates are still increasing.

Another benefit of the mortgage meltdown is that it created a population of more realistic buyers. Buyers now do not seek loans that they cannot afford unlike their counterparts from several years ago. The families now entering the market match a loans to their income and do not try and outlive their means due to the fear of repercussions such as home loss as seen several years earlier. Now, the buyers entering the market are now more financially minded and more likely to retain their homes as they are aware of potential negative repercussions and are living within their means. Coupled with the more realistic buyers the banks are also held to be more accountable which is another silver lining that is an important benefit from the mortgage meltdown.

While slow, painful, and frustrating all attempts at solving the foreclosure crisis today have been short sighted. Despite public outcry, little was done to try and prevent a future crisis. Therefore, the focus of this essay will be on provisions to change the system we have today that will mitigate if not stave off the possibility of a future crisis.