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Solving The Foreclosure Crisis Essay

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It is a well know fact that the world is in a financial crisis which has resulted in the foreclosure crisis. This is a problem that can not be resolved by the government alone. If the government continues to hand out bail out money to businesses trying to help them avoid bankruptcy or from going out of business the national debt will continue to increase. The national debt will have to someday be paid off and if the government continues to borrow money the result will be higher income taxes paid by those that are already struggling to bring home a paycheck that will meet their basic living expenses. In turn this will make the financial crisis continue to get worse as time goes on. This is a problem that has to be solved by each business …show more content…

The solution is mortgage amendments. These amendments are not the same as a refinance and do not require any refinance fees or appraisal. They should take very little time and expense to create, approve and be considered a legal amendment filed with the original documents. These are meant to be temporary but the time limit on them is dependent on the borrower’s income allowing them time to find a job or increase their current income.

There will be two types of amendments. The first one will lower the interest rate significantly which will lower the monthly payment without changing the term of the mortgage. This one can be very beneficial to those who have taken a pay cut or a slightly lower paying job and will not extend the term of the loan.

The second one will also lower the interest rate significantly but will also lower the principle payment and extend the term of the loan until the loan is paid in full. The disadvantage to this amendment is that the borrower may end up paying more in interest through the length of the loan. The advantage is that the borrower will be able to lower their payment to an amount they can afford.

With both amendments the borrower will report their income yearly until their income reaches the amount that was provided in the original mortgage documents or their income from the borrower’s previous job. Reasonable income guidelines

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