Market Transparency and Consumer Choice for Housing Essay

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Since 2006, the number of foreclosures in the housing market has sparked dramatically. This is due to the fact that banks have given out subprime mortgages or interest-only loans to consumers regardless of their credit score. One of the main reasons why banks did not care about consumers’ credit history is because they resold the loans as mortgage-backed securities. This caused the loans to fall into the hands of credit rating companies that rated the loans too positive; thus, these assets were expanded and helped lead to the foreclosure crisis without hurting the banks directly. The goal was that banks lustily sought the big payoff that these mortgages could provide. The mortgages and loans let low-income consumers pay only a low rate of …show more content…
So far, as a result, foreclosures are decreasing and the mortgages are becoming more affordable, but job creation and transparency in the market has not occurred, so the crisis continues.
Fortunately, job creation is projected to increase by this spring due to the passing of the American Recovery and Reinvestment Act dubbed the economic stimulus to pull us out of the recession and create jobs; therefore, new job growth will help citizens pay their mortgages and lower foreclosure even more. Despite all of these laws, there still remains one vital part to ensure the stability of our financial system: transparency. Congress has proposed a financial overhaul bill that would enforce new rules and regulation to the industry, but the downfall of it is that it would hinder needed economic growth in a time of feeble recovery. So I propose creating an internet portal administered by the Department of Housing and Urban Development. The government would then require banks to put the address on the top of every loan application to ensure consumer awareness of the address. The portal or website would allow consumers to create a profile and input a basic credit history. The employees at the Department of Housing and Urban Development would then perform calculations about the type of loan, the ability to refinance and buy a home, the risk factor for different types of loans, the outcome of the housing market in the future, and a background check on every bank in

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