The Foreclosure Crisis is the direct effect of the mortgage crisis that became apparent in 2007, so in order to solve the current crisis we must tackle the cause, not just the symptoms. The issue at the heart of the mortgage crisis is that in most cases the cost of the mortgage has risen above the market value of the home, trapping the homeowner. To solve the crisis both in the short-term and to prevent similar crises in the long-term, steps must be taken to achieve two broad goals: make mortgages affordable by regulating mortgages and mortgage providers and lowering interest rates, and stabilize the market value of homes by increasing demand and decreasing supply.
In the past, governmental regulations on banks and mortgage lenders…show more content… These actions will protect debtors from unjust rates and will ultimately protect creditors from defaults on their loans.
• The next essential regulatory act is to limit the size of mortgages. A regulation should be put in place that prohibits the granting of a mortgage that is over 100% of the market value of house. In the past, when house prices were rising it seemed safe to take out a mortgage higher than the value of a house, but that is a root cause of all mortgage crises. The economy naturally grows and shrinks and so does the market value of a house. When mortgages represent more than the market value of the collateral and the value of the house drops, homeowners cannot sell their house for the equivalent of the principal and if the homeowner cannot make payments, foreclosure or bankruptcy are the only options. This clearly limits the lenders, but it is a necessary regulation to protect lenders from losing money. In the case of a foreclosure in which the mortgage is worth more than the collateral, the lender suffers the difference and risks its own bankruptcy. While this regulation may seem to hurt lenders, truly it protects them.
• Debtors who are close to foreclosure should have further rights protected by law. In the case where a debtor cannot make their monthly payments due to financial situations beyond their control, they should have the right to renegotiate for lower payments through
Solving the foreclosure crisis is not an easy quest. In order to solve the crisis, it will take everyone getting involved. The banks and other lenders need to be willing to work with people who have been in their homes and need to have their loans restructured or refinanced. There should not be any more QUICK FIXES. Too many of the lending institutions are trying to put a bandage on an open wound. Instead of working with the homeowners, they are willing to put the residents out of the homes and think
In order to solve the foreclosure crisis, first we must identify and examine the reasons why people are going into foreclosure. The unstable economy which has led to the loss of thousands of jobs is the most obvious reason that people are foreclosing their homes. Without a stable and sufficient source of income, it is virtually impossible to pay back mortgage lenders. The first step we should take to solve the foreclosure crises is to create more jobs so that people can pay their mortgages on time
The foreclosure crisis has hit America exceptionally hard these past few years especially in California where the housing market is at its worst. California is also the worst because it is home to a lot of the most expensive properties. People are walking away from their homes because they cannot afford the mortgages or loans that they took out on their homes. The lenders are also to blame for this because they did not thoroughly look at them borrower’s credit and income to ensure that they would
Some measures that have already been taken in the foreclosure dilemma include a tax credit for first time buyers. This tax credit creates an incentive for younger people to purchase properties. In order to help this crisis, incentives need to be created to allow people to purchase and maintain payments on their property. Lenders also need to be given an incentive to take a loss and sell some properties. Creating incentives will allow the housing market to recover.
If the current tax credit
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
Home foreclosures have been a hot topic in recent months as the economy has been in a serious downfall with a very slow recovery process. There are many different philosophies and many people truly feel that we can recover from this. We can alter the foreclosure status by giving serious consideration to the economic times and the types of mortgages that are available. Buyers must become more educated on the additional costs when getting a mortgage such as taxes, insurance, etc. The government
“Foreclosure filings were reported on 336,173 U.S. properties in June, the fourth straight monthly total exceeding 300,000…”
Brooklyn, NY – December 30, 2009 Foreclosures continue to rise drastically across the United States due to the recession, and have effected, and continue to affect thousands of families and individuals every day. One aspect we must take into consideration is that most people are not informed of what foreclosure means, or the process, even those who are homeowners.
The current foreclosure crisis is affecting everyone in this nation. If people are not experiencing the crisis firsthand, they hear about it through family, friends, and their other social networks. Nonetheless, it is impossible to escape because the media is constantly showing coverage about it. People are becoming more aware and seeing how expansive the impact is through television, internet, print, and radio. Americans are quickly realizing the impact the foreclosure crisis is having on the
One way to solve the foreclosure crisis is to actually foreclose on every homeowner’s home loan, including the homeowners in bankruptcy, pre-foreclosure and post-foreclosure. The credit report of these homeowners should read as a recession in 2009 and it should not lower their credit scores. The banks should then match the previous interest rates to the interest rates of today and appraise each home and property at the value that it was assigned by its local tax assessor.
By doing this it will
“I’d like to suggest that 2010 be the year that banks no longer have the right to foreclose on people’s homes.” Stanley Bing, FORTUNE magazine, While You Were Out / Fourth Quarter Yearnings. Many Americans and I agree with Mr. Bing’s general feeling of the need to aide American families in holding on to their homes. However, this may be easier said than done. We cannot strip banks from the right of foreclosing on properties because then nobody would ever pay their mortgage. Banks would take overwhelming