I notice that a lot of American politics is about ending major crisis at home and worldwide. Unfortunately the politicians seem to go off course or side tracked on their particular platform or their states agenda. A major dilemma that needs to be addressed in American politics is the current foreclosure rate in the housing market. The issue needs to be addressed because our entire financial stability seems to be balanced on the housing market. When the housing market crashed subsequently the stock market crashed soon after it.
I believe the foreclosing of houses can be resolved through the process of help by our government. With the economy problems that we have faced throughout the years people have become behind on their mortgage payments which have caused severe disaster throughout the American society. The government wants to help Americans but isn’t sure how to come up with the right solution so that foreclosure stops happening. There have been stimulus packages, loans for Americans, and grants given but none are actual stopping the crisis of the foreclosure problem. This is why the government should create the Forgiven Package.
Many of them are good ideas, but they don't get to the real root of the problem, personal responsibility. In addition, I do feel that banks should share some responsibility in helping to change the direction of our economy. In the following paragraphs, I will detail my plan on how I would solve this dangerous crisis and help return America's economy to it former strength. The first issue I feel that should be addressed is imminent foreclosures (either currently in progress or those that are within 60 days of proceeding) with the Mortgage and Financial Recovery Act. Many families have felt the sting of a job loss or lay-off.
As for the increase in the unemployment rate, I propose the banks/lenders give the home owners a three month moratorium or period of leniency. The banks will agree not to foreclose upon the property and let the home owner try to get back on their feet. Three months is reasonable amount of time to find a new job. The missed mortgage payments will be paid back in installments on top of the normal monthly payments until the home owner is caught up. It is so powerful an incentive for the home owner not to lose their house and keep the payments coming along.
I believe that the biggest reason we had so many foreclosure in the first place was because banks and mortgage companies placed so many people in home loans they could not afford if any type economic downturn occurred which, of course, it did occur. My solutions involve changing the structure of the home loans because I feel this is the most flawed area. It is based on a simple premise; homeowners can only pay what they can afford. To solve this crisis, I would like to offer three plans that have not been tried to date. Plan 1 would be for homeowners who have gotten behind on their mortgage for one reason or another but are still able to afford their current mortgage.
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 guidelines are in place to prevent another crisis, confidence will return to the housing market.
Worst of all people searching for The American Dream are facing foreclosure. I think that we need to get back to basics as far as the mortgage crisis is concerned. During the last 15-20 years there have been too many mortgages given to people who do not have the credit worthiness nor the ability to pay the mortgage, taxes, and maintenance of the home. Realtors and lenders were so quick to make a sale for the commission that they did not take in to account whether the person buying the home could actually pay for the home in the long run. Those same organizations were quick to push jumbo mortgages to people that clearly did not qualify too.
After researching this situation, three proposals came to mind. For one, banks could reconstruct their mortgage loan interest rates to fit each family’s situation and secondly, twice a year, the U.S. government could tax each American citizen that is working, $.75 from their paycheck each year to help decrease the $11 trillion U.S. mortgage debt that we are in. Thirdly, banks all over the U.S. could lower their mortgage loan interest rates to a very low standard rate for not only people who want to buy homes but for people who already have homes. In the first proposal, banks could possibly reconstruct their mortgage loan interest rates to fit each family’s situation. In this case, the mortgage loan interest rates would fluctuate from family to family.
Presently in the United States millions of homeowners are facing the prospect of losing their homes due to bank foreclosure. An event if allowed to occur has the potential of collapsing not only our financial system, but our social fabric as a nation. The unfolding crisis has prompted the US Government to enact aggressive monetary stimulus designed to reverse the downward spiral of home values. Unfortunately this approach has failed to achieve any meaningful results and perhaps has acted more as a red herring to conceal the real issues causing this debt implosion. With billions of dollars being pumped into the banking system why then are banks still timid to continue financing home loans?
We as a nation must find an alternative to home foreclosure that offers hope for homeowners who feel it is impossible to regain control over their mortgage payments. Being from an area of the country hit very hard by the automobile industry’s downfall I know many people who are in need of immediate help, as they are in the process of having their mortgages foreclosed. Several homeowners took advantage of the easy to obtain credit experienced in America during the late 1990s and early 2000s, and now find themselves “buried in their mortgage”. They borrowed amounts above their home’s value, and now that these values have dropped tremendously so they cannot even come close to selling their homes for what they owe. Lending companies are partly responsible for the troubled real estate market we are now experiencing, as they should have never allowed anyone to borrow more than 90% of a homes value.