How to Solve the Foreclosure Crisis: Tax Incentive for Homeowners

How to Solve the Foreclosure Crisis: Tax Incentive for Homeowners

To anyone who is unaware of the current economic situation that the United States, and much of the world, is currently in: welcome to The Great Recession. The beginning of which can be traced back to the start of the Subprime Mortgage Crisis in 2007. The impact of this economic catastrophe can be seen in every corner of the American economy and every US taxpayer is feeling its effects. It will be incredibly difficult to pull the economy out of this hole, and it must start with a plan.

The most effective plan has to be one that builds up the strength of mortgage securities and reduces their volatility. When credit marketers realize that they can once again successfully invest in mortgage securities, banks and lending companies can begin to replenish their pipeline of funds to create new mortgage. However, mortgage securities can only become more “secure” if there are fewer foreclosures in the housing market. The goal then is to make sure that all homeowners are able to pay off their mortgage completely and on time.

It is nearly impossible to control the actions of individuals, but how do you get homeowners to be responsible and pay off their mortgages? If paying off a mortgage is such a beneficial action, it would be best to reward the homeowners who follow through on it. A reward in the form of a tax incentive for all homeowners that have been financially responsible enough to remain current on their mortgage payments would encourage responsibility and change consumers’ behavior.

Tax incentives have been historically used to influence a certain behavior among consumer. Whether it is giving a tax break to c...

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...ple deficit spending right out of a high school economics textbook. In Keynesian economics, deficit spending will help to move the economy out of a recession by encouraging the full output of companies. By giving money back to the people who are able to budget their money and live with in their means, they will gain back immense and needed buying power that will also help to jump-start the economy, creating demand for goods, which means productivity and other associated economic opportunities. So not only is this plan a fix for the housing market, but it will also help the American economy in general. In the beginning, the Great Recession was started because of problems in the mortgage industry. Now, by starting with changes in the mortgage industry, it is possible to pull the American economy out of a recession. It is best to attack the problem at its core.