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How To Solve The Foreclosure Crisis

Powerful Essays
HOW TO SOLVE THE FORECL0SURE CRISIS

2009 was a record breaking year for foreclosures in the United States. The perfect storm of high unemployment, tightening credit, decreasing real estate values and cataclysmic stock market crash resulted in millions of homeowners defaulting on their mortgages. What are the solutions to this problem? Some would argue that the government should intervene and help homeowners. Those with a more “free market” or laissez faire approach would contend that the government should let it play out and the problem will eventually resolve itself. But with the faces of evicted families on every newscast, and Wall Street investors and banks facing collapse, the scenario is one that even the most hardened members of Congress cannot ignore. I believe that there are two fundamental issues with which the government MUST help: (1) Reworking mortgages for current homeowners in an equitable manner, and (2) Educating future homeowners so that this debacle will be read about in history books instead of the daily newspaper. Just as the Congress passed the Securities Acts of 1933 and 1934 in response to the causes of the Great Depression, Congress must again take action to assure high foreclosures are a thing of the past, not the wave of the future.

PLAN FOR CURRENT HOMEOWNERS:

Any homeowner who is more than 30 days in default MUST be contacted by the lender and mediation arranged. I have repeatedly read newspaper accounts of homeowners who said they desperately tried to contact their lender, but the lender did not return their phone calls. I imagine lenders may say the same thing about the homeowners. In any case, clogging the judicial system with slow moving foreclosure cases, is bad for everyone, except ...

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...k for government assistance in any form in the event of inability to pay mortgage.

Conclusion

For any plan to work, we must also begin rethinking homeownership. Maybe every American should not be considered a potential home buyer and persuaded into loans that the mortgage lenders and brokers knew were unaffordable. Perhaps, people should not buy million dollar homes to impress their family and friends. That type of thinking contributed to the housing collapse. But there are also millions of hard working Americans who got caught up in a market on the verge of collapse by buying a house at the wrong time or wrong place. The government cannot be expected to protect the banks from the borrowers and the borrowers from the banks, but it can help establish rules of fair play that would enable people to modify loans and get back in the game of homeownership.
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