Collateral would not be allowed. This would direct first time home buyers to get a loan for a house they could afford and prevent false representation of wealth. Misrepresentation of wealth was a huge factor in the fall of the economy. A person would put down false collateral, such as another house or multiple houses, in order to gain another loan. When values fell, their inability to sell the properties caused the collapse.
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. We cannot undo the mistakes already incurred, however we can alleviate some of the damage and help American homeowners that are facing foreclosure. Lending companies need to offer alternative mortgages to those homeowners that are no longer able to pay their payments as long as these borrowers are willing to work out an optional payment plan. There will always be a percentage of borrowers that are simply irrespon... ... middle of paper ... ...-estate market create a no-win situation for all involved when it comes to foreclosure. With a little creativity and a few concessions from both the mortgage lenders and borrowers, the American Dream of homeownership can survive.
It will also keep the homeowner, like my parents, who are feeling discouraged, because they owe more than they can sell it for, from walking away from their investment. This will also give the American people confidence and a greater over-all sense of security. With the increase disposable income, money would be put back into the economy. More money from consumers, flowing through the economy would help every aspect of the economy getting back on track. Submitted By:
So we are forced to do it the conventional way by getting a loan. An investor ... ... middle of paper ... ...at will allow the final price closer to the asking price. Now the buyer can afford their new home. There should be more non-profit organization that can assist the struggling home owners to restructure their delinquent mortgage without being charged for it. I have seen and heard many people complain that when they attempted to get assistance from a company that is supposed to get them out of the foreclosure problems they are charged a large fee.
From 2008 until now the national unemployment rate has risen from 5-6% to about 10.2% (U.S. Bureau of Labor Statistics). With unemployment rates continuing to climb, more and more Americans are stuck in large mortgages with no means to pay them. Many of these debtors are faced with mortgages that are greater than the values of their homes due to impairment resulting from the market collapse. With the job market in its current state and unemployment continuing to grow, most of these debtors look to default as the best solution to their problems. Simply, the best preventive measure to the foreclosure crisis would have been to not to overextend yourself.
Would-be buyers – discouraged by the lack of response and ultimately enticed by the plethora of more accessible homes on the market – move on to other properties, most of which are more attractive than empty bank properties because someone is living there and taking care of them. Making matters worse, bankers give Realtors incentives to steer buyers away from the foreclosed properties by offering smaller commissions than the going rate for other homes. Is it any wonder that the inventory of foreclosed homes continues to grow? There is a way out of this mess, but it will require exactly the kind of short-term pain that everyone in government has been striving to a... ... middle of paper ... ...ttled and a buyer’s money is sitting at the title company, the FDIC can take weeks for final signatures. Left in the FDIC’s hands, millions of houses will sit empty and drag down values of surrounding properties for years to come.
It is clear that the foreclosure rate in the U.S. is a problem that has not been resolved with the recent Stimulus Act and other measures taken to correct the problem. The root problems of the foreclosure crisis are consumers buying a home they cannot afford, decreasing neighborhood home values, home owners who have not planned for emergencies and unexpected expenses, refinancing homes to make unwise investments or cover increasing debt, and lastly banking lending practices. Implementing solutions that support education, responsibility, long-lasting results and proper banking regulation will help to correct the foreclosure trend. Everyday consumers are purchasing homes they cannot afford. Looking to impress friends, family and co-workers and give the image of success is very popular among American culture.
Additionally, the American public needs more confidence that home prices will start to increase. Nobody wants to purchase an investment that will decline in value. The prospective homebuyers must also share blame because of the lack of knowledge most people seem to have regarding how expensive of a house they can afford. Perhaps the biggest problem faced by homebuyers is the staggering interest rate that must be paid. I firmly believe that lowering interest rates will greatly reduce the number of foreclosures.
Therefore, attracting people’s attention away from asking the federal government to help them and turning it towards these organizations will ultimately result in an easier way to get assistance/advice and give the federal government the time they need to create the solutions the people want. A foreclosure is a messy situation. Everyone loses money in the process and it is hard to solve the problem once it has begun. Hopefully, by possibly using these and other suggestions, the foreclosure rate will drop and people will be able to realize the American dream of owning their own home again.
In essence, the problem leading to the foreclosure crisis is the recent decrease in people’s ability to make their loan payments due to job loss and lower wages brought on by the economy’s weak state. Rather than throw billions of dollars at big banks in the hope that they find ways to help the homeowners’ loans, the government should attack the problem through the individual. Simply, the government aid being spent in the hopes of stimulating the economy should be funneled toward reducing the balance of home loans to make the monthly payments affordable for the owner. By funneling the government aid directly to the American home owner in need, the economy would greatly benefit as homeowners regain their footing with their budget because the economy and foreclosure are directly related. When one hurts, so does the other; when one prospers, the other does as we... ... middle of paper ... ...s not apart of many other economic stimulus ideas) By using profits from the future sale of the house, income tax refunds, 401K withdrawals, and a portion of federal endowments, these loans have a very promising chance to be fully repaid.