Again, there were certainly many people who bought homes that they couldn’t afford and used their equity for loans like there was no tomorrow. Therefore, the foreclosure was sort of a formality and an appropriate action by the banks in those cases. Although, there were many responsible people who bought affordable homes, but got behind on payments after the economy crashed. Normally under those circumstances the bank has an incentive to keep borrowers in their homes because foreclosure is generally a costly decision for the bank as foreclosed homes are sold at a discount on the open market. However, many lenders have a perverse incentive to foreclose on a loan if the loan is insured through various investments such as derivatives and government guarantees. That insurance pays the lender the full price of the loan, instead of the reduced price from a sale on the open market. Thus, in a predictable fashion, the homeowners with loans that were backed by insurance have been foreclosed upon at significantly higher rates, as opposed to the borrowers with loans without insurance.
Furthermore, homeowners don’t have much recourse when their foreclosure case goes to court. The judges are pressured to clear their docket as they are literally forced to conduct hundreds of cases every day. Under those circumstances, the judges are naturally going to side with banks. The sheer time pressure alone negates anyone from properly examining if the documents issued by the banks are valid.
Too many Americans have fallen victim to the crisis that has become the norm for our citizens these days. Lenders no longer want to work with individuals who have gone through the foreclosure process and for many it is not only their homes they lose. Some have lost their jobs and/or families, others fall into a deep depression and worst of all some have taken their own lives.
“Most of the homes being abandoned and foreclosed will produce losses for the mortgage lender, which could add up to trillions of dollars and break the financial system before it is half repaired” (Zuckerman, 2008). These are the major reasons why the government should be thinking of a bailout for homeowners. If the government will not take action, then these losses will go past any bailout efforts of the government and it will be too late. By preventing foreclosures, it could bring a double benefit to the US economy and society. It would let families to stay in their homes and at the same time keep the housing market from getting out of control.
Foreclosure in America has been a rising and prominent problem recently, and has destroyed many Americans hopes and dreams. Over 2.3 million homes were foreclosed in 2008, and an estimated four million homes will be foreclosed by the end of this year. Despite the efforts of many banks and lending companies, over half of homes will foreclose that have received their help. I believe that we have only started in the right direction in solving the foreclosure crisis. Giving money and lowering mortgage rates will help, but I believe we should find out why Americans are in this situation in the first place. We are being too stereotypical when we think the only reason someone is foreclosing is because of irresponsible payments or buying a home
There are several issues that need to be addressed, to help solve this foreclosure crisis. The first issue is how the banks were clearly misled by the government, in a sense, that they approved clients for home loans they could not afford. They then took advantage of the late payments, and increased interest rates. We have seen firsthand what happens when people take advantage of the uneducated, ultimately everyone fails. We as a society need to stop dwelling on failure, stop preventing bankruptcy, and rather reward success through government guarantees. The United States government has already pumped billions of dollars into the US banks, but the money is not being used the way it was
The economic crisis that hit the country took many jobs or people had their hours cut. With this situation happening, many people were finding themselves short on their mortgage payments and needing to go into foreclosure or having a short sale on their homes. Either option the homeowner chose or had chosen for them, they found themselves with poor credit and no way to become homeowners again. However, most wait times before was a minimum of two years up to seven years before that previous owner could be eligible for traditional loans.
For the last several years, the one issue that has been bringing the United States into a state of trouble that it has not been seen since the great depression has been the monstrous Foreclosure problem. Thousands of people have lost their houses. Thousands of people have faced the dangers of debt and chaos. Thousands of people lives have been ruined because of the mistakes that Americans have done in this nation. In order to solve the problem, one must take a look at how it started and how this depression began. Around eight-nine years ago, the market in housing caused many people to chase after it. This caused a mistake of creating a domino affect that has hurt banks from lending out the high amount of money to people and finding out
I often used to watch a show called “Extreme Makeover” where a team of builders would come to a neighborhood, build a need worthy family a beautiful new home, and then just give it to them. “Wow! What a lucky family,” I would say. “How fortunate.” However, as time went by, that same family would be in the news again. Why? The house was in foreclosure. The people had gone to the bank and taken out a mortgage against the home, then spent all the money they got for it on other things.
The foreclosure crisis in America has impacted everyone- even those who don’t own homes. Our nation is currently struggling with high unemployment, a relatively illiquid credit market, and a deficit that raises serious concerns about the value of the US Dollar in the not too distant future. With interest rates already at historic lows and the government pursuing an unprecedented policy of quantitative monetary easing, options for government intervention are limited. While there is no simple solution to this problem, I think that we must look at the reasons the housing market went into crisis, and based on that develop a regulatory system that will allow us to avoid another situation like this in the future. If Americans believe
According to Desmond, Arleen is not alone in her dilemma. A great many Americans are being evicted in light of the fact that they cannot pay the rent (Desmond, 2016,p 4). Like Arleen, many poor families are spending the majority of their income on rent and utilities. In fact, using estimates from The American Housing Survey (AHS), 1991-2013, Desmond finds that, in America, most poor renting families use over half of their income on housing; and, roughly one quarter spend more than 70% of their income to pay rent and utilities (Desmond, 2016, p 4). Aside from the fact that Arleen’s monthly welfare stipend of $628 has remained stagnate for years, housing costs have soared. Due in part to the foreclosure crisis, and the deluge of millennials into the rental market, the demand for rental stock has risen.(Sisson, 2016). At the same time, escalating building and labor expenses, and declining subsidies, have helped to slow new construction. Thus, demand for rental housing is exceeding supply, resulting in escalating rent prices. Furthermore, the razing of older public housing projects and defunding of government assisted housing has pushed poor families into the private rental market (Sisson, Patrick may 19, 2016). As a result, most poor families in America today live unassisted in the private housing market. In fact, in 2013, 67 percent of poor renter households did not receive federal housing assistance (Desmond, Matthew, 2015). One day, Arleen stopped by the Housing Authority
There are many reasons a person can end up in foreclosure. Many people were victims of predatory lenders, whom they trusted to have their best interests at heart. These lenders misled homebuyers and helped them achieve loans for purchases that were beyond their budget.
After the United States suffered one of the biggest foreclosure crisis in its history, countless of American homeowners were forced out of their homes when the economy collapsed. In a slow and often painful recovery process, many are battling continued high interest rates and home prices in attempt to get back their families back into a normalcy of life. As a solution to the ongoing ownership dilemma that many currently face, the concept “rent-to-own” has come into the economic limelight. This resolution has started to be viewed as a realistic option to regain ownership and improve quality of life after the fallout of the foreclosure catastrophe through benefiting both buyer and seller of real estate.
“Shit happens” is probably what most of these foreclosed homeowners hear after they were forced to leave their comfy home. Even though the economy is unpredictable, not a lot of the victims are satiable by such a vague expression that has caused them to lose their property. It’s a harsh comment, but the economy has turned into something that we have little influence over. One of the worst feelings is having minimal control over the consequences and outcome. Some people are afraid to make the same home-buying decision again as a result, because what’s stopping the economy from taking another shit on them again? The answer is probably nothing, but what are some actions these homeowners can take to ease into settling down in a home again? Foreclosure victims can try to improve their credit score and it could get them that approved private loan in return if needed. Saving money is also a general option for those that tend to spend a lot on luxury retail goods. Another option can be utilizing the rent-to-own option to have that ‘homey’ feeling as soon as possible. Some people can also test their patience and attempt to wait it out until the economy exits the lavatory.
Although, I have not had to face the foreclosure crisis, I see it all around me since I am in Texas and we see it a lot. In my opinion, we can solve the foreclosure crisis with the participation of the lender and the banks to assist the homeowners in helping them to get back on track and hopefully be able to remain in their home and not have the home go into foreclosure. Most of the time when the home goes into foreclosure it seems to be a lot of heartache on most families and not to mention the additional work for the banks. It has to cost the lender more money since they have to deal with legal fees and trying to get the home ready to sell again. Many times the homes if they are vacant long enough, they will get vandalized and then
Banks now offer programs to help homeowners/homebuyers, but many times, these loans are often hard to obtain. The current programs have more stringent requirements that are unreasonable for distressed homeowners. In my opinion, the only way to rectify the foreclosure issue is to make a substantial change in how potential homebuyers and homeowners obtain loans.
With our economy in a downslide and increasing numbers of foreclosures worsening our economic problems, it is obvious that there needs to be some intervention in order to prevent more foreclosures. Home ownership has always been a key portion of the American economy and an integral part of the American dream. We cannot allow the current crisis to let more people lose their homes and become disenchanted about home buying in the future. Not only will the defaults on mortgages further destabilize the American economy now, but they will also cause problems in the years to come as less people decide to venture into home ownership again.