Developing Solutions to the Foreclosure Crisis

In today’s economy, foreclosure seems to be a common phenomenon. In its simplest form, foreclosure results because people, for whatever reason, cannot pay back a mortgage that they have taken and the mortgagor decides to seize the property that has been mortgaged. This inability to pay can either be due to foreseeable causes such as having a higher mortgage rate that one’s ability to comfortably pay for it, or unforeseen circumstances. But unfortunately, with the current recession and economic crisis, more and more of today’s foreclosures are due to unforeseen circumstances such as a sudden medical illnesses, loss of a job or forced pay cuts to enable further continued employment. With unemployment levels rising and average pay levels decreasing, more and more families are finding themselves unable to pay their mortgages and hence losing their houses to the mortgaging banks. Because most of these foreclosed properties have become foreclosed not because of bad decisions on the part of the consumer, but rather due to national economic trends, we need to find a way to reduce the number of properties getting ready to be foreclosed.

Because foreclosure of properties is such a deep current economic problem, it will be difficult and near impossible to find a quick and easy solution. Yet there are steps that the government and banks can take to make the current situation a little better and avoid a crisis of this nature in the future. Since not all foreclosures result due to the owners’ negligence or reaching beyond their means for buying a property, those creditees that were responsible and in a position to pay some form of payment to the mortgagers should be given the chance to retain their houses by paying what they could. This not o...

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...ter and more fiscally feasible and responsible payment system can be set up. As such, creating variable mortgage rates based on the stock market or other such economic predictor will enable the banks to receive their mortgages on a timely basis and will also enable the consumers and homeowners to be able to retain their properties even as they face tough economic conditions, boosting community morale and preventing chaos in tough times.

Economics is a very integrated and multi-disciplinary field that is hard to understand even at the best of times, and foreclosure is one of those tricky concepts where solutions seem impossible to reach. But we have to try to prevent the current foreclosure crisis and reduce the number of families facing foreclosure now, and also seek to gain long-term solutions that ensure another crisis like this doesn’t come up in the future.