A Commitment to Strengthening the US Housing Market

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While the subprime mortgage mess and foreclosure crisis came as a shock to many Americans, the truth is that it was staring us right in the eyes for several years. The US government must help to not only correct this problem, but prevent it from happening in the future by creating a control system that alerts us to when the real estate market gets overheated. This essay outlines steps that the government can take to help out those who need it. The U.S. government should create a Foreclosure Relief Fund (FRF) for individuals who are facing foreclosure amidst the economic crisis. This fund will allow many homeowners who have been affected by the economy to stay in their homes without permanently draining the resources of the federal government. The rules and stipulations of the fund are as follows. The FRF should be open to those who have been living in their homes for at least 5 years and are behind on their payments due to involuntary job loss. The 5 year requirement is to offset the likelihood that that the recipient of FRF money bought a home that was too expensive for them. The FRF will take a look at how families have been paying off their mortgages in the last 3 (or more) years, to ensure that homeowners at least made an attempt to pay their mortgages on time. They will then reconcile this data against the homeowners’ date of job loss. If homeowners qualify for the FRF program, the federal government will make the payment on their mortgages for up to a year. The FRF would be financed by taxpayer money. However, it is not a grant – it is a loan. Homeowners would be expected to pay back this loan to the federal government within 3 years. This would be a huge commitment to homeowners by the federal government, and since go... ... middle of paper ... ...must be banned, because it has become very clear that these securities cannot retain their values for extended periods of time and the downside far outweighs the upside. Investment banks that offered CDO’s backed by subprime mortgages during the real estate boom are certainly facing the effects of the collapse, but we must ensure that the path to prosperity in the future is not hindered by reckless decision making in the hands of a few executives. The “American dream” has by no means been threatened by the recent economic crisis. Our economy will thrive once again, but in the meantime, there must be relief for those who did not cause the collapse in the real estate market. Accountability is the key word in ensuring that those who need help get it in time and those who took part in weakening the economy think twice before making moves that hurt the general public.
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