Making Home a Home: Solving the Foreclosure Crisis

However these current plans limited to those nationalized entities fails in comparison to the overwhelming number of foreclose properties on the market and those that the banks have yet to release. The housing industry need some stability for future assurance that once this crisis is past it is improbable for another one to occur. First and foremost, there needs to be standards to homeownership approval. While it is true that some marginalized communities do not have the same purchasing powers as others, they are still able to meet minimum standards. Predatory lending was a primary factor in the real estate bubble-lenders underwriting homes to people who could not afford them or maintain them.

The important point here would be the stabilization of the market. Also, it would be rather pointless to continue building new homes when existing homes are being repossessed and there is no need to. Unfortunately, when new homes are not being built homebuilders do not have work to do. The effects of foreclosure reach ... ... middle of paper ... ...to the housing industry, it needs to ensure that the industry end some of its bad habits. The federal government has a legitimate reason to intervene in the real estate industry at this current juncture.

Foreclosure is a relatively common problem that is currently being experienced at a higher occurrence rate across the whole globe. The rate has become so high in comparison to historical experience that we are now considered to be in a state of crisis. However, the current foreclosure crisis can be solved by educating potential mortgage applicants and reigning in the number of higher risk type mortgages that banks offer. Part of solving the foreclosure crisis is in the hands of the average person. After all, the first step in solving the foreclosure crisis is to keep new people from finding themselves in the unfortunate situation of owing more for their house (mortgage) than they can afford.

However, if we expand home buyers at the expense of rental owners we will still cause significant damage. Also, keep in mind that the U.S. population is growing at about 1% a year and if left to natural mechanisms will take years to soak up the oversupply. First, let's try to solve the issues that are making the situation worse. We will quickly touch on the oversupply problems and then move onto the demand solutions. One of the reasons for the oversupply of housing is that many individuals that can afford their homes are walking away because of the negative equity in the house.

Without changes in mortgage lending, any positive steps taken to protect current homeowners will be negated. Two primary methods must be used to help borrowers who are currently in danger of losing their homes. First, refinancing opportunities must be increased, particularly for families who were coerced into borrowing at sub-prime rates. This is a policy area that has already been addressed, but more must be done. Many of the programs previously implemented by state legislatures have used rigid standards of refinancing without regard to the individual’s specific needs.

In summary, then, this plan is both fair to all parties, conducive to an effective regulatory régime, and a reasonable solution to the foreclosure crisis. In addition, and perhaps most importantly, this plan also serves as a strong disincentive to future reckless behavior in the housing market -- since few would buy a house under such potentially onerous conditions if their desire was simply to make money by speculation. Thus, the most advantageous part of this plan is probably that it will act as a strong dissuasive factor to future speculative bubbles in the housing market, in addition to bringing to an end the uncertainty, anxiety and pain that is currently being caused by the foreclosure crisis.

There is no fix all for foreclosure. It’s going to happen; people will get around the safe guards, ignore the information and seek out what they can’t afford in the name of decadence. But hopefully with the suggestions I’ve offered; watching closely the market, getting information to the people, fiscal responsibility and counseling, and licensed home loaners, we can move towards a more fiscally responsible nation, a fast recovery and a more stable housing market. Citations http://www.gao.gov/new.items/d0878r.pdf

The foreclosure crisis was caused by a pattern of risky investments by the leading United States banks that put the short term pursuit of profit above the long term interests of homeowners. This unquenchable desire for short-sighted quarterly profits, oblivious to long-term risk, motivated the decision of some banks to begin offering adjustable rate mortgages. These banks lured honest homeowners with low adjustable interest rates that were at serious risk to rise precipitously if short-term interest rates reverted to historic levels. The established government policy of stressing homeownership that was supported by Reagan, Clinton, and both Bush administrations heavily incentivized purchasing homes. The combination of low interest loans and government incentives produced a dramatic rise in homeownership that was unsustainable.

Some of the financing problems have resulted from various lenders wooing borrowers with generous terms they once reserved only for borrowers with outstanding credit. Eager mortgage financiers started buying more of these loans, and basically subsidized the market. In its current state, the housing market is in dire n... ... middle of paper ... ...s will greatly save on brokers’ sales commissions, usually by 4% to 7% in most markets (onlinehousetrading.com). Conclusion The housing crisis requires creative thinking and fast action. Bartering and homeswapping would be an ideal solution to the high number of foreclosures we are currently seeing in the marketplace.

To sum it all up, what we need to get out of this foreclosure crisis is public awareness and incentives to encourage smart home buying. We can raise public awareness on how to make and educated decision when buy a home by seating guild lines. The public could uses to make smart choices in finding a price range that is adequately affordable for them. The government can give incentives by giving tax breaks for Americans who used these flyers and made smart home buying decisions. Combined these efforts could greatly reduce the number of foreclosures and bank owned homes in this country.