Solving the Foreclosure Crisis Essay

2165 Words 9 Pages
Of every issue facing the American people today, including our wars in Afghanistan and Iraq, our floundering economy, and our troubling health care system, none may be considered quite so frightening as the state of the sub-prime mortgage crisis. While matters in the Middle East and Washington often seem irrelevant and far away, the beast that has evolved out of low interest rates and plummeting housing costs is currently breathing down the necks of Americans in every state, city, and neighborhood. According to Realty Trac, the leading online database on foreclosure statistics, 3.4 million homes will fall into foreclosure before the end of 2009. Foreclosure and bankruptcy, often caused by unemployment or medical catastrophe, affect not …show more content…
Through analysis by several informed sources, this problem can be explained using tangible examples as well as theoretical implications. Research has also been done on what is standing in the way of allowing mortgage loan modification and how to best resolve them. Foreclosure has infected the American people with fear for the past three years, and it has severely affected both our economy and our communities. It is time a solution was solidly agreed upon, and mortgage loan modification has the merit to achieve results.
In the article “Mortgage Market Sensitivity to Bankruptcy Modification”, Adam J. Levitin of Georgetown University and Joshua Goodman of Columbia University argue a tangible solution to the sub-prime mortgage crisis:
Permitting modification of all mortgages in bankruptcy would create a low-cost, effective, and immediately available method for resolving much of the current foreclosure crisis without imposing costs. Ideally mortgage servicers would modify the terms of unexpectedly unaffordable mortgages to help homeowners stay in the properties and to mitigate the loss to lenders. (6)
Essentially, this plan involves extending Chapter 13 of filing bankruptcy to include loan modifications. Currently, when an individual files Chapter 13, their debt can be examined and the loan extended so the debt can be paid in full. If legislation was introduced that included