How to Solve the Foreclosure Crisis

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Foreclosed homes have become a menacing commonality in nearly every neighborhood in the United States. These foreclosed properties problems range from unkempt yards, broken doors and windows, as well as becoming dangerous havens for drugs and violent acts of vandalism. In addition, empty foreclosed homes drive down property values of surrounding homes and neighborhoods. Many of these homes became foreclosures because the buyers could not afford the payments. This inadvertently ruins not only their credit scores, but also ruins the chance of owning a home in the future. This results in crushing families hopes of achieving the American dream of home ownership. The flip side of this crisis is the affect that these foreclosures are having on the financial institutions. An investment that does not return any capital to the lender then becomes a “toxic asset”(Gordon, 2009). This transforms liquid capital to stagnant non profiting capital. This hinders the company’s profitability and ability to reinvest this capital into other endeavors. International investment in American companies continues to become more crucial to the U.S economy, therefore when there is an industry marked with such a large amount of “toxic assets” attracting investors home or abroad becomes much harder. So, how can we fix this disastrous situation we are facing? Solving the Crisis There are three key components that must be addressed to solve the foreclosure crisis. The first component is that the banks need to unload some of the “toxic assets” to free up capital. The second component is that the “toxic assets” need to be repurchased and occupied. Finally, the third component is the prevention of additional foreclosures from happening. We need to... ... middle of paper ... ...s high priced homes, moderately priced homes, or even low priced homes. This program would entice existing home owners to consider upgrading, renters to look at buying, and investors to get interested again. Creating a few web-based educational program for new home buyers would be tremendously beneficial, as well as for struggling home owners at risk of foreclosure. Combined these programs will correct and prevent the majority of the problems we are facing in the real estate market and the banking industry. References Gordon, M.(2009). What Are Toxic Assets & How Did They Get to be Poisonous? Retrieved from http://www.myfoxchicago.com/dpp/news/Toxic_Assets_Poisonous. H.R. 1424 (2008). Tax Relief Assistance Program (TARP) Sec. 101. Retrieved from http://www.house.gov/apps/list/press/financialsvcs_dem/essabill.pdf.

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