If we do not fix what we have done in our past, now, we can never change what we will do in our future. This makes sense at any level of change and development when you take a deeper reasonable look at problems. Recently, I have heard that it is the Realtor’s fault for the soaring prices of homes for sale in many communities. I have also heard that it is the banks fault for lending out more mortgages than they are allowed to, therefore causing an eruption of foreclosed homes. Another great fault was caused by many people who went out and purchased homes when they did not have the actual funds to.
These rates caused widespread grief because many of them are adjustable--meaning they change and normally increase periodically. Due to these rates, even fiscally responsible homeowners struggle to pay their mortgage; therefore, mortgage companies have a lack of income and layoff employees and even close their doors.Another major issue for some homeowners is that their mortgages are worth more than their homes. The apparent solution in this viscious cycle is to fix the rates and terms of mortgages and a possible plan is to do just that. The government will hand down a directive that all mortgage companies refinance all mortgages that are in danger of default. The directive will state and define the circumstances involving a default mortgage which could be a range of definitions.
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.
In simple terms, it was caused by a lack of sustainability within the housing market. For years, homeowners watched the value of their homes climb with seemingly no limit. It was a sellers’ market and people clamored to get into the housing market which seemed like a sound investment. Banks gave out hefty loans and mortgages to people who in less lucrative times might not have qualified, assuming the value of the home would continue to rise meaning a guaranteed return on their loan. Capitalizing on thi... ... middle of paper ... ...d be applied across the board to all lenders, and new homeowners would no longer be penalized for the mistakes of previous owners and lenders.
People changed their spending habits and everyone wanted to own a house. Appraisers at the time overvalued many houses, agents from financial institutions provided high value loans in order to increase the commission cost and many homeowners lied on application forms in order to qualify for large mortgages they could not repay for a very long time. Banks at the time gave out very huge mortgages with low interest rates basing the suitability of an applicant by the ability to pay the artificially low interest rates and not the real value based on market conditions. Concerns over oil and gas also resulted in the financial difficulties of many homeowners thus leading to the foreclosure crisis. The rise in need of... ... middle of paper ... ... in confidence and consumer spending hence allowing loan repayments.
I have two ways that we, as citizens of this beautiful country, can help to solve the foreclosure crisis that faces us in these hard times we are experiencing. One has to deal with the foreclosure of businesses and the other deals with home foreclosures. The majority of us are affected by both of these types of foreclosure, which is why I tried to come up with a solution for each. As we know, foreclosure is not just one simple subject that we can get rid of very quickly. It is complex, and will take much time to finally eliminate this issue.
These actions set up a terrible domino effect; the more homeowners went into def... ... middle of paper ... ...sis once more. They can grant the banks money to compensate for some of the money that is owed by the homeowners to them as long as they make the banks follow a set of rules that will inhibit them from granting subprime mortgages loans and from raising their interest rates in the future. The most important solution to this crisis would be the education of the public on how the entire system works and what their responsibilities are. As we all know, education is the key to success. This may seem difficult to accomplish but it can be done.
My first solution to the foreclosure crisis is a modest spin on the standard participation mortgage. The first step taken is crucial to the solution: the bank must refinance the loan. Simplistic, no? Such is already something we’ve considered, w... ... middle of paper ... ... they need to get back on their feet. It’s important to note that the solutions made above should be on a person-to-person basis and do not apply to everyone.
Today a lot of people have wants that exceed their budgets,... ... middle of paper ... ...comfortable with who they are and their financial worth. There must be a line drawn between our financial means and our inner struggles to “fit in“with what we believe society should be like. There are several people and organizations out there that are more than willing to help people adjust to the new lifestyles that will need to be pursued in order to restore stability. The foreclosure crisis is a wide-spread problem that cannot be solved swiftly or with one action. I believe the only way to fix the crisis is by everyone taking tentative steps towards a better financial future.
This may be true in some cases but it is not fair to penalize the mass of people who are not able to pay their bills on time because of the select few who take advantage of the government. Some effects of the foreclosure crisis are due to the loss of jobs, short pay periods, and interest rates. Job loss and unemployment are the main sources for the cause of the foreclosure crisis. Having a job is one of the main resources for paying a mortgage. So the fewer jobs the economy has the more foreclosures will occur.