Impact of Foreclosure Crisis on the Economy Essay

1405 Words 6 Pages
The recession that started in December 2007 and has lasted through 2009 has been the worst economic downturn of my lifetime, and after listening to my parents and grandparents I realize this could be one of the worst recessions in generations. We can all acknowledge that this period of time since 2007 has been the most difficult period in generations for so many middle class Americans who thought they were secure or within reach of the American dream to own their own homes. I have heard people on TV and on the national stage debate the reasons and the impact of the foreclosure crisis on the economy. This debate has been frustrating because people focus too much on arguing who is right or who was wrong; some people claim the foreclosure …show more content…
This is a problem because now the banks have little incentive to give people loans that they can pay back. So they will just give them higher loans, because if they can’t pay them back, the bank doesn’t get hurt. Whoever originally gives out the money must be held accountable for its repayment; otherwise there is a serious conflict of interest.
We need to design a structure that is more morals based, motivating lenders to care more about their customers’ long term prospects of staying in a home, rather than just viewing them as loans or profit. One way this could be accomplished is a sort of rating system that rates lenders based on how much they care about their consumers, and what percentage of their customers are able to pay their loans back. Then, this list could recommend the most moral lenders to customers. If customers could pay attention to this list, then lenders would be motivated to be on it, so they would work hard to be morally sound.
Another way to help the buyers would be for the banks to conduct counseling sessions with the homeowners, not only before the crisis but even after hard economic times occur. Banks and lender s would work with the buyers and owners to give them financial advice and encouragement to make arrangements to pay off their loans. This would create a framework of cooperation to develop solutions in a morally responsible manner, which is consistent with how our country