How to solve the foreclosure crisis?

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How to solve the foreclosure crisis? In every neighborhood no matter how rich or how poor you can see the toll that the housing market has taken by the foreclosure crisis in America. Almost every street has a house on it that has fell victim to this crisis. The housing market today is a reflection on the banks and the homeowners who fell into the trap. In order to solve the problem we must look at the core of the problem. What caused this crisis to happen in the first place, so we can make sure it doesn’t happen again. When the housing market boomed it caused almost a panic for perspective home buyers. Houses were having multiple bits on them and the bidding wars would cause the already inflated house price to rise even higher. People where paying 400,000 for a house that just one year prior was worth half of that. I live in California were it seems we have been hit really hard with this problem. It was unbelievable little track home were selling for half a million dollars. The problem was is that the average family income does not support that kind of house payment. In order to qualify for a mortgage payment it shouldn’t be more that 40% of the family income. What was happening is most people wouldn’t qualify for that much money so the banks raised the percentage to qualify up to as high as 60%. Then there were these loans that came out that offered interest only payments for a certain period of time for example the first five years of the loan, then the remainder would be an adjustable mortgage with full payment. This is where things for the people and the banks really went wrong. It gave people a false sense of security because they could afford the payment for the first five years, but after that many were tol... ... middle of paper ... ...financing and give the customer the foundation to make proper decisions once they do own a home. There will be a certificate of completion that can be emailed or printed. In order for the loan to go through it would be a mandatory document like W-2’s and paycheck stubs. Most of the clients I would see that were refinancing was to get out the tremendous debt they had created with credit cards and car loans. Many of the clients had two cars in the home which both had car payments that far exceeded what they could afford. Many times the car payments were over 1,000 dollars a month. This combined with a mortgage payment would max out most homeowner’s monthly income. This program would give the customer the information to prevent this from happening. We can spend billions of dollars in bank bailouts but if we do not educate the people this will continue to happen.

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