Essay on Proposed Solution for Solving the Foreclosure Problem

1373 Words 6 Pages
My proposed solution for the foreclosure problem has several parts. They include eliminating and legally banning interest only loans, mandatory loan modifications, government tax incentives to stay in a potentially foreclosed home and consumer education. Many years ago the mortgage companies created the thirty year home loan. It seems like this extended payment plan would benefit the homeowner by allowing more time to pay for the mortgage. The payments were smaller and more affordable than those of a shorter loan. But, the long term time frame was most favorable for the corporations. The thirty year loan plan originated due to the banks theory that many buyers could possibly have financial difficulty in the period of thirty …show more content…
Many individuals and investors did well flipping houses, as long as there was the increasing equity to walk away with. But, in the recent economy there are loads of homeless citizens that have walked away from the illusion that you can own a luxury home for as little as $1,000 down and be able to re-fi the disastrous doomed loan when the home values took an upside down nose dive. There is little hope for a possible sale or re-fi when the mortgage payment becomes unaffordable and the home is appraised for $150,000 less than was borrowed. The problem can easily be seen in most cities where construction has halted and homes sit vacant and empty. So, my first remedy is to do away with interest only home loans. They have been made available for too long and should not exist. The first solution is to eliminate them and the government should make it illegal to provide them. Lenders should be policed. As great as our country is it is not perfect, as is evident with the foreclosure crisis.
Next, the mortgage companies that sold them should be legally held accountable to provide mandatory loan modifications to homeowners in distress. All of these deceptive loans should be modified to an affordable rate and plan for the homebuyer. Some individuals were not even aware that their payment would be increasing and there were lawsuits because of it. Sometimes this was not properly revealed or made clear. This
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