The Financial Collapse Of The U.s. Economy

The mortgage crisis of 2007 marked catastrophe for millions of homeowners who suffered from foreclosure and short sales. Most of the problems involving the foreclosing of families’ homes could boil down to risky borrowing and lending. Lenders were pushed to ensure families would be eligible for a loan, when in previous years the same families would have been deemed too high-risk to obtain any kind of loan. With the increase in high-risk families obtaining loans, there was a huge increase in home buyers and subsequently a rapid increase in home prices. As a result, prices peaked and then began falling just as fast as they rose. Soon after families began to default on their mortgages forcing them either into foreclosure or short sales. Who was to blame for the risky lending and borrowing that caused the mortgage meltdown? Many might blame the company Fannie Mae and Freddie Mac, but in reality the entire system of buying and selling and free market failed home owners and the housing economy.

The Great Recession of 2007-2009 was one of the most economically disastrous events in American history. The housing market took a significant downturn during this period. People were not cautious when it came to their money and loans. Larger loans were given out to people, even to those with bad credit and low incomes. These large loans caused many homes to go through foreclosure since people were unable to pay off their mortgage debts. These debts were created by banks increasing the interest rates on the loans significantly in a short period. In 2008, foreclosures were up by eighty-two percent. This increase is significant because the previous percentage of foreclosures was at fifty-one percent from 2007. Unemployment skyrocketed, and people

In the year 2000, the stock market crashed whichshifted thepeople’s money away from the stock market and into the housing market. Many people were buying homes, which led to banks offering more loans, including subprimed loans. Most loans, specifically, subprimed loans began going into default once the credit markets froze in the summer 2007. Things began to deteriorate rapidly. The offering of subprimed loans stopped completely and interest rates for other types of borrowing such as corporate loans and consumer loans rose dramatically. Since the interest rates of loans were so high, home owners were not able to afford to make payments, which caused them to be evicted from their homes. In 2013, the government introduced new laws and

Lending and mortgage loans become predatory when the borrowers are led into a different transaction than what they were led to believe or come to expect. These predatory lending practices involve different people including mortgage brokers, lenders, real estate brokers, lawyers, and even (home improvement) contractors. Most of these transactions often victimize people who have small incomes but significantly large home equity

Rent-to-own is an option that helps the seller and the potential buyer by allowing the potential buyer to save some money and secure the loan or funds they need to actually make a purchase. With the problems of too many homes on the market due to foreclosures and short sales, rent-to-own is a good option for the everyone involved. This option gives the owner a

Renting to own can be a valuable solution to the boomerang buyer with tainted credit. The benefits far outweigh the other options for these buyers. During a 3 to 5 year period of renting a home, an individual’s credit can improve and open up possibilities of homeownership. This allows the potential homeowner time to prove they are reliable. Since a foreclosure stays on your credit report for 7 years the person is going to need a place to stay. With a “foreclosure” attached to their name they will not be able to hop into another house right away. This is the perfect window for someone to get his or her feet back under themselves while chipping away at owning another home.

First of all, the rent to own option is a superb option that allows the renters to apply the monthly rent to the purchase of the house. Renting to own, otherwise known as a lease-option, allow those people that are not in the

When paying the commission of a realtor is no longer an issue, the seller is more likely to pass along the savings to the buyer and lowers the price of a home even more. Once both parties agree on a “rent-to-own” payment option, the potential monetary saving that is available to the buyer develops into realistic saving and also the development of investment.

The rent to own option requires prospective buyers to pay a monthly rent to the homeowner with a portion of the rent going towards purchase of the home at a later date. Usually this will last 2-5 years before the standard home purchase contract goers into effect. This option is good for the sellers who have not been able to move their house quickly. It allows the sellers to move to a new location while having a cash flow to pay the mortgage. It also gives you time to see if the homebuyers can afford the house and will be good for the money. The boomerang buyer will have a checkered credit history due to their foreclosure so this gives the seller time to see if they can maintain payments. If payments can be maintained then credit for the buyer will increase and the sellers have a flow of money so it is a win, win situation.

The buyer should save for a down payment, address credit issues and pay off existing debts before buying. Rent-to own afford the “boomerang buyers” time to assess their finances to figure out:

The American homeowners have been forced to accept these adjustable rate loans in order to lower their monthly payment by a few hundred dollars. In the long-term, most end up refinancing down the line and losing all the money they saved monthly on additional closing costs, to modify an adjustable interest rate loan.

Absent any financial or emotional investment in the property, when the payment became too much to bear, the unqualified homeowners stopped making the payments. Defaults on these loans snowballed causing panic in the financial market. With the economic downturn, employers were forced into layoffs. Unemployment reached into the double digits, thereby compromising previously stable homeowners in the process. As housing values plummeted, foreclosures only increased.

financing or a land installment contract that might be viable options for buyers in the

With all of the incentives and mortgage products given so easily to people that couldn’t afford the high prices (including interest rates), many people defaulted on their first mortgages because they were no longer were able to receive the profit from the homes they first intended to flip. “During the first quarter of 2008, nearly 9% of all mortgage holders were delinquent or in foreclosure, the highest rate since recordkeeping began in 1979. Foreclosure filings more than

WHEREAS, Buyer desires to purchase the Acquired Vehicle offered for sale by Seller under the terms and conditions set forth below; and, therefore,